• 20 Feb
    Sell Your ‘High Yield’ Immediately – Aggressive Traders Get Short

    Sell Your ‘High Yield’ Immediately – Aggressive Traders Get Short

    • Due to higher oil prices, ‘high yield’ bond yields are approaching historical lows while interest rates and inflation are increasing. Investors should be grateful for the amazing opportunity to unload.
    • ‘High yield’ ETFs have grown from 0% to 10% of the total fixed income ETF market in less than 10 years.
    • Apart from rising interest rates, illiquid ‘high yield’ primary markets in relation to the highly liquid secondary ETF markets signal potential Armageddon as there will be no buyers when the ETF trend reverses.

    Introduction

    I usually look for investments where the risk is low and return is high as asymmetric risk reward situations provide the highest and safest returns. Today I’m going to do the opposite, discuss a high risk low reward investment. If you own or are attracted to higher yields, or want a short play, this article is for you. More →

  • 19 Feb
    Sunday Edition: Copper May Be The Strongest New Bull Market Over The Coming Decade

    Sunday Edition: Copper May Be The Strongest New Bull Market Over The Coming Decade

    The Escondida mine problems are only the tip of the iceberg for Copper, which appears to be in a bit of a panic since workers of BHP Billiton Ltd.’s Escondida copper mine in Chile started an indefinite strike on February 9, forcing a force majeure declaration on its shipments.

    Adding more fuel to the fire is a one-month delay to exports at Indonesia’s Grasberg mine when Freeport-McMoRan suspended copper concentrate output while in negotiations with the government over the terms of its mining permit which has expired. More →

  • 17 Feb
    Sven Is Still Bullish On Copper And You Should Be Too

    Sven Is Still Bullish On Copper And You Should Be Too

    • Copper bottomed in 2016 and the outlook remains bullish in the long term.
    • The short term could also offer positives due to strikes and political issues.
    • The long term balance for copper should be above $3.5 per pound and that price will be increasing due to lower copper ore grades and higher mining costs.

    Introduction

    The last time I wrote exclusively on copper was in April 2016. The bullish article is available here. Since then, copper prices have increased 22%, from $2.22 per pound to the current $2.73. As the dollar has also strengthened by 7% since then, we should add 7% to the current copper price to show the real appreciation in copper. Thus, copper would be at $2.92 in real terms. More →

  • 16 Feb
    How Much Will You Lose In The Next Bear Market?

    How Much Will You Lose In The Next Bear Market?

    • The current stock market will, on average, deliver returns of 4% per year for the next 15 years. However, the risks don’t justify the returns.
    • All investors owning an S&P 500 or similar portfolio should know that they run the risk of a 50% temporary decline.
    • Various sectors and countries offer much higher returns for the same inherent volatility.

    Introduction

    What’s equally important to how much you expect to make from your investments if things go well is the question of how much volatility you can take if things go wrong. Today’s article is more of a reminder that there are two sides to each investment, the return side and the risk side.

    I’ll elaborate on techniques that will help you assess your future returns and risks. We’ll start with the fun part, the returns, and finish with the necessary part, the risks. More →

  • 15 Feb
    The Institutional Performance Derby: The Client Is the Loser

    The Institutional Performance Derby: The Client Is the Loser

    • It’s important to understand how investing institutions operate and think so you don’t get trapped.
    • Nobody at these institutions eats their own cooking and there is no incentive to do anything. It reminds me of communism.
    • Institutional investing is a self-reinforcing mechanism, which is great in a bull market but terrible in a bear market.

    Introduction

    Seth Klarman’s book Margin of Safety is an iconic investment book. As it’s extremely difficult to get, I’m synthesizing it for you while injecting my own up-to-date commentary.

    You can read my introduction to Klarman’s Margin of Safety here, my review of chapter one, Where Most Investors Stumble, here, and my review of chapter two, The Nature of Wall Street Works Against Investors, here. Today’s article will discuss his The Institutional Performance Derby: The Client Is the Loser chapter. More →

  • 14 Feb
    A Look At The Crazy World Of Chinese Stocks

    A Look At The Crazy World Of Chinese Stocks

    • It isn’t unusual that a Chinese stock loses 75% to 90% of its IPO value after a year or two.
    • Delisting, lack of transparency, obscure companies, fraud, buyouts at large discounts, and fears around the economy are some reasons for such performance.
    • You should require at least 50% per year from Chinese stocks with minimum risk. Such opportunities can be found.

