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Everything's Expensive. There's Nowhere to Hide: Credit Weekly

Everything's Expensive. There's Nowhere to Hide: Credit Weekly

Bloomberga day ago
Credit market bargain shoppers are having the hardest time finding deals in at least a generation.
A relentless rally has left valuations stretched on just about all high-grade company debt globally. The difference between spreads on individual bonds and the average of the index is the lowest on record, according to data compiled by Bloomberg going back to 2009.
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Top economist says it's ‘panic season' in markets and it's your fault for taking summer vacation. Blame the ‘harvest time' mentality
Top economist says it's ‘panic season' in markets and it's your fault for taking summer vacation. Blame the ‘harvest time' mentality

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time25 minutes ago

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Top economist says it's ‘panic season' in markets and it's your fault for taking summer vacation. Blame the ‘harvest time' mentality

What is August really about? Owen Lamont, Senior Vice President and Portfolio Manager at Acadian Asset Management, suggests that for normal people, it's about relaxing on the beach, but for financial markets, it's 'panic season.' Lamont, who is a leading economist at the $150 billion quantitative hedge fund and has been a faculty member at Harvard University, Yale School of Management, University of Chicago Graduate School of Business, and Princeton University, looked back at financial history, and found a startling pattern. 'Even if systematic equities aren't your thing,' he wrote on his Acadian blog, Owenomics, 'you need to be mentally prepared for an epic financial disaster over the coming three months.' His research draws a direct line between the timing of many of the most devastating financial crises and a centuries-old pattern: market crashes tend to cluster during the so-called 'harvest time,' spanning August to October. The historical pattern 'For grizzled practitioners of systematic equity strategies,' Lamont writes, 'August is the cruelest month.' He cast his mind back to the 'quant quake' of August 2007, writing that analysts ever since have spent August 'compulsively checking our phones and having nightmares about screens full of glowing red numbers.' When reached for comment by Fortune Intelligence, Lamont said he was calling from the same house in Maine where he was summering during the quant crash of 2007. Every year around this time, he added, that panic is 'certainly on my mind,' as it is for any quant equities managers who is over 50 years old. Although overshadowed by the onset of the Great Financial Crisis in September 2008, Lamont writes that the quant crash was a classic fit, occurring during a sleepy time in markets when liquidity is thin because so many traders are away from their desks. Lamont cites modern research showing that August and September are periods of unusually low trading liquidity, as investors and market makers take summer vacations in the Northern Hemisphere. Lower market liquidity means less capacity to absorb big, sudden trades—a recipe for outsized volatility if a crisis does erupt. Looking at the past 50 years, Lamont underscores the fact that most major U.S. market crises have struck between August and October, when thinner markets amplified shocks. Among the historic market meltdowns during these months were two in September—1998's collapse of Long-Term Capital Management and 2008's Lehman Brothers bankruptcy—and two in October—1987's Black Monday stock market crash and 1997's Asian financial crisis. But going back to the founding of the United States itself, he sees a similar pattern. The deep roots of harvest time Lamont wrote that America's first bubble, 'Scriptomania,' occurred in July/August 1791, and the Panics of 1857 and 1873 occurred in August and September, respectively. Then the Panic of 1907 followed in October. The culprit is clear to Lamont: summer vacation. But, in a chicken-or-the-egg discussion, he argues that America's agricultural economy created the need for time off in the summer, as that was when harvests occurred and money needed to flow from the big East Coast cities and into the Western agricultural regions. Lamont cited Oliver Mitchell Wentworth Sprague's diagnoses of 'panic season' in 1910's History of crises under the national banking system: 'With few exceptions all our crises, panics, and periods of less severe monetary stringency, have occurred in the autumn, when the western banks, through the sale of the cereal crops, were in a position to withdraw large sums of money from the East.' The pattern was spotted as far back as 1884 by English economist William Stanley Jevons. The creation of the U.S. Federal Reserve system itself was in part a reaction to such panics, Lamont adds, citing a 1986 American Economic Review article by Jeffrey Miron. 'If you do the rough math, there's a 10% chance of an epic disaster between August and October this year, and just a 2% chance from November through the following July,' Lamont writes, cautioning investors to 'be mentally prepared' for outsized risk in the coming quarter. Lamont told Fortune Intelligence that he's not particularly worried about the coming panic season compared to any other. A market crash is still a 'rare event,' he said, adding that he's not aware of any particularly levered players in the market that could spark a crash. But then again, he added, he wasn't aware of any in August 2007 when the quant crash happened. Remote harvest time? Lamont agreed with Fortune's comparison of the harvest/panic season thesis to 'flash crashes,' which often occur overnight, after trading in America ends and before it starts in Asia. He said that's a bit of an extreme vacation of an illiquid market, 'like what would happen if everyone went asleep.' He reiterated his belief that 'weird stuff happens' in illiquid markets. Then he got philosophical about how economics require all of us to have some kind of appetite for weirdness. What about Europe, which traditionally takes much longer vacations in August, sometimes the whole month, compared to Americans and their much more reserved time-off policy? Lamont agreed, but noted that with America as the world's global financial center, with a much larger market, the impact of thinner liquidity is felt more strongly. He noted that other academics have covered seasonalities in other countries, such as Australia, where it seems to be the opposite case, or the impact of seasonal affect disorder on trading in northern countries. Ultimately, he told Fortune, the benefits of the current system outweigh the risks. The 'traditional, heavy-handed approach,' he said, would be to shut the market down, calling off trading in August altogether. Lamont told Fortune of his upbringing in the two schools of economics that revolve around heavy regulation and libertarianism, with the East Coast 'saltwater' tradition he learned at MIT a major influence on him before he spent eight years on faculty at the libertarian 'freshwater' school, the University of Chicago. 'A basic principle of economics is you should let people trade,' he said, before adding that he also believes in behavioral finance, which holds that 'people mess up and markets make mistakes.' He believes that governments make mistakes, too, he added. The whole issue may be resolved over time by the rise of remote work, he added. 'One theory would be that because nowadays we can all work remotely, vacations are less impactful on [trading] volume,' he said. Lamont said he was working remotely from his Maine house at the time, the week before his planned August vacation in the same location. For now, he added, we are trapped in the paradox of tradition that began with our agricultural economy. People take vacation in August because that's when people take vacation. 'Especially with family gatherings,' he said, 'you want to be on vacation the same time your relatives are on vacation.' How's that for behavioral finance? For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. This story was originally featured on 擷取數據時發生錯誤 登入存取你的投資組合 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤

