In terms of cyber related problems, 2015 turned out to be a tough year for many financial firms. While surprising for some, elements of this problem were seen in 2015 as the alleged ISIS downing of a Russian commercial jet decimated Egypt’s tourism to the Sinai region. The gist is that Kass believes that shares in airlines, hotels and entertainment companies will underperform. For example, Kass’s top surprise of 2016 is "Terrorism Dismantles an Already Fragile Global Recovery". In addition, many of his other scary forecasts are based on problems faced last year. While Kass’s cyber predictions for 2016 are extreme, they do follow unfortunate trends from 2015. 2023 Digital Banking Trends and the Future of Banking.Why Robo-Advisory and Automated Investment Platforms Are the Future.This in turn is organized by price level and is reflective of real-time market activity. Broad-based definitions of market depth characterize it as a function of liquidity and trading volume.In its most simplistic sense, market depth reflects a real-time list displaying the quantity to be sold versus unit price. Market Depth is a characteristic of a given market and its ability to handle large order sizes without materially affecting the price of the underlying asset or currency pair. This would cause legislation being written up to curb the “unfair trading field” of HFT traders and the outlawing of co-location servers and spoofing of trades and Market Depth Among the effects, Kass stated that the flash crash would lead to renewed anti-HFT sentiment from the US government. As such, they, like lower stock prices, are our allies as their role in distorting stock prices and markets provide us with attractive entry points.For stock prices, Kass expects these disruptions to trigger the ‘The Mother of All Flash Crashes’ and lead to the largest single day point drop in the Dow Jones 30 as it falls 1,100 points. Quantitative products and strategies, that generally worship at the altar of price momentum, know everything about price and very little about value. There is little question that the evolution of market structure from active to passive investing - which has delivered a false sense of diversification - has been a contributing factor to the pace of the recent market decline.While traders and investors remain in a quagmire of uncertainty with numerous economic and market outcomes, some of them adverse - I reminded my investors that bull markets arise from bad news (March 2009, December 2018 and April 2020) - while bear markets are borne out of good news (late 1999/early 2000, September 2007 and December 2021).The Fed is now following up with another mistake, based on ex post analysis, by tightening too aggressively. The monetary tide, in particular, has been "guided" by a bunch of academicians (armed with 400 PhDs) at the Federal Reserve who erroneously determined, through ex ante analysis, that inflation would be transitory - marking the single largest mistake in The Fed's 109 years of history. Warren Buffett also once said "only when the tide goes out do you discover who's been swimming naked." In economic terms, the transition from too easy to much tighter monetary conditions has been a tide going out, which has revealed the incompetence and lack of quality leadership of our fiscal and monetary authorities.As such, higher interest rates diminish the value of stocks, especially high growth, Nasdaq names. (DDM is a quantitative method used for predicting the price of a company's stock based on the theory that its present-day price is worth the sum of all its future dividend payments when discounted back to their present value).
note yields about 4.5% - it is not only a strong alternative to equities but is an important part of the calculus used in valuing stocks in a dividend discount model. An elevated risk-free rate of return is particularly concerning.
dollar and rising interest rates (" all roads lead to interest rates!") remain our biggest investment concerns. Goods inflation and the prices of durables, automobiles and housing, are moderating rapidly - but wage inflation will likely remain sticky.* Though equities are growing more attractive, as noted in my Diary's commentary over the last two months, there are existing headwinds:
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