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Misconceptions, Misperceptions,

and Blind Spots



Mike Mish Shedlock
http://globaleconomicanalysis.blogspot.com/


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Todays Topics

Valuation
Sentiment
Housing
Demographics
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Tobin Q Ratio

What is it?

Its a method of estimating the fair value of the
stock market developed by Nobel Laureate
James Tobin. The Q Ratio is the total price of
the market divided by the replacement cost of
all its companies.
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Tobin Q Ratio Since 1900



Source: Doug Short Advisor Perspectives

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Tobin Q Ratio Geometric Look






Source: Doug Short Advisor Perspectives
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Measures of Sentiment






Source: SentimenTrader
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Margin Debt







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Positive vs. Negative Credit Balances
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Money-Losing IPOs
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Housing

Originations
Pricing
Cash Purchases
Interest Rates
Student Debt
Household Formation
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Housing Originations





Wells Fargo and JPMorgan Chase, the two largest U.S. mortgage lenders, reported a first-quarter plunge in loan volumes. MBA reported
lenders made $226 billion of mortgages in the period, the smallest quarterly amount since 1997 and less than one-third of the 2006 average.
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Home Prices Flatten




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Prime Housing Demand



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Prime Housing Demand Numbers



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New Home Sales



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Mortgage Rates Since 2007

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Demographics

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Employed vs. Not Employed
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Employed vs. Not Employed Ratio
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Student Debt Soars Out of Sight
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College Tuition Comparison
Source: Doug Short Advisor Perspectives


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Median Income
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Marriage Age on the Rise
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Adults Age 18-24 Living With Parents
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Adults Age 25-34 Living With Parents
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Things That Are Expensive
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Things That Are Cheap
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Things That Are Cheap
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Newmont Mining
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Yield Curve
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Investment and Trading Ideas



Invest in things that are cheap and out of favor

US Treasuries

Japanese Equities

Gold


Avoid (cautiously short) things that are expensive

U.S. Stocks, Russell 2000


Mike Mish Shedlock

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