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WOWS full issue, April 7, 2017
An Alternative Way To View Or Print The Entire Current Issue As A Single Document
4/07/17 4:00 AM
Attention Paid-Up Subscribers: To read or print the entire current issue as a single document, use the "easyprint" feature in the "Nav bar" to the right to open it, or any of WOWS' individual features, as an Adobe PDF file, and then print it. Alternatively, you can click "more" at the bottom of this paragraph and then click the red Adobe icon that appears. Your second click will download the full issue .pdf file of WOWS' latest issue to your computer, a process that -- depending on the file size and your connection speed -- might take more than the blink of an eye. Then, depending on preferences you've set on your device, it will either open automatically or show up in your downloads folder, waiting to be opened. [More]
Small-Cap Connoisseur
Royce & Associates' Lauren Romeo's Eye For Compounding Value
Serendipity and Passion. Royce & Associates’ Lauren Romeo has parlayed some of the former — and employed endless amounts of the latter — to build her dream career, researching and investing in dynamic small companies from a highly visible perch as a principal and portfolio manager of several funds at the “Mecca of small-cap management.” 

The serendipity started with the first stock she bought while still college, during the tech bull market of the late 1980s —  Microsoft. It continued after she graduated from Notre Dame, when she got a job with a short-staffed two-man shop whose partners threw her into doing research, and it kicked up several notches when a lucky introduction led to her going to work for Bill Miller. Then came Wharton, and more intensive exposure to small-cap value investing at T. [More]
Down The Rabbit Hole
Bulls Believe Six Impossible Things Before Breakfast
4/07/17 8:00 AM
By James Montier
One of the great joys of working at GMO is the freedom to disagree. Indeed, many moons ago when Ben Inker first approached me about joining GMO, he told me that, having read my work, he believed we were very much philosophically aligned. Ben noted, however, that occasionally I would reach a remarkably different conclusion than he, and that was interesting because we obviously approached problems using a very similar framework. [More]
Departing Thoughts
Regulations Imperfect, But Necessary. Banish Wrecking Ball
4/07/17 7:00 AM
By Daniel K Tarullo
Tomorrow is my last day at the Federal Reserve. So in this, my final official speech, it seems appropriate to offer a broad perspective on how financial regulation changed after the crisis. In a moment, I shall offer a few thoughts along these lines. [More]
Urgent Stupidity
The Most Broadly Overvalued Moment In Market History
4/07/17 6:00 AM
By John Hussman
On March 1st, the consensus of the most reliable equity market valuation measures we identify (those most tightly correlated with actual subsequent S&P 500 total returns in market cycles across history) advanced within 5% of the extreme registered in March 2000. Recall that following that peak, the S&P 500 did indeed lose half of its value, the Nasdaq Composite lost 80% of its value, and the tech-heavy Nasdaq 100 Index lost an oddly precise 83% of its value.

With historically reliable valuation measures beyond those of 1929 and lesser peaks, capitalization-weighted measures are essentially tied with the most offensive levels in history. [More]
Recession Signal
The Federal Reserve Is Wrong On The U.S. Economy
4/07/17 5:00 AM
By Michael Belkin
Financial markets are being misled by the Federal Reserve. The U.S. economy is headed into a recession, led by falling auto sales and a retail sales slump. [More]
Passive Aggressive
Using ETFs And Serving Yourself From Market’s Offerings
4/07/17 4:00 AM
By Paul Brodsky
Investment capital is in the process of shifting to fit investor objectives that have always been there but never satisfied. Passive investing, which is to say gaining mostly long exposure to stocks and bonds, is nothing new. ETFs are innovations for the majority of investors that directly or indirectly just want to be in the market. [More]
Race Condition
Mandated Intermediaries, Pricing Rules Screwing Investors
4/07/17 3:00 AM
By Tim Quast
You might think today’s title is about physical fitness.
No, ModernIR is an equity data analytics firm, not a personal trainer. I first heard the term “race conditions” used to describe stock-trading at TABB Forum, the traders’ community, in comments around an October 2012 article there by HFT expert Haim Bodek on why high-frequency traders have an advantage. [More]
Good News/Bad News
DJIA Leadership Negative For Broad Market; Russell 2K Wavering
4/07/17 7:01 AM
By Andrew Addison
The price action of the Dow Industrials continues to improve vs. the S&P 500. [More]

First Quarter Review
Eye-Catching Charts From Strategas’ Roundup
4/07/17 6:01 AM
By Daniel Clifton
Four charts from Strategas give an outlook for the economy. From inflation to consumer confidence, the charts are thought provoking. [More]

Liberty St. Economics
Q: How To Find A New Job? A: Start Looking While You Have One
4/07/17 8:00 AM
By R Jason Faberman, Andreas I Mueller, Ay?egül ?ahin, Rachel Schuh, and Giorgio Topa
Most people find themselves looking for work at some point in their adult lives. [More]

Something Is Wrong
Jamie Dimon’s Solutions In JPM Shareholders’ Letter
4/07/17 7:00 AM
By Jamie Dimon
We had a severe financial crisis followed by needed reform, and our financial system is now stronger and more resilient as a result. [More]

Diplomas To Doorsteps:
Education, Student Debt, and Homeownership
4/07/17 6:00 AM
By Rajashri Chakrabarti, Nicole Gorton, and Wilbert van der Klaauw
Evidence overwhelmingly shows that the average earnings premium to having a college education is high and has risen over the past several decades, in part because of a decline in real average earnings for those without a college degree. [More]

Acute Observations, week ending April 7, 2017
Perceptive Commentary from March 24-April 7, 2017
4/07/17 8:00 AM
Nicholas Bohnsack, Ryan Grabinski and Thomas DiFazio
Against a backdrop of mixed, albeit generally positively-skewed data, market participants have continued their quarter-long rotation into higher quality names, in sharp contrast to the decidedly risk-on performance profile which dominated the tape in the two months and a half month following the U.S. election.

While some investors take the pessimistic view — bullish sentiment is waning and a more defensive portfolio construction is required to inoculate against weaker economic growth and/or a downturn in the market — we would argue in favor of a more encouraging intermediate-term conclusion. [More]

© 2017 Welling On Wall Street, LLC.