• 11 Nov
    Forget About The Election Noise, Let’s Talk About China

    Forget About The Election Noise, Let’s Talk About China

    • China’s long term outlook is very positive and its debt is not worrying.
    • However, due to the nature of economic cycles, we have to expect and prepare for potential trouble coming from China.
    • When trouble will happen is anybody’s guess as many have called negative scenarios several times, but those have so far failed to materialize.

    Where China Is Now & Where It Is Going

    China is the growth motor of the global economy. It consumes about half of the global produced copper and produces half of the global steel output. This is due to the incredible GDP growth China has achieved in the last 25 years, which has averaged 9% per year. More →

  • 10 Nov
    Why You Should Switch To Active Investing Now

    Why You Should Switch To Active Investing Now

    • PE ratios in the S&P 500 are all over the place; 7 of the top 20 stocks have PE ratios below 15, 7 from 20 to 30, and 5 above 30.
    • You can buy stable, growing businesses at PE ratios below 15, so why would you stick to passive investing and buying riskier stocks at PE ratios of above 20?
    • Maybe you think passive investing meets the definition of “boring,” something investors such as Buffett advocated. I don’t wish you the excitement of watching your portfolio fall from a PE ratio of 24 to a PE ratio of 15. Therefore, think about rebalancing now before it’s too late.

    Introduction

    Yesterday we discussed how the economy is doing well but that the market isn’t responding accordingly. This is because of the high valuations where only exceptional catalysts can push the market higher while any kind of negative news easily brings it into negative territory. However, by analyzing recent earnings, we have found large discrepancies among sectors in revenue and earnings growth. We understand this is normal for a well-diversified portfolio, but do we have to own more of the overvalued stocks and less of the undervalued stocks as a market capitalization weighted index fund does? More →

  • 09 Nov
    The Economics Are Great, But Valuations Point Toward Stock Picking To Limit Risk

    The Economics Are Great, But Valuations Point Toward Stock Picking To Limit Risk

    • GDP, productivity and earnings are growing which is great news.
    • However, valuations are high and interest rates are likely to rise soon.
    • Given the variations in revenue and earnings growth, and the upcoming changes in interest rates, now may be the time to switch from index investing to stock picking.

    Introduction

    As the earnings season is almost over—and GDP, productivity and labor data is in—it’s a good time to look at what kind of conclusions can be made out of the multitude of information. By putting the noise aside (the election) and focusing on news that impacts future earnings, we’ll relate recent developments to the potential risks and rewards for your portfolio. More →

  • 08 Nov
    It May Be Time To Switch From Discretionary To Staples

    It May Be Time To Switch From Discretionary To Staples

    • Consumer staples and discretionary stocks have similar valuations, but rising consumer debt suggests rebalancing towards staples is less risky.
    • Staples have better earnings to revenue growth which indicates higher competitiveness and M&A activity in the discretionary sector.
    • In the case of an economic pullback, discretionary stocks would be hit harder as M&A activity will prove too expensive at valuations above 24.

    Introduction

    With most of the earnings in and the S&P 500 down in the last two weeks, it’s good to take a look at the consumer goods sector to find potential defensive investments. The iShares Consumer Goods ETF (NYSEARCA: IYK) has enjoyed a wonderful run in the past 7 years. More →

  • 07 Nov
    Why You Should Be Holding Cash Now

    Why You Should Be Holding Cash Now

    • Beware of the financial industry pushing you to invest your cash. They are only doing so because they don’t earn a dime on it.
    • Market circumstances change, so what might be the best option now compared to other assets, might not be the best option in next five years.
    • Cash is a call option and before investing in anything, you should ask yourself what the risks are. Investing in stocks with a 50% potential decline around the corner for a 2% yield isn’t always the best idea.

    Introduction

    In an environment where everyone is looking to find the next best returns boosting investment, an asset that is rarely discussed and often taken for granted is cash.

    Today we’ll discuss the role cash should play in investors’ portfolios, the perspectives we have on cash, and finally, how much cash investors should have in relation to current market circumstances. More →

  • 06 Nov
    Sunday Edition: What Does EWT Portend For The S&P 500?

    Sunday Edition: What Does EWT Portend For The S&P 500?

    This Sunday Edition will conclude our series on the Elliott Wave Theory (EWT). I hope you have enjoyed reading them as a different perspective on the markets, and hope I haven’t confused you too much.

    To wrap things up we are going to analyze the S&P 500 and see what the future holds for the major stock market indices – that is, according to EWT. More →

  • 04 Nov
    This Metal Offers The Best Risk Reward Potential… And Has A Minimum 50% Upside Potential.

    This Metal Offers The Best Risk Reward Potential… And Has A Minimum 50% Upside Potential.

    • Copper consumption in relation to GDP per capita is essential for understanding the future demand for the metal.
    • At higher than $1.5 per pound, the copper cost curve becomes very steep indicating a sharp boom in copper prices when deficits eventually arise.
    • The five-year investment perspective necessary for copper seems long, but returns of 1,000% are on the table.

    Introduction

    Yesterday we discussed iron ore, aluminum, platinum and zinc. Today we will focus in on copper.

    Copper prices haven’t moved much since the beginning of this year, trading in a range between $2 and $2.2 per ounce. More →

  • 03 Nov
    Which Metals Are Shining The Most In 2016?

    Which Metals Are Shining The Most In 2016?

    • The issue with aluminum and iron ore is that there is plenty of both.
    • Platinum demand is related to demand for internal combustion engine cars.
    • Zinc might continue to be a winner if China continues to grow at the rates it has been.

    Introduction

    As metal prices are very volatile in nature, it’s important to regularly check on what’s going on in order to see where the greatest opportunities and risks are.

    Today we’ll walk through the main investable metals, and look at structural trends, demand and supply balances, and investing opportunities. More →

  • 02 Nov
    Are You Ready For The Tech Revolution? Sven Tells You How To Position Yourself

    Are You Ready For The Tech Revolution? Sven Tells You How To Position Yourself

    • New technologies are coming fast and will be coming faster in the future.
    • It’s important to avoid getting caught in a declining industry, but it’s also important to not buy into the hype of growth industries at crazy valuations.
    • We’ll try to find sectors that will benefit no matter what happens.

    Introduction

    Last week’s unveiling of Elon Musk’s new “solar roof” poses a very important question for investors: How is your portfolio positioned in relation to structural changes and disruptive technologies?

    We might look at solar roofs as uneconomic at the moment—or call a CEO crazy who wants to colonize Mars—but the trends are here to stay. Rare are those among us who would have reacted positively 20 years ago to the idea that it would soon be the same process buying an electric powered or a gasoline fueled car. More →

  • 01 Nov
    GDP Is Up But Stocks Are Down – How You Should Respond

    GDP Is Up But Stocks Are Down – How You Should Respond

    • Inflation is approaching 2% as the current dollar GDP has increased to 4.4%.
    • Both inflation and GDP growth will force the FED to take action – the selloff in yielding assets will continue.
    • Nondurables consumption leads to GDP growth alongside exports and inventories buildups questioning GDP growth sustainability.

    Introduction

    Last Friday, the Bureau of Economic Analysis released the GDP data for Q3 2016. At first, it looked surprisingly good with the GDP growing at an annual rate of 2.9% for the quarter. This is excellent news as it takes the economy out of its anemic growth rhythm seen in the last two years. More →

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