WSJ: 'Presidential Stock Cycle' Sees Weak 2014

By SIMON CONSTABLE

Tomorrow, as you cast a vote, you might also gird yourself for rocky markets ahead, especially during the first nine months of 2014.

How so? The second year of a presidential term is traditionally a period of subpar stock performance.

Specifically, since 1945, the second year of a president's term saw the S&P 500 gain 5.3% in price on average, versus 16.1% in the third, according to an analysis by S&P Capital IQ. No distinction is made between a president's first or second term. The clock simply starts over.The "presidential stock market cycle" says that stocks perform better or worse depending on the year of the president's term. The second year is the worst, and the third is the best, on average. See original story here.

Barrons: Zinc Prices Could Jump 20+%

By SIMON CONSTABLE

Now might be a great time to galvanize your portfolio with zinc futures.

Why? Booming construction in China, combined with mine closures, could propel prices about 20% higher over the next couple of years, as demand for the metal outpaces output. The likely result: a supply shortfall in 2015.

Zinc has moved roughly sideways since March. But benchmark prices of the metal—used in construction, automobile production, and the manufacture of brass—could hit $2,400 a metric ton by 2015, about 23% above its recent quote of $1,955 on the London Metal Exchange, analysts say. A recent report from brokerage firm Natixis cites "the imminent demise of a number of significant [zinc] mines around the world," as a cause. Mineral deposits get depleted as ore is extracted. At some point, it isn't profitable to continue digging. See original story here.

WSJ Live: Shiller Big Interview

By SIMON CONSTABLE

Blast from the past-- my 2010 interview with Robert Shiller, who was today awarded the Nobel Prize in economics...

Robert Shiller

MeJudice, CC BY 3.0, via Wikimedia Common

WSJ: 'Mean Reversion' Suggests Big Stock Gains Won't Continue

By SIMON CONSTABLE

Investors tend to be either overly optimistic or overly pessimistic based on recent experience. They often think recent good or bad performance will continue indefinitely.

In simple terms, years of subpar stock returns will be followed by better returns to bring overall performance back to the long-term norm. It works vice versa, also.But investment returns over time are more likely to exhibit what economists call "mean reversion." That's the idea that over long periods the annual returns of various assets will swing back toward their long-term average—or back to the mean. See original story here.

Barrons: How Bernanke Built a Metal Mountain

By SIMON CONSTABLE

Industrial companies irked at Wall Street over the availability of warehoused metal have their eyes on the wrong target. The real culprit is the Federal Reserve and its continued easy-money policy. When that policy ends, metals prices could sink.

Metal is piling up in London Metal Exchange-licensed warehouses as inventory is quick to enter but slow to leave. In some cases, it's taking more than a year to get aluminum out of storage once you ask for it. See original story here.

WSJ: A Weak Economy Puts the U.S. Just a Couple of Hiccups From Recession

By SIMON CONSTABLE

Unless you are one of a very lucky few, there is little about the economic recovery that looks "robust." We are likely just one or two hiccups away from another recession.

For all but high earners it's increasingly tough to make ends meet. Just look at J.C. Penney as a prime indicator, says Kristin Bentz, consumer expert at Phoenix-based private-equity firm PMG Venture Group. See original story here.

PLBechly, CC BY-SA 4.0, via Wikimedia Commons

WSJ: Break Up the Banks Says TARP's Barofsky