Does Tanco Holdings Berhad (KLSE:TANCO) Deserve A Spot On Your Watchlist?
Does Tanco Holdings Berhad (KLSE:TANCO) Deserve A Spot On Your Watchlist?

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time33 minutes ago

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Does Tanco Holdings Berhad (KLSE:TANCO) Deserve A Spot On Your Watchlist?

Explore Tanco Holdings Berhad's Fair Values from the Community and select yours It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad. Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Tanco Holdings Berhad (KLSE:TANCO). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. Tanco Holdings Berhad's Improving Profits Strong earnings per share (EPS) results are an indicator of a company achieving solid profits, which investors look upon favourably and so the share price tends to reflect great EPS performance. So a growing EPS generally brings attention to a company in the eyes of prospective investors. It's an outstanding feat for Tanco Holdings Berhad to have grown EPS from RM0.00077 to RM0.0026 in just one year. When you see earnings grow that quickly, it often means good things ahead for the company. But the key is discerning whether something profound has changed, or if this is a just a one-off boost. One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Tanco Holdings Berhad maintained stable EBIT margins over the last year, all while growing revenue 46% to RM173m. That's a real positive. You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart. See our latest analysis for Tanco Holdings Berhad While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Tanco Holdings Berhad's balance sheet strength, before getting too excited. Are Tanco Holdings Berhad Insiders Aligned With All Shareholders? It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. Tanco Holdings Berhad followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group. Indeed, they have a considerable amount of wealth invested in it, currently valued at RM859m. That equates to 20% of the company, making insiders powerful and aligned with other shareholders. Looking very optimistic for investors. Should You Add Tanco Holdings Berhad To Your Watchlist? Tanco Holdings Berhad's earnings have taken off in quite an impressive fashion. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. Based on the sum of its parts, we definitely think its worth watching Tanco Holdings Berhad very closely. One of Buffett's considerations when discussing businesses is if they are capital light or capital intensive. Generally, a company with a high return on equity is capital light, and can thus fund growth more easily. So you might want to check this graph comparing Tanco Holdings Berhad's ROE with industry peers (and the market at large). There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of Malaysian companies which have demonstrated growth backed by significant insider holdings. Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio

Here's Why We Think Duty Free International (SGX:5SO) Is Well Worth Watching
Here's Why We Think Duty Free International (SGX:5SO) Is Well Worth Watching

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time33 minutes ago

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Here's Why We Think Duty Free International (SGX:5SO) Is Well Worth Watching

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away. Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Duty Free International (SGX:5SO). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Duty Free International with the means to add long-term value to shareholders. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. How Fast Is Duty Free International Growing Its Earnings Per Share? Investors and investment funds chase profits, and that means share prices tend rise with positive earnings per share (EPS) outcomes. Which is why EPS growth is looked upon so favourably. Commendations have to be given in seeing that Duty Free International grew its EPS from RM0.0091 to RM0.045, in one short year. When you see earnings grow that quickly, it often means good things ahead for the company. It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. We note that while EBIT margins have improved from 7.5% to 42%, the company has actually reported a fall in revenue by 6.0%. While not disastrous, these figures could be better. In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers. View our latest analysis for Duty Free International Since Duty Free International is no giant, with a market capitalisation of S$90m, you should definitely check its cash and debt before getting too excited about its prospects. Are Duty Free International Insiders Aligned With All Shareholders? It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions. We haven't seen any insiders selling Duty Free International shares, in the last year. So it's definitely nice that Non-Independent Non-Executive Director Soo Lin Chew bought RM22k worth of shares at an average price of around RM0.058. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in Duty Free International. Does Duty Free International Deserve A Spot On Your Watchlist? Duty Free International's earnings per share growth have been climbing higher at an appreciable rate. Growth investors should find it difficult to look past that strong EPS move. And in fact, it could well signal a fundamental shift in the business economics. If this these factors intrigue you, then an addition of Duty Free International to your watchlist won't go amiss. We don't want to rain on the parade too much, but we did also find 3 warning signs for Duty Free International (1 shouldn't be ignored!) that you need to be mindful of. Keen growth investors love to see insider activity. Thankfully, Duty Free International isn't the only one. You can see a a curated list of Singaporean companies which have exhibited consistent growth accompanied by high insider ownership. Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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