Investiv Daily

  • 06 Jan
    This Is Why You’ll Want To Take A Closer Look At Investing In China

    This Is Why You’ll Want To Take A Closer Look At Investing In China

    • The large GDP-credit gap in China could be a win-win; panics should be seen as an opportunity to buy on the cheap.
    • Forecasts for the yuan are negative indicating further depreciation. Don’t fight the positive dollar trend for now.
    • Some sectors are going to get crushed by China, thus it is a threat.

    Introduction

    In the last two years, China has shaken the markets twice: once when the Chinese market correction began in August 2015, and when it seemed that we were in for a Chinese/global recession in January 2016. More →

  • 05 Jan
    If You Don’t Own Gold, You Know Neither History Nor Economics

    If You Don’t Own Gold, You Know Neither History Nor Economics

    • The bull case for gold is getting stronger for monetary, fundamental, and technical reasons.
    • Gold miners offer a positive asymmetric risk reward opportunity.
    • However, in the short term, anything is possible.

    Introduction

    I’ve borrowed the title of today’s article from Ray Dalio, the manager of the $150 billion Bridgewater hedge fund.

    Historically I have been against owning gold as it is not a yielding asset. However, after seeing how the global monetary base expands and will probably expand further when the next recession comes along, it’s a good time to contemplate an investment in gold as a hedge against human stupidity and greed.

    Today, I’ll elaborate on the bull case for gold, the risks, investment options, and why I think some of those options have extremely positive asymmetric risks. More →

  • 04 Jan
    Fundamentals & Sentiment: Sven Dissects 1,626 U.S. Stocks

    Fundamentals & Sentiment: Sven Dissects 1,626 U.S. Stocks

    • It is possible to build a well-diversified portfolio with low PE ratio stocks that have equal the growth of high PE ratio stocks.
    • Short exposure and analysts’ targets indicate the market is in a very positive mode.
    • The market is extremely short term focused. We’ll identify where to look to find the opportunities.

    Introduction

    Using data from Quant, I’ve analyzed 1,626 U.S. stocks.

    The factors I’ve analyzed are: market capitalization, current and forward PE ratios, price to book value, dividend yield, percentage short, analysts’ targets, 52-week highs and lows, and earnings per share growth.

    The goal of this analysis is to provide insight into how to beat the market in 2017. I believe that research, thorough analysis, and patience will always outperform the market, especially because the distribution of the above-mentioned factors is all over the place as you will see below. More →

  • 03 Jan
    Do You Need To Invest In Frontier Markets To Be Well Diversified?

    Do You Need To Invest In Frontier Markets To Be Well Diversified?

    • Due to low liquidity, frontier markets are highly influenced by foreign capital inflows and outflows.
    • Political risks, exposure to oil, and variegate PE ratios advise against investing in frontier market ETFs.
    • However, there is one low risk high reward option.

    Introduction

    A frontier market is a developing country not big enough to be considered an emerging market. The term describes smaller, less accessible, but still investable markets. Such investments are considered high risk because of high volatility and lack of information.

    Small markets usually have low liquidity and are very sensitive to foreign fund flows. Capital inflows alongside positive sentiment quickly lead to a bubble. More →

  • 02 Jan
    If You’re A Long-Term Investor, You’ll Want To Read This

    If You’re A Long-Term Investor, You’ll Want To Read This

    • 78% of executives would sacrifice positive net present value projects if it would make them miss quarterly earnings expectations.
    • Long term executive compensation plans increase operating performance in the long term, but decrease it in the short term. It’s a difficult trade-off for investors and managers.
    • We’ll provide you with a tool to use to assess whether companies increase long term or short term value.

    Introduction

    Last week we questioned whether the large amounts spent on buybacks creates any shareholder value at all.

    We closed our article by mentioning the CEO of General Electric (NYSE: GE) who is spending more than $20 billion a year on buybacks attempting to push stock prices higher, even though GE has a terrible track record related to buybacks. We concluded that shareholder value in this case is being destroyed because someone wants a higher paycheck in his last few years before retirement.

