On Penultimate Preparedness; Is High HDL Enough for a Healthy Heart?

From: aditya rana
Date: Sat, May 21, 2016 at 1:10 PM
Subject: On Penultimate Preparedness; Is High HDL Enough for a Healthy Heart?


The month of May seems to be living up to its historical reputation as being a harbinger for weak equity markets over the ensuing summer months. Given the high volatility we have experienced in global markets over the last year, and the sharp drawdowns experienced during the late summer months last year and the first two months of this year, investor sentiment is beginning very bearish yet again. The question therefore to ask is whether the heightened nervousness and preparedness is warranted? Jeffrey Saut, the veteran chief investment strategist at Raymond James, wrote a pertinent note this week on this topic. To summarise:

-As a preamble – to quote from the book “One Up On Wall Street” by the legendary investor Peter Lynch, written subsequent to the great market crash of October, 1987:

-“The day after the market crashed on October 19, people began to worry that the market was GOING to crash. It has already crashed and we’d survived it (in spite of our not having predicted it), and now we were petrified there’d be a replay. Those who got out of the market to ensure that they wouldn’t be fooled the next time as they had been the last time were fooled again as the market went up.

-The great joke is that the next time is never like the last time, and yet we can’t help readying ourselves for it anyway. This all reminds me of the Mayan conception of the universe.

-In Mayan mythology the universe was destroyed four times, and every time the Mayans learned a sad lesson and vowed to be better protected—but it was always for the previous menace. First there was a flood, and the survivors remembered it and moved to higher ground into the woods, built dikes and retaining walls, and put their houses in the trees. Their efforts went for naught because the next time around the world was destroyed by fire.

-After that, the survivors of the fire came down out of the trees and ran as far away from woods as possible. They built new houses out of stone, particularly along a craggy fissure. Soon enough, the world was destroyed by an earthquake. I don’t remember the fourth bad thing that happened—maybe a recession—but whatever it was, the Mayans were going to miss it. They were too busy building shelters for the next earthquake.

-Two thousand years later we’re still looking backward for signs of the upcoming menace, but that’s only if we can decide what the upcoming menace is. Not long ago, people were worried that oil prices would drop to $5 a barrel and we’d have a depression. Two years before that, those same people were worried that oil prices would rise to $100 a barrel and we’d have a depression. Once they were scared that the money supply was growing too fast. Now they’re scared that it’s growing too slow. The last time we prepared for inflation we got a recession, and then at the end of the recession we prepared for more recession and we got inflation.

-This ‘penultimate preparedness,’ is our way of making up for the fact that we didn’t see the last thing coming along in the first place “.

-This time around the “upcoming menace” could result from : 1) Recession; 2) Banking crisis; 3) War in the Middle-East; 4) Inflation on deflation; 5)Presidential race; 6) All of the above , and much more.

-Investors are thinking that the stock market cannot make a low until these “menaces” are fully discounted. However, they fail to realize that markets are a discounting machine – and that the 14% fall in the Dow from last November’s nearly 18,000 level to a low of 15,450 in mid-January – was the market discounting the various risk factors at play.

-The popular news media is full of stories articulating one or more of the problems facing the world today – but if they are already making front page news then they are mostly already factored into stock prices. So investors awaiting a resolution of any or more of the above “menaces” are completely ignoring the historical role of the stock market as being a discounting barometer.

-As a market observer wrote “Big swings often just reflect human emotions. The two can disconnect in the short-term because of the immediate effect sentiment has on stocks. Then that nervousness wanes, and people capitulate, and that’s when you see the market come back.”

-The Dow Jones index certainly experienced wild swings over the past week: -35 points, +222,-217,+9,-185 ending up the week down 200 points and in negative territory year-to-date. The S&P 500 index is still marginally positive for the year, but has broken through its 10 and 50-day moving averages, with the important 200-DMA level of 2012 being the next target.

-Most of the recent negative market commentary has centered on a “recession” which it is still a relatively low risk (15 to 20%) with paycheck income, over the last three years, rising at 4.3% (signifying robust demand) and significantly beating the growth in real GDP growth. So while we are still likely to get near-term wiggles in the market, the secular bull market remains intact.

-A timely piece which highlights the importance of ignoring the manic short-term market fluctuations and focusing on the medium to long term. The sharp drop in the market earlier this year were great opportunities to add to risk positions rather than retreating into a shell.

