Ed Yardeni, of Yardeni Research, joins Michael Batnick and Barry Ritholtz at The Compound to explain why we're looking at the wrong data all wrong, what the real data is, and what it means for the current narrative surrounding share buybacks.

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Welcome to the latest edition of What Are Your Thoughts - Michael Batnick and Downtown Josh Brown break down the biggest topics of the moment. On this episode: 

* JP Morgan calls out permabears.

* Should investors be concerned about the national debt?

* Does Google want to be a bank?

* Selling performance vs selling opinions.

* Stock-based compensation.

* Opinion vs price.

* Disney +, first impressions.

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Josh here - I really enjoyed talking with former JPMorgan strategist and the founder of Fundstrat Research about how he uses the evidence to understand what's happening in the markets. 

Tom cites four indicators he uses to explain current trends and think about where markets and the economy might be headed. Among them, credit spreads, demographics and volatility. 

Tom also talks about his bullish stance and why he isn't terribly worried about the yield curve inversion we saw this summer. 

You can learn more about Tom's work at the site: 

https://fsinsight.com/

Follow Tom Lee on Twitter here:

https://twitter.com/fundstrat

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Josh here - we had Greg Zuckerman of the Wall Street Journal up at the Compound to talk about his new book, The Man Who Solved the Market - the first ever deep dive into Jim Simons and his legendary firm Renaissance Technology. Renaissance has pulled over $100 billion in trading profits out of the markets since its founding decades ago, in a highly secretive approach that combines mathematical equations with cutting edge technology. 

Zuckerman conducted over 400 interviews with current and former employees of the firm and even spent a few days with Simons himself - despite the fact that he didn't want this story told or the book written. 

You can get The Man Who Solved the Market here: 

https://amzn.to/2WM6BAY

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The S&P 500 came into October this year up double digits. It has done so on 42 occasions since 1926. That’s almost 50% of the time. 

Of those 42 times, in 35 cases the market went up through the end of the year. That’s an 85% success rate, about as one-sided as market statistics can get. 

On only 7 occasions did it fall in the fourth quarter. 

BUT....

The 3 worst Q4 losses ever all occurred with the market up double digits - these worst Q4 drops ever were 1929, 1987 and last year

-28%, -23% and -14%

So most of the time when stocks are already up they continue to go up. but sometimes they also get crushed.

The average gain is 4.5% (even including the losses). this is also the 24th time the S&P has been up 20% or more through 3 quarters of the year.

We talked with famed Wall Street strategist Tony Dwyer about the tendency for markets that have a good three quarters to finish strong, and why this year looks like it should fall in line with the historical data. 

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Welcome to the latest edition of What Are Your Thoughts - Michael Batnick and Downtown Josh Brown break down the biggest topics of the moment. On this episode: 

* Private markets used to be thought of as "the smart money" while public markets were for retail shleps - but this time around, it's the public investors who are calling bullsh*t on the VCs, private equity firms and insiders. 

* It's not just value investing that's out of favor - value commentary from the likes of Howard Marks seems to be on the wane as well. 

* Is the breakout for international stocks finally going to happen? 

* The big brokers' announcements about commission-free trading seems to left out the mutual fund wrapper in the cold. Is this just another nail in the coffin? 

* Has inflation finally bottomed? A big anecdotal sign has come our way...

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Dave Nadig, managing director of ETF.com, stops by The Compound to discuss how fee-free trading is changing the investment landscape with Ritholtz Wealth Management Chairman and CIO, Barry Ritholtz.

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Welcome to the latest edition of What Are Your Thoughts - Michael Batnick and Downtown Josh Brown break down the biggest topics of the moment. On this episode:

* Get your story straight - are there too many IPOs coming out this year or not enough? 2019 is on pace to see the most capital raised by initial public offerings in a year since 2000, and possibly even break the record. The number of companies coming public is on pace to match or exceed prior records as well. So this is....good news?

* Twitter's new app update has a "trailer" feature, previewing the next people who are about to show up on your timeline. Was this a solution in search of a problem? Does anyone actually need this?

* The bond market has delivered big gains for investors this year. One year ago, the CEO of JPMorgan was concerned that 10-year treasury yields could soar to 5%. Today they're half that level and have gone in the exact opposite direction. And now he's talking about preparing the bank for zero percent interest rates. If Jamie Dimon doesn't know where yields are headed, why would any investor or financial advisor think their forecast would be better?

* There are four NFL teams with 0-4 records, the Bengals, Redskins, Dolphins and Jets. Season over? Any point to keep watching?

* Josh has a mea culpa. Amazon Prime does have some shows worth watching. In particular, 'The Boys' was a great first season. Michael recommends 'Catastrophe' next. Let us know below what else Josh should be watching on there.

* So it looks as though we're getting another rate cut this month. Does this qualify as a "rate cut cycle"? Will a rate cut even help at this point? Are insurance cuts worth doing with unemployment at all time lows and the stock market at all time highs?

* What is to become of your local sporting goods store? Will any survive besides Dick's?

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Campbell Harvey is a Professor at Duke University and a partner as Research Affiliates. He sat down with Michael Batnick and Josh Brown of Ritholtz Wealth Management to discuss the meaning of the inverted yield curve indicator, which he discovered in 1986 while working on a dissertation.

Campbell cites the fact that 7 out of the last 7 recessions had been presaged by a yield curve inversion - which is what happens when it longer term bond yields fall below shorter term bond yields in the Treasury market. He believes that this phenomenon occurs when the market participants begin to grow more pessimistic about the economic outlook. The behavior of executives, lenders, borrowers and investors can change enough during these times to actually become a self-fulfilling prophecy - producing a negative feedback loop that drives a weakening economy into a full-blown recession.

Recessions are a normal part of the business cycle, although they can be painful to live and invest through. They can also vary greatly be degree. Campbell fields questions from Michael and Josh about all of the ways in which this time might be different. He acknowledges that it is always possible that the yield curve indicator might stop working as a recession signal, but he believes that because it hasn't yet, this might be a good time for people and corporations to rethink the risks they're taking.

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Josh here -

Charles Schwab announced that starting October 7th all commissions on stocks, ETFs and options would go down to zero. The march toward commission-free trading has been happening in slow motion for decades, ever since the 1970's.

My take on it is this - it's terrific news for investors, as it lowers the cost of being an investor and gaining access to markets. But is it a "game changer"? I don't think so. It's also important to note the link between market valuations and the ease of access. On a secular basis, US stocks have been valued higher as the average fund fee, commission fee and other costs have fallen. Trading volumes have soared and more participants than ever are using the public markets to build wealth. This is not a coincidence.

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