Investiv Daily

  • 22 Dec
    Advice On Value Investing In Emerging Markets From Mohnish Pabrai

    Advice On Value Investing In Emerging Markets From Mohnish Pabrai

    • Investing in emerging markets still offers 100-baggers, the problem is that most investors don’t stick with them.
    • Looking for 100-baggers can make your portfolio, but it can’t break it because you can only lose 100% of the investment while the upside is unlimited.
    • Great investments can be found everywhere, you just need to know what to look for.

    Looking Around The World For Value

    It gets harder and harder to find stocks that have positive future business perspectives, a low valuation, and a price to book value that gives you a margin of safety when investing. Therefore, it’s necessary to do some research on such investments at a larger scale, especially in emerging markets. One person who is a specialist on this is Mohnish Pabrai. More →

  • 21 Dec
    Should You Invest In Russia? Sven Tells You Why It Might Not Be Such A Good Bet

    Should You Invest In Russia? Sven Tells You Why It Might Not Be Such A Good Bet

    • The numbers make Russia the cheapest global market.
    • However, most of the market is made up of energy and financials, while normal companies are fairly priced.
    • Long term economics in Russia aren’t positive as the country is completely dependent on oil prices.

    Russia As An Investment Opportunity

    Russia has been the best performing market year-to-date and is up 50%. However, it’s still considered by many in the financial environment as one of the cheapest global markets as it’s still far from the pre-sanction and higher oil prices levels of a few years ago. More →

  • 20 Dec
    Be Overweight In These Sectors In 2017

    Be Overweight In These Sectors In 2017

    • Increasing interest rates make earnings growth unlikely and increase the probability for a decline of the S&P 500.
    • To beat the S&P 500, you have to invest in sectors that offer a better risk reward ratio than the S&P 500.

    Don’t Go For 10 To 20 Percent Returns In 2017

    With the S&P 500 yielding 3.85% going into 2017, stocks in general are currently an investment vehicle that gives you a small and limited upside with a potentially large downside.

    We know that the FED plans to raise interest rates another three times in 2017. If that happens, the investments people consider most secure—like treasuries, dividend paying blue-chips or REITs—will be hit the hardest because as required yields go up, their asset prices will go down. Therefore, the best way to prepare for 2017 is to position yourself so that if the FED raises rates, your upside is far bigger than 3.85% and your downside far smaller than the potential downside of the currently overvalued stock market. More →

  • 19 Dec
    The FED Getting It Right Would Be Scary For Stocks

    The FED Getting It Right Would Be Scary For Stocks

    • A negative scenario implies economic growth and inflation not reaching the FED’s estimations, which wouldn’t be such a bad thing for stocks in 2017.
    • A positive scenario implies the FED’s estimations to be met, a potentially dangerous situation for stocks.
    • A federal funds rate of 2.1% by the end of 2018 would see the S&P 500 at 1,629 points, all other things being equal.

    Finally, The FED Had The Courage To Increase Rates

    After more than a year of waiting, the FED finally decided to increase interest rates.

    You probably know that this is because unemployment has reached natural levels and inflation is rapidly moving towards targeted levels. On top of that, the FED forecasts to raise interest rates by another 0.75 percentage points in 2017.

    Today we’ll discuss the potential repercussions this rise in rates could have on the economy and our portfolios. More →

  • 18 Dec
    Sunday Edition: Looking For Value – Market Heavyweight Or Scrappy Underdog?

    Sunday Edition: Looking For Value – Market Heavyweight Or Scrappy Underdog?

    In sports, there is something incredibly compelling about the underdog that nobody expects to win, but does it anyway. It’s even better when it happens against an opponent that is obviously superior in practically any measurable way. As a fan of sports like football and basketball, I like the playoff after-season, when the best handful of teams battle it out for ultimate supremacy. In particular, I get a kick out of trying to pick out the team that I think everybody is dismissing but could be in just the right place, at the right time to prove them all wrong. True, Cinderella doesn’t often actually get to wear the glass slipper, but boy, is it fun when she does! More →

  • 16 Dec
    Why You Might Want To Start Dollar Cost Averaging Precious Metals

    Why You Might Want To Start Dollar Cost Averaging Precious Metals

    • Central banks’ balance sheets have quadrupled in the last decade.
    • Balance sheets will continue to balloon as there isn’t another option for economic growth in developed countries.
    • You should start to think about protecting yourself from inflationary pressures now, when such fears seem distant and unlikely. It’s the cheapest time to do it.