– One of the most compelling buying opportunities then, as pointed out in an earlier note, was Brazil with the stock market down 72% (in dollars) over the previous four years and negative news on the economy and politics abounded. A stupendous drop like this at the country wide market level is almost always followed by a sharp recovery if you are patient enough– and late January/early February was a time to add risk (if you were already painfully long!) or make a new investment while ignoring the multitude of bad news (as pointed out by the veteran investor Howard Marks of Oaktree Capital – whether a security is risky or less risky depends on the price at which it trades – i.e. a unusually low priced “risky” asset might actually be less risky than a high priced quality asset). Brazil equities have since rallied by 85% (in dollars) from the low, and while likely to experience sharp falls in the ensuing months, they are quite likely to be in a cyclical uptrend over the next few years.

-There will be a time over the next several years to become extra cautious on markets, but as the legendary value investor Jeremy Grantham pointed out last week, we first have to see a market well into bubble territory on a valuation basis – combined with widespread optimism amongst investors and in the media. So until then stay long in a diversified manner and use downturns to add positions.

-The key to success over the long term in this business is selecting a strategy that has worked over time and sticking with it through market ups and downs – by being disciplined and not getting swayed by the chatter – as Warren Buffet said in a late 80s interview- “The most important quality for an investor is temperament, not intellect. You don’t need tons of IQ in this business. You don’t have to be able to play three dimensional chess or duplicate bridge to succeed.”

Is high HDL enough for a healthy Heart?

-An interesting piece of new research which calls into question the idea of high HDL (good cholesterol) levels being enough to compensate for a high LDl (bad cholesterol) level.

Medical daily, May 12, 2016

-Your doctor may have told you to lower your cholesterol, but what does that mean exactly when there are three different numbers to keep track of? Good cholesterol (HDL), bad cholesterol (LDL), and triglycerides play their own role in keeping your heart healthy, but a team of cardiologists from the University of Maryland Medical Center want to give your heart a reality check; your HDL levels may not be as good at protecting you from heart disease as you think.

-"There’s no question that HDL does have a protective role, as we also confirm in the study, but HDL has been hyped-up," said the study’s senior author Michael Miller, a professor of cardiovascular medicine at the University of Maryland School of Medicine and preventive cardiologist at the University of Maryland Medical Center, in a statement. "HDL really should be viewed as a third priority, with LDL on top and triglycerides second."

-Miller and his team analyzed the HDL, LDL, and triglyceride levels of 3,590 men and women who had no known risk factors for heart disease over nearly 25 years. When they isolated participants’ HDL levels and put them either in the high or low category, researchers found high levels of HDL weren’t able to protect a person from heart disease if their other levels fell short of normal range.

-"Nobody has really looked at an isolated low and isolated high HDL, and whether or not other factors, such as triglycerides and LDL, make a difference in the risk of cardiovascular disease," Dr. Miller said.

-Their findings, published in the journal Circulation: Cardiovascular Quality and Outcomes, reveals a problem in how patients look at their cholesterol levels: HDL levels cannot be used to weigh your cardiovascular risk without knowing LDL and triglyceride levels.

-Cholesterol is a waxy substance that helps build your body’s cells. Your body makes it naturally, but it’s also found in foods from sources like meat, poultry, and full-fat dairy. According to the American Heart Association, it’s important to have your cholesterol levels checked at least every five years in order for your doctor to keep your cholesterol in the normal range and minimize the risk of having a heart attack or stroke.

-LDL contributes fat to the thick, hard deposits that can clog arteries, making them less flexible and more prone to clots, heart attacks, and strokes. HDL, on the other hand, helps remove LDL from the arteries by carrying cholesterol away from the arteries and back to the liver where it’s broken down and filtered out of the body. Triglycerides are another form of fat that’s used to store the extra and unused calories from your diet. (High triglyceride levels are often indications of someone who is overweight, obese, or has diabetes.)

-According to the National Institutes of Health, cigarette smoking, high blood pressure, a family history of early heart disease, and age can all influence your cholesterol levels. A normal, optimal LDL level is less than 100 mg/dL , while a high level is considered more than 160 mg/dL. For good cholesterol levels, 60 mg/dL and higher is considered protective against heart disease, however the recent study’s findings reveal it may not be as helpful to keeping the heart safe as previously thought. Together, along with physical activity levels, they make up your heart’s ultimate risk of disease. Stay within a healthy range with diet and exercise, and your heart should be pumping just fine.

Source: Miller M, Bartlett J, and Predazzi IM, et al. Is isolated low high-density lipoprotein cholesterol a cardiovascular disease risk factors? New insights from the Framingham Offspring Study. Circulation: Cardiovascular Quality and Outcomes. 2016.

Here’s to maintaining low LDL and Triglycerides levels and high HDl levels, by minimising fatty foods like meat, poultry and dairy and replacing them with low fat foods plants, whole grains and fruits!



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