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Month: October 2017

One of the Most Overbought Markets in History

The Dow is trading at one of its most overbought levels in history. At 87.61, its 14-day RSI is higher than 99.999% of historical readings going back to 1900. Out of 30,914 trading days, that’s good for top 10 all-time. Sell everything? If only it were that simple. Going back to 1900, the evidence suggests […]

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When Backtests Fail

Let’s say you’re building a diversified portfolio and want to include European high yield bonds in the mix. What are you plugging in for an estimated return today? If you’re like most investors, you’ll look to a backtest to provide the answer, asking the following question: what have the returns been historically? With data going […]

The Year Volatility Died

When it comes to market volatility, how low is low? Before 2017, a close below 10 in the Volatility Index (VIX) was an extremely a rare event. It had only happened 9 times since 1990 out of 6,804 trading days. This is equivalent to 1 day every 3 years, or 0.13% of the time. A […]

Bull Market Aphorisms

  • Markets
  • Charlie Bilello

Aphorisms in the Year of the Bull (2017)… Buy in May and Stay Leveraged Long Buy the Rumor, Buy the News Buy the Dip, Buy the Rip Be Greedy When Others Are Greedy Bulls Make Money, Bullish Pigs Make More Money Rule No. 1: Never Go Short. Rule No. 2: Never Forget Rule No. 1 […]

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When Mean Reversion Fails

Are equities overvalued? Is the economic expansion long in the tooth? — In attempting to answer these questions, we often look to averages: -What is the average valuation? -What is the average length of an expansion? We then take the present environment and compare that to the average past to make definitive statements about the […]