    Introduction

    Yesterday we discussed the three drivers that could push markets higher if all other factors like interest rates, risk perceptions, and global political issues stay as they are now. However, we didn’t discuss what happens if the underlying pillars that have been holding up global financial markets since the Great Recession change. Today we’ll discuss what could change and how to properly diversify. More →

  • 15 Dec
    This Could Push The S&P Even Higher

    This Could Push The S&P Even Higher

    • The market looks overvalued but there are three main factors that could push it even higher.
    • A repatriation tax holiday could make $2.1 trillion available for dividends, buybacks, and M&As.
    • Economic growth and inflation could push earnings higher, further inflating stock prices.

    Introduction

    It seems that everyone agrees on the fact that this market is overvalued and borderline irrational. However, there is no correction in sight and the only question to be asked is “how high can this market go?”

    The S&P 500 has jumped 5.4% since Trump won the elections, and is 12.1% higher year-to-date. By adding in the 2% dividend yield, we arrive at an excellent 14% return for 2016. This year’s positive return will make it number eight in a row for the S&P 500 as it has been rewarding investors since 2009. More →

  • 14 Dec
    How To Make 50% On Your Investments

    How To Make 50% On Your Investments

    • To know a small cap stock in detail and its business environment, you’ll have to invest more of your time than anyone else.
    • Investing while following the 20-punch card rule is extremely difficult, even Buffett didn’t follow it.

    Introduction

    In a 1999 Businessweek interview, Warren Buffett said the following:

    “If I was running $1 million today, or $10 million for that matter, I’d be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”

    Most investors invest peanuts, Buffett’s measure for $1 million, so they should all be able to make 50% a year. As in life you mostly get what you ask for, why not ask for 50% yearly returns? You might get it.

    In this article, we’ll discuss what Buffett meant when he said that, as well as a few strategies you could implement to reach 50% returns. More →

  • 13 Dec
    The Crowd Loves Index Investing. Should You?

    The Crowd Loves Index Investing. Should You?

    • Index investing really means buying high and selling low. The latest NASDAQ 100 inclusions and exclusions are a perfect example.
    • If you invest in an index, you are bound to receive market returns which will be in line with market earnings. However, history shows that market returns won’t be that great from today onward.
    • Even if index investing is still the most popular thing to do, it’s time to switch to smarter investment vehicles.

    Buying High & Selling Low

    Last week, NASDAQ announced the results of the annual re-ranking of the NASDAQ-100 Index® (Nasdaq: NDX). The following four companies will be added to the Index, Cintas Corporation (Nasdaq: CTAS), Hasbro, Inc. (Nasdaq: HAS), Hologic, Inc. (Nasdaq: HOLX), and KLA-Tencor Corporation (Nasdaq: KLAC), while the following four companies will be removed from the Index: Bed Bath & Beyond Inc. (Nasdaq: BBBY), NetApp, Inc. (Nasdaq: NTAP), Stericycle, Inc. (Nasdaq: SRCL), and Whole Foods Market, Inc. (Nasdaq: WFM). More →

  • 12 Dec
    Hold On To Your Cash

    Hold On To Your Cash

    • A market crash will come, likely sooner than later, as this bull market isn’t based on fundamentals.
    • However, it’s equally important to seize the upside as well as protect yourself from the downside.
    • A cash cushion and knowledge about fundamentals is what will give you the best risk reward scenario for your portfolio.

    Introduction

    You might find this strange: talking about a stock market crash while the Dow is above 19,000, the S&P 500 above 2,241, and the Nasdaq largely above 5,300, and revised economic growth at 3.2% all in the midst of a seemingly never-ending bull market. On top of that, 610 Nasdaq and NYSE companies are currently at their 52-week highs while only 14 are at their 52-week lows.

    Nobody can know when this bull market is going to end, but it will end eventually as the fundamentals fueling it aren’t all that strong. More →

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