The Big Picture

Bloomberg Radio Appearance (6/4/13)
10 Tuesday PM Reads
The Saddest Tweeters Live
Why Do People Fear the Hindenburg Omen?
10 Tuesday AM Reads
Analysts Are Not Paid to Make Stock Recommendations
Risk-Taking: Real Economy vs Wall Street
For Starters, Have a Beard

Posted: 04 Jun 2013 04:00 PM PDT

Ritholz Discusses Economy, Stocks with Eisinger, Gross (Audio)

Jun 4, 2013

Barry Ritholz, chief executive officer and director of research at Fusioniq, discusses the stock market and the Federal Reserve tapering off its bond purchases. He’s joined by Daniel Gross, columnist and global business editor at Newsweek and The Daily Beast, and Jesse Eisinger, senior reporter at Pro Publica. They speak with Bloomberg’s Kathleen Hays and Vonnie Quinn on on Bloomberg Radio’s “The Hays Advantage.”

Bloomberg Radio

This posting includes an audio/video/photo media file: Download Now

10 Tuesday PM Reads

Posted: 04 Jun 2013 01:30 PM PDT

My afternoon train reads:

• Why I’m an Optimist (Motley Fool) see also Recession ended 4 years ago: How far have we come? (CNNMoney)
• World Chasing U.S. Yield With 25% Deal Jump (Bloomberg)
• Should We Trust Economists? (Atlantic)
• The Intelligent Investor: How Funky Is Your 401(k)? (Moneybeat)
• Today's Dystopian Vision: The Chinese Hacker Proliferation (Priceonomics)
• Bruce Bartlett: Proposition 13 at Age 35 (Economix)
• The black/white marijuana arrest gap, in nine charts (Wonkblog)
• Feedly partners with RSS apps like Reeder as Google Reader's end draws near (paidContent)
• Apple Said to Shift Ad Focus to Support New Music Service (Bloomberg) see also In the weeds (asymco)
• The Single Most Important Change You Can Make In Your Working Habits (Farnam Street)

What are you reading?

Dividend Stocks Fall Victim to Fed

Source: WSJ

The Saddest Tweeters Live

Posted: 04 Jun 2013 12:00 PM PDT

Click to enlarge

Source: National Geographic

See also The geography of Tweets

Why Do People Fear the Hindenburg Omen?

Posted: 04 Jun 2013 09:00 AM PDT

Not a track record to be proud of:

Source: Moneybeat

Previously:
Hindenburg Omen? Put a Fork In It. (March 26th, 2011)

The PermaBear to English Translation Guide (October 15th, 2010)

10 Tuesday AM Reads

Posted: 04 Jun 2013 07:00 AM PDT

My morning reads:

• Investors: What Are You Afraid Of? (WSJ) see also The Return of Volatility (Alhambra Investment Partners)
• Will Cyclicals Finally Break Out vs Staples? (All Star Charts)
• No gold trader should ignore these odds (MarketWatch)
• Japan’s Market Has Bulls Reeling (WSJ) see also Intended consequences and the yen (FT Alphaville)
• Behind the Rise in House Prices, Wall Street Buyers (DealBook)
• The High Cost of Unemployment (Slate)
• Inside the ‘Black Box’ of Sell-Side Financial Analysts (Social Science Research Network) see also The Shocking Truth About Wall Street Stock Recommendations (The Motley Fool)
• The U.S. Bond Market May Be Much Different Than You Think It Is (Learn Bonds)
• Red-State Socialists vs. Obama (Barron’s)
• Hilarity ensures! Econ blogosphere comment form (Stickman’s Corral)

What are you reading?

Major Asset Classes | May 2013 | Performance Review

Source: Capital Spectator

WSJ

Analysts Are Not Paid to Make Stock Recommendations

Posted: 04 Jun 2013 04:15 AM PDT

Source: SSRN, Motley Fool

News flash: Analysts exist to generate investment banking business and trading commissions; they are not here to assist you in making stock buys or sells.

That is the conclusion of a recent study, but let’s be blunt: If you have been paying attention, you probably already knew this.

At this point in the evolution of Wall Street, analyst conflicts and priorities should not come as any surprise to investors. Most learned this from getting burned by various frauds of the late 90s and early 2000s.

Following the many analyst scandals that have plagued investing, from the dotcom underwriting to corrupted analyst coverage to outright hostility to shortsellers who uncovered many of the accounting frauds, it was apparent that something was rotten in the state of Denmark. Now we have statistical proof from academia to prove what you suspected all along.

Here are John Reeves and Ilan Moscovitz:

“Countless studies have shown that the forecasts and stock recommendations of sell-side analysts are of questionable value to investors. As it turns out, Wall Street sell-side analysts aren’t primarily interested in making accurate stock picks and earnings forecasts. Despite the attention lavished on their forecasts and recommendations, predictive accuracy just isn’t their main job.”

The ongoing rise of indexing — Vanguard was the only firm that garnered fresh assets during most of the past few years — suggests that Mom & Pop won’t be so quick to follow analysts again.

Time has a way of making people forget, but I suspect perhaps their memories might be better this time.

Previously:
McKinsey: Equity Analysts Are Still Too Bullish (June 2nd, 2010)

Sources:
Inside the ‘Black Box’ of Sell-Side Financial Analysts
Lawrence Brown (Temple University), Andrew Call (Arizona State University), Michael Clement (University of Texas), and Nathan Sharp (Texas A&M)
SSRN, March 1, 2013
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2228373

The Shocking Truth About Wall Street Stock Recommendations
John Reeves and Ilan Moscovitz
Motley Fool June 3, 2013
http://www.fool.com/investing/general/2013/06/03/the-shocking-truth-about-wall-street-stock-recomme.aspx

Risk-Taking: Real Economy vs Wall Street

Posted: 04 Jun 2013 03:45 AM PDT

click for video

Source: Yahoo

Real Economy Avoids Risk-Taking as Wall Street Embraces It:

“Has the intrepid American entrepreneur turned timid? Is the courageous, risk-embracing business pioneer becoming like the cowboy: a popular icon of a bygone time rather than a reflection of what America has become?

We might not be quite there. But there is a broad array of evidence, much of it hashed out in a long Wall Street Journal feature, that American workers and companies have grown more risk-averse in recent years.

Companies are less eager to expand payrolls to grow; the rate of small-business creation has ebbed; investment in startups is sluggish; workers are less likely to leave a job for a better opportunity; families aren't as willing to move to a part of the country with more vibrant economic prospects. If these trends persist, it will restrain the pace of long-term economic growth.”

For Starters, Have a Beard

Posted: 04 Jun 2013 03:00 AM PDT

Source: Dilbert