It came to be known simply as “the indicator,” with its longer title including the name of its sponsor, my boss during the great drop in interest rates during the mid-1980s. For long stretches of time it was as good as gold. The black line is the monthly yield on the Moody’s AA Utility Average, and the red line is its eighteen-month simple moving average. Be short or long your index in response to the signal and you could produce amazing numbers. (Someday on the research puzzle I’ll tell the whole story of how it fit into an investment philosophy and strategy — and what I learned about markets, brokers, strategists, and clients as a result.) Part of what happens is that the big trends can be self-reinforcing for a number of reasons. The Indicator, at least, says don’t be too quick to assume a change just yet. (Chart: Bloomberg terminal.)
As noted in an earlier pix, you can count investor relations among the businesses that are being turned upside down. IR Web Report provided further evidence that public companies are set to move away from the standard model of using paid PR firms. Now, StockTwits has released its IR Beta. Another part of the business has reached a tipping point.
No matter that the articles are from past issues. When you get a chance to read Jim Grant you should do so. You’re guaranteed to learn something.
“Disclosure” has been a key word the last few months. From the Goldman situation to the financial reform battle — and in countless meetings between investors and their investment managers — the question of what should be disclosed or how transparent a transaction or a portfolio should be has been at the core of the debate. With good reason, since hidden exposures, hidden intentions, and hidden costs have defined this era of the markets. The list is very long, but you can see how high the stakes are when you read about the ongoing “rumble” between brokers and advisors. A new and captivating story relates to New Jersey and its bond deals and pension woes. There are always cycles, but it seems that fresh air and light are winning the battle of the elements right now.
There has been much attention paid to the rules blunder made by Dustin Johnson during the PGA Championship. (Like investors are sometimes, he was out of position.) Given the rules that were in force, the officials made the right call in penalizing Johnson, keeping him out of the playoffs. Because of the unique potential for Whistling Straits to produce such an imbroglio, the rule sheets were plastered everywhere, even on the back of the bathroom stalls, according to Steve Elkington. But, as Nick Watney said, “We get a sheet every week, and we never read them.” Kind of like investors ignoring the footnotes and risk factors. Sometimes it makes a difference.