    No matter what GE does, the topic of creating value is essential for investing, especially for long term investing. Today, we’ll discuss a few ways of determining whether the management of the companies you own is really focused on creating long term value or more focused on creating short term value in order to pad their paychecks. More →

  • 01 Jan
    Sunday Edition: Pitfalls & Risks Of Chasing Yields

    Sunday Edition: Pitfalls & Risks Of Chasing Yields

    When the purpose of your investments is to generate useful income, it’s natural to look around at all of the different investment vehicles available to you to find the highest yield for your dollar. The problem is that in today’s economic environment, investment yields work much differently than they did 20 or 30 years ago. More →

  • 30 Dec
    Why Big Pharma Isn’t A Good Investment Right Now

    Why Big Pharma Isn’t A Good Investment Right Now

    • The pharmaceutical industry is facing regulatory headwinds amidst positive global trends.
    • Fundamentals show that all the positives are already priced in leaving more downside room than upside potential.

    Introduction

    The pharmaceutical sector has been one of the worst performers in 2016. It’s down 11.22% year-to-date while the S&P 500 is up 13.37%.

    From a longer-term perspective, the pharma sector has largely outperformed the S&P 500. From the low point in the 2009 financial crisis, the iShares U.S. Pharmaceuticals ETF (IHE) has gained 291% while the S&P 500 has gained 233%.

    Today, we’ll analyze sector trends, risks, and the fundamentals of potential pharmaceutical investments to see if the recent pullback is an investment opportunity. More →

  • 29 Dec
    Is Your Value Being Destroyed? Sven Tells You How To Spot It

    Is Your Value Being Destroyed? Sven Tells You How To Spot It

    • Buybacks and dividends continuously exceed earnings creating a financialized corporate environment and leaving less money for innovation and investments.
    • Such a situation isn’t sustainable in the long term.
    • We’ll close with an example of somebody willing to spend $21.5 billion of shareholders’ money to increase his salary by a few million.

    Introduction

    The end of each quarter is an excellent time to analyze what’s going on with buybacks and dividends. FactSet’s comprehensive analysis of quarterly buybacks and dividends for the S&P 500 is a great place to start.

    It’s of extreme importance to know what it is that management is doing with your money and if they are increasing or decreasing shareholder value. Today, we’ll analyze the situation and give you a few hints to enable you to easily analyze if the managers of the stocks you own add or subtract value with dividends and buybacks. More →

  • 28 Dec
    2017 Looks Like Another Excellent Trading Year

    2017 Looks Like Another Excellent Trading Year

    • Rebalancing your portfolio between sectors and markets should lower your risks and increase your returns in 2017.
    • 2016 is an excellent example of how such a strategy works when the general stock market is overvalued.
    • Things like avoiding REITs in August 2016 or entering metals will be easy to spot and act upon, even in 2017.

    Approaching The Current Market Risk Reward Puzzle

    A recent Wall Street Journal article raised the question of whether investors looking to get into the market now are too late for the Dow 20,000 party. Many investors watched the 7-year stock bull market from the side-lines after they got burned during the latest financial crisis and didn’t overcome their anxiety and invest again. The article suggested that investing now is a good thing to do if you are a long-term investor. More →

  • 27 Dec
    The Silver Story

    The Silver Story

    • Silver has a big industrial application and could be also used for batteries.
    • The metal has been in a supply deficit for the last three years but prices haven’t yet reacted.
    • The bullish case is very strong. There’s significant downside, but the upside is greater.

    Introduction

    Two weeks ago we discussed how it’s a good time to start dollar cost averaging precious metals due to ballooning central banks’ balance sheets, the end of a 30-year low inflation period, and the current relative cheapness of precious metals in relation to their 5-year highs. Today, we’ll discuss how silver might be the better option to gold as it’s historically cheap, it has been in a supply deficit for the past three years, and its industrial usage is growing while production is declining. More →

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