    Introduction

    Chinese stocks are, to say it in one simple word, crazy. And apart from crazy, looking at Chinese stocks that are trading on the NYSE seems like walking through a graveyard.

    Companies like China Xiniya Fashion Limited (NYSE: XNY), China Zenix Auto International (NYSE: ZX), ChinaCache International (NASDAQ: CCIH), or Kingtone Wirelessinfo Solution Holding Ltd (NASDAQ: KONE) all seized the craziness going on in 2011 around China and listed themselves on American markets. The results for initial investors were disastrous. More →

  • 13 Feb
    Sometimes You Shouldn’t Be Like Buffett – Cashing Out Debunked

    Sometimes You Shouldn’t Be Like Buffett – Cashing Out Debunked

    • Don’t look at your portfolio as security for rainy days.
    • Don’t ask the market whether you should cash out, look at your goals and at the companies you own.
    • Standard investment advice has it all wrong.

    Introduction

    99.9% of all content related to investing is focused on returns and how much money can be made. However, what’s equally important, or even more important, is to align your investing returns with your personal life goals.

    I don’t want to be like Buffett and die the richest person in the world. I assume most of you feel the same way. Unfortunately, this creates constant internal or spouse-related battles between investing and spending, greed and fear, security and excitement, which leads to an important question, when and how should you cash out?

    Today, we’ll discuss a few concepts that can help you make investing, cashing out, and spending decisions. More →

  • 12 Feb
    Sunday Edition: Clues From The Ticker Tape – Do These Charts Spell Big Trouble Ahead?

    Sunday Edition: Clues From The Ticker Tape – Do These Charts Spell Big Trouble Ahead?

    On February 1, 2017, the share price of Automatic Data Processing Inc. – ticker ADP gapped lower intraday by -6.8% on heavier than normal volume.

    In technical analysis, often times a long running trend, whether up or down, will begin its reversal with what is known as a “breakaway gap”. More →

  • 10 Feb
    How A Hedge Fund Manager Researches A Stock

    How A Hedge Fund Manager Researches A Stock

    • Researching stocks is simple: you have to leave no stone (stock) unturned, meticulously assess risks, calculate present values of future cash flows, compare the stock price, and if your estimated value is much higher, assess how much of your portfolio to put into a stock.
    • Unfortunately, this is more than a full-time job. You have to love it and more than a decade of experience helps. For those that don’t have the time, we’ll provide a solution.
    • This article also includes a detailed example of an investigation on a stock that didn’t turn out as an investment. Usually, only one of 20 thoroughly researched stocks turn out as a potential investment. In the end, it boils down to the fact that only 1 out of more than a 1,000 researched stocks is a good investment.

    Introduction

    I was a spear fisher for many years. It was my passion, and I went fishing more than 150 times per year. You can watch a video of what I was doing here.

    If you are or know fellow fishermen, you know that we live for the big catch. However, catching the fish of the year takes thousands of hours gaining experience, patient searching for the best spot and the best time, and analyzing many variables that can increase your odds at catching the big one with billions of small fish swimming around.

    After a few years of diving, I learned that it all boils down to pure statistics. The more time I spent at sea, dives I made, and the more times I came home empty handed, the higher the probability became for a big catch. More →

  • 09 Feb
    Europe Is A Long Term Ticking Time Bomb

    Europe Is A Long Term Ticking Time Bomb

    • Europe is made up of many countries, which means there are even more politicians that just want to get reelected creating an immense short term attitude.
    • Don’t buy Europe just because it underperformed the S&P 500, and don’t buy European debt at single digit yields.
    • Tightening won’t work as many countries have an average debt to GDP ratio above 85%, therefore there is a high chance that the Euro remains weak for longer.

    Introduction

    The IMF just reported that the situation in Greece is getting better, but the debt is unsustainable. This contradictory as it implies a long term catastrophe and short term positivity. I’m flabbergasted on a daily basis by the incapacity or unwillingness of the financial world and monetary institutions to look at the long term.

    That’s why I’m here. To warn you about impending catastrophes and perhaps even increase your returns in the process. More →

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