Vitaliy Katsenelson's Contributions

A few months ago my firm bought the Internet. Let me explain: When people think about the Internet, they imagine an enormous, decentralized (key word), spiderweblike network of millions of servers and hundreds of millions of...

Apple’s growth has slowed, and in the minds of investors the company has gone from a growth stock to a value trap.

Jos. A. Bank has always been a very promotional retailer. It would jack up prices, then run sales for consumers happy to be deceived—a typical American retail tale. But sometime in 2008, Jos. A. Bank went promotional on steroids.

Sideways markets happen not because stock market gods play an unkind joke on gullible humans but because of human emotions. Historically, sideways markets have always followed secular bull markets.

The election is over. I am left with two very contradictory feelings. First is the one of appreciation – every four years we peacefully replace our government.

When I step back and look at the past 100 years, I’m reassured by all the things that the U.S. and global economies survived: pandemics that wiped out a percentage of the global population, two “hot” world wars and a cold war, the disintegration of a superpower, plenty of other wars, a few nuclear plant meltdowns, economic collapses, terrorist attacks on U.S. soil, stock market crashes, and I’m sure I’m forgetting a slew of other bad things. Somehow our economy (and economies that were affected a lot more than ours) got through those things. Our will to survive is so much stronger than any adversity.

Being politically correct has never been my strongest quality; therefore I’ll say this: I don’t feel sorry for Facebook’s new shareholders. Despite NASDAQ technical glitches and analysts sharing changes in estimates for the near quarter only with big clients, the Facebook initial public offering (IPO) was a success.

Ironically, it is the Fed’s intervention in the free market and arbitrarily setting short- and long-term interest rates at insanely low levels that is responsible for this uncertainty, as it enables and propagates speculation, not investing (two distinctly different activities) and erodes confidence about the future.

I have received many emails and a few calls from friends, asking one question: What are the consequences of the downgrade? So I decided to put my thoughts on paper. I break up the consequences into three categories: fundamental (the impact on the economy), emotional (the short-term impact on the market), and political (will it change anything in Washington DC?).

Party rulers in China are trapped in a position that chess players deeply fear — zugzwang — where any move made puts you at disadvantage. In China, the potential cost of both action and inaction is economic collapse.

Nothing defined Alan Greenspan's tenure as chairman of the Federal Reserve Bank more than his wholehearted embrace of capitalism. With early roots in his 30-year association with the novelist and philosopher Ayn Rand, that faith grew into an unconstrained confidence in the free market and deregulation to steer the economy and ward off crises.

Profit margins are a tick away from all-time highs and are creating the impression of cheap equity valuations. But that impression is a mirage, because today’s generous margins are destined to shrink.

I am a very nervous flyer. Whenever there is a little bit of turbulence, I look out the window, see shaking wings, and start to wonder whether they’ll keep holding the plane up. Then my rational self kicks in, and I tell myself that statistically it is safer flying than driving, that the pilot’s incentives are aligned with mine (it is not like he has a private parachute). Eventually the turbulence subsides and I go back to whatever I was doing.

During the ’80s and ’90s, ignorance was bliss. The global economy was growing nicely, and analyzing it (or even paying attention to market cycles) seemed like a waste of time, as the economy came in only three flavors: good, great and awesome.

Over the next eight months the Federal Reserve will conduct QE2 – quantitative easing, the sequel. It will buy $600 billion worth of US long-term bonds in the open market, close to 7% of all Treasury securities in public hands, or about the amount the debt that the federal government will issue over that time period.