Investiv Daily

  • 28 Apr
    An Analysis of the Latest Earnings Reports

    An Analysis of the Latest Earnings Reports

    • “Sell in May and go away” doesn’t sound so foolish anymore.
    • The Dow Jones Industrial Index average revenue has declined by 4.1%.
    • High liquidity and employment enables buybacks and pension funding that keep the market at high levels.

    Introduction

    Recently there have been some surprising earnings debacles. This article is going to elaborate on them and discuss possible reasons and consequences of the earnings misses. More →

  • 27 Apr
    The Buyback Conundrum

    The Buyback Conundrum

    • Buybacks should increase shareholder value, but that’s not always the case.
    • From a book value perspective most companies are destroying value.
    • From a return on investment perspective the logic behind buybacks is open for discussion.

    Introduction

    The goal of investing is to enjoy stock price appreciation and dividends, but there is another method for achieving interesting returns: buybacks. With stock buybacks, a company buys its own stocks on the open market. As a public company cannot fully own itself, the purchased stocks lower the number of outstanding stocks and increase the relative ownership of the remaining stockholders. In other words, the company is using its cash to invest in itself. More →

  • 26 Apr
    Copper as an Investing Opportunity

    Copper as an Investing Opportunity

    • Copper has declined due to a strong dollar, increased production and a slowdown in China.
    • In the long term a supply deficit is expected as mining grades are constantly getting lower and demand is steadily growing.

    Introduction

    Commodities in general have been in a slump for the last 5 years; the Dow Jones Commodity Index peaked exactly 5 years ago on April 26 2011. High 2011 commodity prices induced new investments that—combined with low interest rates—made it easier to finance new projects, eventually increasing supply. With limited growth in demand the inevitable result was a contraction in prices. More →

  • 25 Apr
    A Broader Perspective on the Global Economy

    A Broader Perspective on the Global Economy

    • Easing monetary policies go on globally but do not seem to fuel sustainable growth.
    • China is slowing, Japan is looking toward another recession, and the global outlook is adjusted downwards.
    • Bad news might be around the corner, but good news is as well.

    Introduction

    News is usually focused on the latest happenings. The fact that the human brain is set up in a way that it always tries to focus and eliminate marginal information brings to the consequence that most people do not objectively analyze the world around them. An example: How many blue cars have you seen today? Probably none because you were not looking for them, but as soon as you focus on them you will be surprised by how many you will see. The same applies to finance. More →

  • 22 Apr
    On International Diversification

    On International Diversification

    • Markets are more correlated in the short term but strongly diverge in the long term.
    • Currency movements further fuel international divergence.
    • Being overweight a certain market or currency means carrying additional risks that could be removed by international diversification.

    Introduction

    One issue that is more often off than on investors’ minds is international diversification. Historically, cross-country equity correlations have been far from perfect but they are becoming more correlated in recent times. The higher correlation is not a reason to shun international diversification. More →

  • 21 Apr
    An Investigation Into the Relative Cheapness of the Automotive Industry

    An Investigation Into the Relative Cheapness of the Automotive Industry

    • With a PE ratio of 5 to 10 the automotive industry looks attractive
    • The risks are that the industry is considered to be at a historical peak by most analysts
    • A global perspective gives a bullish outlook for the industry

    Introduction

    The automotive industry is usually called a cyclical industry, considered elastic in relation to GDP and vulnerable to economic shocks. According to a former Ford chief economist a normal recession reduces sales by 15%. With sales being reduced by 15% and costs being inelastic the decline in sales is the one that makes the difference between strong earnings and big losses. Any sign of a recession puts people off from buying new cars and makes them stick to the car they have for a little longer. Connecting the cyclicality and cost inelasticity with the current valuation for automotive companies brings to interesting conclusions. More →

  • 20 Apr
    Is Brazil an Investing Opportunity?

    Is Brazil an Investing Opportunity?

    • The political situation is corrupted but the country shows growth potential.
    • From a long term perspective, the market is undervalued and currency effects can bring to gains of 80%.
    • Brazil is still a developing economy with a young population and huge potential.

    Introduction

    On Sunday the Brazilian congress voted for the impeachment of president Dilma Rousseff. When the senate, likely in the next few weeks, confirms the vote, the Workers party will temporarily be replaced by a center-right administration government. The move from left to right creates hopes for investors as they look for a more investing friendly environment. More →

  • 19 Apr
    A Coal Perspective on Commodities

    A Coal Perspective on Commodities

    • Coal has seen lots of bankruptcies but companies continue to produce and the price remains low.
    • Iron ore provides better investing opportunities and a better demand scenario.
    • Low cost and low debt producers with increasing demand should be the best risk/reward investments.

    Introduction

    Yesterday’s newsletter mentioned that there might be opportunities in the commodities markets. Today’s letter is going to elaborate on why the coal mining industry is seeing many bankruptcies and extract important insights in order to enable finding opportunities in other commodities that minimize risks and maximize returns. More →

    By Sven Carlin Commodities Investiv Daily
  • 18 Apr
    What to Expect from the US Stock Market

    What to Expect from the US Stock Market

    • The S&P 500 has not grown in the last 14 months.
    • A fundamental and interest rate perspective show that the S&P 500 is overvalued.
    • Strategies that include stock picking, emerging markets or beaten down cyclicals might prove best.

    Introduction

    The S&P 500 has rallied in the last two months, from the February 11 low of 1829 points to the current 2083 points. This is an increase of 13% but to understand what is going on in the markets a longer term perspective has to be taken. More →

  • 02 Feb
    The Case for Gold Now

    The Case for Gold Now

    Gold has had a resurgence of late. Is it because in this volatile market investors want to put their money toward something solid, or is it something else? More →

    By Kristina Keene Gold Investiv Daily Market Forecast
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