Jump Around at UW

Ok, this has nothing to do with markets, but someone posted this video and I thought it would be fun to share. My ears can't make out what is being said, and that might be a good thing.

If you want to know what it looks like to see an entire student section bouncing, click play. I'm probably somewhere in the middle of it all. This happens every game between the 3rd and 4th quarters, and is a pile of fun.

Alumni Reunion 2006 - Thanks to all who Participated!

This past weekend the ASAP Reunion of 2006 (Otherwise known as the Fall Investment Conference) took place. I believe about half of all current ASAP alumnni returned to give current students advice...

I want to give a big thank you to all who participated and helped set it up. It was tons of fun and I feel priveleged that I can partake in future reunions - well, provided I graduate :-)

Thank god we also beat Illinois after falling behind 21-3. Nerveracking. My voice is still gone!

52 years in the market

Wow, I can't believe it has been two weeks since I last made a post. I'm trying to find the time - we're still spinning our wheels a bit getting the portfolio positioned.

Nonetheless, I felt that the following chart was interesting. it represents 52 years in the market - 1 year S&P 500 returns, GDP growth, the Term Premium (10 year Treasuries minus the Fed Funds rate), and S&P 500 earnings per share.

You may not believe me, but this chart represents many hours of work - scrubbing data, formatting, checking, etc. I have learned alot while doing it, though. A few important points seem to stick out:

-The Term Premium has done a wonderful job predicting lousy markets
-When real GDP growth is above 1%, the market tends to do well.
-Earnings fall quickly when the economy heads south

What you don't see here is a market valuation metric such as P/E, Forward P/E, or P/R (by Michael Alexander). I equate the over / under valuation of the S&P 500 as the amount of gasoline on the fire - whichever direction the valuation suggests the market will go eventually does happen, but the more over or undervalued the index is, the faster it occurs. That may seem very obvious, especially since we experienced this a mere 6 years ago, but it pays to remember this lesson.

Links fixed

Well, I think I saw some recruiter hits to my website here. Unfortunately, the "Career Stuff" links weren't working for a brief period of time, and I am not certain why. Rest assured they are now fixed.

Housing Chart #3

Source: Factset Research Systems, dotted red line is at 100 on the right axis for the affordability index (above 100 is considered "affordable")

My main question is, what does it take to get us back where we were in terms of affordability? Prices can correct and are doing so, but they've a ways to go for that to happen!

Housing Chart #2

Notice how severe the dips in Housing Starts become when the corrections occur. Starts, New Home Sales, and Existing Home sales are all pretty strongly correlated. Employment levels are too (chart 1).