Investiv Daily

  • 05 Jul
    You Fly the Friendly Skies, But Should You Invest in Airlines?

    You Fly the Friendly Skies, But Should You Invest in Airlines?

    • Airline valuations are incredibly low but the risks are also high, especially if a recession arrives.
    • Demand fell by 20% and stocks fell by more than 90% in 2009.
    • The global long term outlook is very positive with demand expected to double in the next 15 years.

    Introduction 

    In his 2007 letter to shareholders Warren Buffett stated that airlines are the worst sort of business because they require significant capital to engender growth and earn little or no money. He continues that creating a durable advantage has been elusive since the days of the Wright Brothers and even concludes that “if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.” More →

  • 01 Jul
    Should You Switch to a More Active Investing Strategy?

    Should You Switch to a More Active Investing Strategy?

    • Passive investing has been excellent in the past decade but has gone nowhere in the last two years.
    • Higher valuations are increasing volatility and risk which gives opportunities for more active strategies.
    • Due to the high valuations in 1968, only an active strategy would have produced positive returns in the period up to 1982.

    Introduction

    The S&P 500 has gone nowhere since December 2014. Several reasons have influenced such a performance, but the most impactful factors seem to be market fundamentals deteriorating while central banks keep limiting the downside by increasing available liquidity. The FED was supposed to begin raising interest rates, but the 0.25% hike was insignificant, and now there is even speculation that the FED could lower interest rates again. More →

  • 30 Jun
    Aluminum: A Leveraged Investment Into the Global Economy

    Aluminum: A Leveraged Investment Into the Global Economy

    • If the economy continues on its growth path, aluminum will enter into a supply gap.
    • After 5 years of losses, investors should be in for a treat.
    • The risks and potential rewards of investing in aluminum will be explained in this article.

    Introduction

    Aluminum is the third most abundant metal in the Earth’s crust and accounts for 8% of its mass. The mineral it is most commonly mined from is bauxite. The most widely known uses of aluminum are aircraft bodies and aluminum foil, but it has a multitude of other uses like window frames, beer cans etc. More →

  • 29 Jun
    BREXIT Aftermath: Where to Look for Returns & What to Avoid Now

    BREXIT Aftermath: Where to Look for Returns & What to Avoid Now

    • U.S. and Europe are overvalued, especially seeing the current political situation and economic fragility.
    • What’s about to hit Europe and the U.S. already hit emerging markets in 2015. There are opportunities in emerging markets now, but where?
    • Bonds seem the riskiest asset of all with no yield and huge potential downside.

    Introduction

    After last week’s BREXIT vote the markets have been in a free fall with a slight recovery yesterday. But savvy investors have been expecting this and it has been a recurring theme at Investiv Daily that stocks are overvalued. In such an overvalued environment it is normal that inflated asset prices take a beating at any sign of future uncertainty. More →

  • 28 Jun
    Is the Negative Cycle Ending in the Shipping Sector?

    Is the Negative Cycle Ending in the Shipping Sector?

    • Most shipping companies are down more than 90% and the short term outlook does not look bright.
    • After 25 years of 10% global fleet gross tonnage growth, 2016 is a turning point with growth lower than 5%.
    • Increased interest rates, fewer ships and constant global trade growth show that there are investment opportunities in the shipping world.

    Introduction

    It seems strange to analyze the shipping sector in the current volatile markets, but sound sector analyses help to keep nerves firm and to clearly valuate the opportunities a bear market brings. The shipping sector is interesting due to the fact that it represents a perfect example for a bottomless investment theory and an excellent investment opportunity for those who can and know how to catch a falling knife. More →

  • 27 Jun
    Is BREXIT Just Noise?

    Is BREXIT Just Noise?

    • Markets fell on Friday but they are exactly where they have been in the last weeks.
    • BREXIT is noise, investors should focus on slower global growth and fragile financial systems.
    • The market is still overvalued in historical terms but there are some opportunities.

    Introduction

    An avalanche of articles since last week’s BREXIT is forecasting terrible things for the world economy and financial markets especially. Most focus on the huge declines stock markets saw on Friday, but let us first take a closer look. The UK FTSE 100 index fell 3.15% to 6,138 points on Friday, but all-in-all it was a positive week as last week started with the FTSE at 6,021 points. More →

  • 24 Jun
    How to Prepare Your Portfolio For The Next Recession or Stock Market Crash

    How to Prepare Your Portfolio For The Next Recession or Stock Market Crash

    • The risks of a slowdown are higher than the upside.
    • Fundamental trends are negative in advanced economies while emerging markets show higher growth rates and are cheaper.
    • It is important to create a diversified portfolio with uncorrelated assets.

    Introduction

    In an environment where it seems maximum potential for the U.S. economy has been reached, the St. Louis FED chief, James Bullard, has said in his most recent report that he favors only one interest rate increase through 2018, which would at best keep things stable. His view is further supported by the fact that the unemployment rate is sitting at below 5%, and the Personal Consumption Expenditures PCE inflation—measured by the Dallas FED—is at 1.84%, both of which signal that the economy has reached its maximum potential. More →

  • 23 Jun
    Will There Be A Long Term Impact To The Fed’s Shift In Rhetoric?

    Will There Be A Long Term Impact To The Fed’s Shift In Rhetoric?

    • A positive outlook seems more political than realistic as the FED is out of maneuvering power.
    • Keeping interest rates unchanged is the best and the only thing the FED can currently do.
    • Low interest rates will weaken the dollar, boost exports and increase corporate earnings in the upcoming earnings season.

    Introduction

    In FED’s Chairwoman Yellen semiannual policy report, the rhetoric has significantly changed since the last report in February. In short, the full employment target is almost reached but the inflation rate is still below the targeted 2% and the expectations for the reaching of that target have been changed from short term to medium term. Further, the latest job reports show a slowdown in jobs increases which creates a bit of a scare. The FED estimates the slowdown to be transitory. More →

  • 22 Jun
    Don’t be Fooled by Noise, Earnings Will Tell the Truth

    Don’t be Fooled by Noise, Earnings Will Tell the Truth

    • A look into next month’s earnings season and trends.
    • 6 out of 10 S&P sectors have earnings declining.
    • 72% of companies issued negative guidance.

    Introduction

    With all eyes focused on Brexit and the FED, it seems that no one really cares what is going on in the economy and, most importantly, with corporate earnings. Don’t forget that next month is earnings season and the earnings trend up until now has been a negative one. As corporate earnings are the main factor in stock returns, you should be focusing on how to prepare for that and not on Brexit as it will probably be forgotten by next week. More →

  • 21 Jun
    Soros is Back and Betting Heavy On Gold

    Soros is Back and Betting Heavy On Gold

    • Structural debt issues in China and European fragility will limit global growth.
    • Soros is overweight gold and short the S&P 500.
    • He trimmed his U.S. stock portfolio by 37%.

    Introduction

    George Soros is an Hungarian-born, 85-years young hedge fund manager and philanthropist famous for his daring investment bets. More →

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