Investiv Daily

  • 15 Sep
    Troubled Waters Ahead For Developed Markets. Look Here For Returns.

    Troubled Waters Ahead For Developed Markets. Look Here For Returns.

    • Europe and Germany aren’t the best places for international diversification right now.
    • The U.S. is looking a bit better, but you’ll find the best opportunities are mostly in emerging markets.
    • Look for companies that are relatively cheap and that have exposure to China, India, and/or Brazil.

    Introduction

    Two days ago we discussed what is going on in the markets in relation to monetary policies. Today we will discuss what is going on in global economics.

    As the market is showing a high level of volatility, basic economic fundamentals is where we should look to get answers on what to do. By analyzing the latest global economic indicators, we can better determine the risk of a recession in the U.S. and Europe or a slowdown in China, all of which could contribute to a decline in global markets. More →

  • 14 Sep
    Diversify Like The Big Boys Do

    Diversify Like The Big Boys Do

    • Temporal diversification diversifies your portfolio through time by buying only the assets that are cheap at the moment and avoiding the ones in a bubble.
    • By buying in cycle troughs you enjoy high-dividend yields that allow you to buy other assets that are in temporal distress.
    • This high yield lowers the need to sell and lowers your tax bill.

    Introduction

    Today we’ll introduce you to a new concept—“temporal diversification,” a term that has begun to gain traction, especially in academic circles—that isn’t yet common knowledge but is already being used by the best investors. Using the example of Berkshire Hathaway, we’ll provide an overview of the concept of temporal diversification and will provide some ideas for increasing your returns by diversifying your portfolio not just for the current moment, but for your whole investing life. More →

  • 13 Sep
    What To Expect From The Markets Now

    What To Expect From The Markets Now

    • The German bond’s 3% loss on a 12 basis point yield move shows how risky bonds are right now.
    • The value of the S&P 500 should be around 1,600 but could go lower with bad economic news.
    • Bonds and stocks seem very risky as they both have low yields and large downsides.

    Introduction

    Last Friday was a pretty scary day in the financial markets. The S&P 500 lost 2.45% and bonds also lost ground due to higher yields.

    Stocks and bonds are correlated and don’t provide quality diversification. We have been warning about the risks inherent to bond investing for a while with warnings that the low yields mean high risk and low returns. More →

  • 12 Sep
    Is Cash An Opportunity Cost, Or An Opportunity?

    Is Cash An Opportunity Cost, Or An Opportunity?

    • Holding cash may be considered an opportunity cost, but its also a call option with no expiration date.
    • The yield you can expect from bonds is 1.5% and the yield from stocks is 2% or 4% when earnings are included.
    • Holding cash will give you the liquidity to load up the truck when opportunities come knocking.

    Introduction

    We’re often taught that action is the way to solve all issues; the more you work the more you have, and as good economists, we have to use all available resources. But that isn’t always the best way to approach investing because all that action may sometimes be just like rowing toward a cliff.

    The other option is to do nothing,—or even better, to do something completely separate from investing, like playing with your kids, traveling, etc.—and sticking to cash with a significant part of your portfolio for a while. More →

    By Sven Carlin Bonds Cash Investiv Daily Stocks
  • 11 Sep
    Sunday Edition: Identifying Undervalued Stocks

    Sunday Edition: Identifying Undervalued Stocks

    The $64 million dollar question asked by every investor is, “when is the right time to make an investment and actually buy shares in the said company?”

    One of the big advantages of value investing is the fact that the question of when you should invest, while never being irrelevant, is only a secondary concern. 

    The focus is on first determining whether a stock is available at a discount compared to how much the business is worth; if a discount exists, the value investor has an immediate advantage over the rest of the market (which has yet to recognize the stock should be priced higher than it is) and should take a position as quickly as possible. More →

  • 09 Sep
    How To Spot The Next Facebook, Amazon, Netflix or Google

    How To Spot The Next Facebook, Amazon, Netflix or Google

    • Earnings aren’t that important but revenue and customer growth is essential.
    • The business has to have the capacity to grow without issuing stocks.
    • Timing is everything with growth stocks.

    Introduction

    “FANG” is the name that has been given to the elite group of technology stocks that includes Facebook, Amazon, Netflix and Google.

    These magnificent 4 have delivered astonishing growth. Since its IPO, Amazon has returned 52,491% (yes, you read that correctly) to shareholders. The other three haven’t quite been that extreme, but have still seen incredible growth, with Netflix returning 9,198% since its IPO, Google returning 1,429%, and Facebook 338%. More →

  • 08 Sep
    Getting Bored? You’ll Want To Read This

    Getting Bored? You’ll Want To Read This

    • Wall Street doesn’t make money if things aren’t moving, so beware of interesting new investment vehicles marketed with the guise of offering you better returns.
    • In this article, we’ll share an old investing gem that is essential to know for every investor.
    • The time to spice up your portfolio is when it looks like the world will end tomorrow.

    Introduction

    It has been a boring summer. The S&P 500 reached new highs, but has traded in a 2% trading range for the last two months.

    The situation isn’t better in the longer term. In the last two years, the S&P 500 is up 4.3% per year which is not spectacular for stocks, but it’s also not bad. More →

  • 07 Sep
    The High Costs Of Low Interest Rates

    The High Costs Of Low Interest Rates

    • The $3.4 trillion public retirement system funding deficit we have currently will only continue to get bigger when expected returns are lowered from science fiction levels of 7% to realistic levels of 3% to 4%.
    • Insurance companies and banks are also at risk as their business models are in jeopardy.
    • Low interest rates are good in a crisis situation, but harmful in the long run. However, politicians have hesitated globally to make changes.

    Introduction

    The fact that interest rates are low is not news. While many are discussing whether the FED will raise rates or not, few analyze what the long term costs of such an artificial environment will be.

    The environment is artificial because if it weren’t for the low rates, or negative rates in many parts of the world, there would be no lending as you don’t lend below a certain interest rate. In any case, this will have severe consequences on the economy, liquidity, inflation, banks, insurance companies, and retirement funds, and could create bubbles that will take years to deleverage. More →

  • 06 Sep
    Headlines Are Telling Us To Worry, But Is It Time For Greed Instead?

    Headlines Are Telling Us To Worry, But Is It Time For Greed Instead?

    • Jobs look great, more people than ever are employed and the number is consistently growing.
    • There is nothing to worry about with China as it has room to grow and incredible potential.
    • Economic scares based on short term news provide great investing opportunities; the macro trends are what you should worry about.

    Introduction

    As investors it’s important to know what’s going on in the economy, but what has to be clearly differentiated are single data points and trends.

    We are constantly bombarded with pieces of information that can mean anything. Last Friday’s jobs report—with 151,000 new jobs—was below the 180,000 expectation of analysts. Headlines like the Wall Street Journal’s “Soft Jobs Data Cools Market Expectations on Fed Rate Increase” were seen on every news site, but such data seldom has an actual influence on your returns. More →

  • 05 Sep
    Do Your Future Returns A Favor

    Do Your Future Returns A Favor

    • S&P 500 companies are not only returning more cash to shareholders than their earnings, but also more than their cash flows.
    • The trend is resembling the one prior to the financial crisis.
    • Not all stocks are unsustainable with their cash returns, so check your portfolio.

    Introduction

    A common piece of financial advice is not to spend more than you earn as it will eventually put you in trouble. Well, this is exactly what corporate managers are doing. Through dividends and buybacks they are spending more than they are earning. If the common advice is of any value it should be trouble ahead for the stocks that are doing so.

    In this article we are going to analyze the situation, look at the real short and long term risks and conclude in fashion. More →

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