Investiv Daily

  • 24 Feb
    Goldman Sachs Is Probably Right But Is It Worth The Risk?

    Goldman Sachs Is Probably Right But Is It Worth The Risk?

    • Goldman Sachs recommends being overweight U.S. equities because of expected loose fiscal policies and because, as they have stated, valuations don’t matter.
    • Goldman expects a 3% yearly return on a moderate risk portfolio.
    • I’ll touch on what the average Goldman client is risking for their 3% yearly return.

    Introduction

    Goldman Sachs (NYSE: GS) recently released its 2017 market outlook. It shouldn’t be a surprise that the outlook is positive. It’s in their interest for stocks and the economy to continue to thrive as GS makes its money from IPO commissions, asset management fees, etc.

    Despite the conflict of interest, their positive outlook will most probably be correct at the end of 2017, but there is something more important than being right or wrong on a yearly forecast.

    Today we’ll discuss Goldman’s view and analyze the possible impacts on our portfolios. More →

  • 23 Feb
    Bubble, Crisis, Bubble, Crisis – Debunking The Chinese Real Estate Sector

    Bubble, Crisis, Bubble, Crisis – Debunking The Chinese Real Estate Sector

    • The Chinese government is controlling the real estate market and allowing short, two-year boom bust cycles.
    • Western investors don’t understand China and see either a bubble or a crash.
    • The best way to invest is to seize the wild market swings created by such erratic behavior.

    Introduction

    The question we would all like to know the answer to is this: is the Chinese real estate market in a bubble?

    If it is, any kind of burst would create a credit crisis, lower economic growth, and quickly spill over first on global financial markets, and consequently onto the global economy.

    There is no consensus on whether or not Chinese real estate is in a bubble. I’m going to describe both perspectives to give you the best information possible for China and Chinese real estate related investments. More →

  • 22 Feb
    What Will The Economic World Look Like In 2050?

    What Will The Economic World Look Like In 2050?

    • Emerging markets will be the economic leaders of the world.
    • Investment returns are related to economic performance, so it’s wise to be internationally diversified.
    • However, diversifying just to diversify is the biggest mistake you can make as emerging markets are full of risk.

    Introduction

    PricewaterhouseCoopers (PwC) just released its report on what the economic world will look like in 2050. You might wonder what that has do to with your investment returns as 2050 is 33 years from now, but it has everything to do with your returns if your investment horizon is longer than a few years because these global trends that will shape the world up to 2050 will also be the trends that will shape your portfolio returns. More →

  • 21 Feb
    Buffett Put $12 Billion On Stocks, But He Didn’t Buy Into <i>This</i> Market

    Buffett Put $12 Billion On Stocks, But He Didn’t Buy Into This Market

    • Stocks grew on positive sentiment after Buffett disclosed his optimism and spent $12 billion.
    • His purchases included Apple, and an extremely cheap sector.
    • Passive investing without thinking is what allows for such heterogeneity in valuations. For investors like Buffett, it’s easy money.

    Introduction

    At the end of January, market bulls rejoiced when Warren Buffet disclosed in a Charlie Rose interview that he had bought $12 billion of stocks since Trump’s election. Since then, the market has jumped another 3% on positive sentiment as even the greatest low risk investors of them all is buying into this market.

    A few days ago, however, Berkshire Hathaway disclosed—in their obligatory holding statement—what Buffett actually bought. This, of course, hasn’t been as publicized as has the fact that he bought $12 billion of stocks, but as always, journalists prefer to focus more on what’s sexy than on what’s important.

    Let’s see if we can learn something from what the Oracle of Omaha has been buying in this market which is constantly breaching all-time highs. More →

  • 20 Feb
    Sell Your ‘High Yield’ Immediately – Aggressive Traders Get Short

    Sell Your ‘High Yield’ Immediately – Aggressive Traders Get Short

    • Due to higher oil prices, ‘high yield’ bond yields are approaching historical lows while interest rates and inflation are increasing. Investors should be grateful for the amazing opportunity to unload.
    • ‘High yield’ ETFs have grown from 0% to 10% of the total fixed income ETF market in less than 10 years.
    • Apart from rising interest rates, illiquid ‘high yield’ primary markets in relation to the highly liquid secondary ETF markets signal potential Armageddon as there will be no buyers when the ETF trend reverses.

