• 25 Jul
    Beware of “Thinkless” Investing

    Beware of “Thinkless” Investing

    • Passively managed funds do offer the lowest fees but invest in stocks without “thinking”.
    • High positive net inflows into passively managed funds push large caps higher regardless of fundamentals.
    • If non “thinking” investors panic when things turn, large caps will be the worst performers.

    Introduction

    Today we are going to discuss two related topics: fees and the general market consequences of passively managed investing funds.

    Fees are charged by funds for their services, be it active or passive management. Passively managed funds, which have the lowest fees, merely track an index. Over the last several years a trend has developed toward lower fees and passively managed funds which may also be creating a growing risk that equities are held by “weak” hands.  If panic comes, and investors pull their money out, passive fund managers will be forced to sell, creating further market havoc. More →

  • 22 Jul
    Have Recent Market & Currency Gains In Brazil Just Increased The Risks?

    Have Recent Market & Currency Gains In Brazil Just Increased The Risks?

    • Brazil’s economy contraction is slowing and the trend is turning positive.
    • The political situation is currently stable but trouble is always around the corner.
    • Fundamentals show potential but also risks as the price to book value is relatively high at 1.4.

    Introduction

    In April we wrote about Brazil and described it as a good risk reward opportunity as all the bad things had already happened. Brazil’s president Dilma Rousseff had just been impeached, the economy had declined by more than 5% and Brazil’s currency was at historical lows against the dollar. More →

  • 21 Jul
    Higher Interest Rates Aren’t A Given, But Investors Should Prepare Anyway. Find Out Why.

    Higher Interest Rates Aren’t A Given, But Investors Should Prepare Anyway. Find Out Why.

    • Rates cannot go lower but higher rates would destroy wealth and lead to a recession.
    • The FED is in a difficult position and rhetoric shifts can be expected.

    Introduction

    It is every central banker’s target, the elusive 2% rate of inflation. We cannot know when, but should expect that it will be achieved and prepare accordingly. Since rising interest rates help to keep inflation in check, once the target is reached, as strange as it sounds, rates should also rise to compensate. This article is going to analyze what is happening, what will probably happen, and how it will affect investments. More →

  • 20 Jul
    “Helicopter Money” Contagion & A Weimar Germany Type Hyperinflation?

    “Helicopter Money” Contagion & A Weimar Germany Type Hyperinflation?

    • Japan is flirting with new and more aggressive monetary easing.
    • Inflation in the U.S. might already be higher than officially reported.
    • Further monetary easing could be beneficial if, and only if, it stays under control.

    Introduction

    We live in very interesting financial times. With low inflation, central banks are able to inject lots of money into the economy through asset swaps, and still keep interest rates low. More →

  • 19 Jul
    This Commodity May Have Reached Its Bottom. Find Out What It Is In Today’s Article.

    This Commodity May Have Reached Its Bottom. Find Out What It Is In Today’s Article.

    • Fertilizer prices have been declining alongside food prices, but food prices are picking up.
    • Fundamentals give downside protection with some risk coming from short term earnings.
    • The long term outlook is positive with balanced markets and demand growth.

    Introduction

    In agriculture and horticulture, potash is the common term for nutrient forms of the element potassium (K). It is used globally for increasing agricultural yields and is an essential fertilizer. More →

  • 18 Jul
    Should You Bet On Small Cap Growth Stocks? Why It May Not Be A Good Option Now

    Should You Bet On Small Cap Growth Stocks? Why It May Not Be A Good Option Now

    • Small cap growth stocks only outperform in the two years after market bottoms.
    • At this moment they provide more risk and less returns than the S&P 500.

    Introduction

    While it’s possible to make money in the stock market, it’s not easy. One thing an investor should know well, and constantly assess, is their exposure to various kinds of stocks, from value and growth stocks to large or small caps. Each type of stock performs differently depending on the economic cycle. However, over the long term small caps and value stocks have outperformed the rest of the market. More →

  • 15 Jul
    Could It Be A Good Idea To Invest In Japan? There’s Upside Potential…

    Could It Be A Good Idea To Invest In Japan? There’s Upside Potential…

    • Price to book is 1.1 and price earnings ratio is at 15.
    • More monetary and fiscal stimulus can be expected.
    • Even if the economy doesn’t pick up Japan is relatively cheap.

    Introduction

    We read a lot about how Japan has been in an economic slump for the past 30 years, how incredibly large amounts of quantitative easing have not triggered inflation, and that Japan should be avoided as an investment opportunity. More →

  • 14 Jul
    As The S&P 500 Reaches New Highs, Asset Inflation Continues

    As The S&P 500 Reaches New Highs, Asset Inflation Continues

    • All factors are indicating an artificially created asset inflation.
    • Earnings are expected to decline with economic outlook being constantly revised downwards.
    • Gold is gaining alongside stocks which confirms that all assets are inflated.

    Introduction

    Amidst all the turmoil from BREXIT, negative interest rates and global downward economic growth forecasts, the S&P 500 has reached a new high. On Monday it closed at 2,137.16 points, overtaking the previous high of 2,130.82 from May 21, 2015. The Monday record was surpassed again on Tuesday and Wednesday, with Wednesday closing at 2,152.43. More →

  • 13 Jul
    Negative Yielding Debt: A Party for Investors or Pure Stupidity?

    Negative Yielding Debt: A Party for Investors or Pure Stupidity?

    • Almost 30% of global sovereign debt comes with a negative yield.
    • The situation is much worse in Japan and Europe than it is in the U.S.
    • Investors should enjoy the asset inflation party while it lasts but also be prepared for the worst.

    Introduction

    Negative yielding debt seemed impossible and illogical for a long time, but it suddenly became a reality a few years ago and now we are seeing it slowly become the new normal.

    This isn’t just strange, it’s dangerous as risk averse investors—like pension funds and insurance companies—are forced to invest in assets that have traditionally been considered safe but that have now become risky, and their returns minimal. Those low returns will result in lower pensions and lower savings which will create new troubles in the future. More →

  • 12 Jul
    Could the Economic Climate in Europe Be Contagious?

    Could the Economic Climate in Europe Be Contagious?

    • The first hard data after the BREXIT won’t be available until October, but property funds are already frozen.
    • The decline of the pound will lower UK GDP and will spill over into Europe.
    • Italian banks are in trouble as 25% of GDP are nonperforming loans.

    Introduction

    As two weeks have passed since the BREXIT debacle, most heads have cooled off and we can calmly look at the current situation in Europe, the repercussions of BREXIT and contagion risks. It is important to analyze the full potential impact of the BREXIT by analyzing the stability of the European financial system, business investments, hiring and the political risk premium. More →

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