    Introduction

    I usually look for investments where the risk is low and return is high as asymmetric risk reward situations provide the highest and safest returns. Today I’m going to do the opposite, discuss a high risk low reward investment. If you own or are attracted to higher yields, or want a short play, this article is for you. More →

  • 19 Feb
    Sunday Edition: Copper May Be The Strongest New Bull Market Over The Coming Decade

    Sunday Edition: Copper May Be The Strongest New Bull Market Over The Coming Decade

    The Escondida mine problems are only the tip of the iceberg for Copper, which appears to be in a bit of a panic since workers of BHP Billiton Ltd.’s Escondida copper mine in Chile started an indefinite strike on February 9, forcing a force majeure declaration on its shipments.

    Adding more fuel to the fire is a one-month delay to exports at Indonesia’s Grasberg mine when Freeport-McMoRan suspended copper concentrate output while in negotiations with the government over the terms of its mining permit which has expired. More →

  • 17 Feb
    Sven Is Still Bullish On Copper And You Should Be Too

    Sven Is Still Bullish On Copper And You Should Be Too

    • Copper bottomed in 2016 and the outlook remains bullish in the long term.
    • The short term could also offer positives due to strikes and political issues.
    • The long term balance for copper should be above $3.5 per pound and that price will be increasing due to lower copper ore grades and higher mining costs.

    Introduction

    The last time I wrote exclusively on copper was in April 2016. The bullish article is available here. Since then, copper prices have increased 22%, from $2.22 per pound to the current $2.73. As the dollar has also strengthened by 7% since then, we should add 7% to the current copper price to show the real appreciation in copper. Thus, copper would be at $2.92 in real terms. More →

  • 16 Feb
    How Much Will You Lose In The Next Bear Market?

    How Much Will You Lose In The Next Bear Market?

    • The current stock market will, on average, deliver returns of 4% per year for the next 15 years. However, the risks don’t justify the returns.
    • All investors owning an S&P 500 or similar portfolio should know that they run the risk of a 50% temporary decline.
    • Various sectors and countries offer much higher returns for the same inherent volatility.

    Introduction

    What’s equally important to how much you expect to make from your investments if things go well is the question of how much volatility you can take if things go wrong. Today’s article is more of a reminder that there are two sides to each investment, the return side and the risk side.

    I’ll elaborate on techniques that will help you assess your future returns and risks. We’ll start with the fun part, the returns, and finish with the necessary part, the risks. More →

  • 15 Feb
    The Institutional Performance Derby: The Client Is the Loser

    The Institutional Performance Derby: The Client Is the Loser

    • It’s important to understand how investing institutions operate and think so you don’t get trapped.
    • Nobody at these institutions eats their own cooking and there is no incentive to do anything. It reminds me of communism.
    • Institutional investing is a self-reinforcing mechanism, which is great in a bull market but terrible in a bear market.

    Introduction

    Seth Klarman’s book Margin of Safety is an iconic investment book. As it’s extremely difficult to get, I’m synthesizing it for you while injecting my own up-to-date commentary.

    You can read my introduction to Klarman’s Margin of Safety here, my review of chapter one, Where Most Investors Stumble, here, and my review of chapter two, The Nature of Wall Street Works Against Investors, here. Today’s article will discuss his The Institutional Performance Derby: The Client Is the Loser chapter. More →

  • 14 Feb
    A Look At The Crazy World Of Chinese Stocks

    A Look At The Crazy World Of Chinese Stocks

    • It isn’t unusual that a Chinese stock loses 75% to 90% of its IPO value after a year or two.
    • Delisting, lack of transparency, obscure companies, fraud, buyouts at large discounts, and fears around the economy are some reasons for such performance.
    • You should require at least 50% per year from Chinese stocks with minimum risk. Such opportunities can be found.

    Introduction

    Chinese stocks are, to say it in one simple word, crazy. And apart from crazy, looking at Chinese stocks that are trading on the NYSE seems like walking through a graveyard.

    Companies like China Xiniya Fashion Limited (NYSE: XNY), China Zenix Auto International (NYSE: ZX), ChinaCache International (NASDAQ: CCIH), or Kingtone Wirelessinfo Solution Holding Ltd (NASDAQ: KONE) all seized the craziness going on in 2011 around China and listed themselves on American markets. The results for initial investors were disastrous. More →

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