Bear Market

  • 14 Jan
    Are small-cap semiconductors like BHE a smart bargain?

    Are small-cap semiconductors like BHE a smart bargain?

    Over the last couple of days, I’ve highlighted a couple of the biggest players in the Electronic Equipment industry that supplies the entire Technology sector. I think it’s always interesting, and useful to pay attention to the industries that supply a sector with the materials, services, and manufacturing or fabrication services it relies on. Since I also consider something of a techno-nerd, that also means that stocks like KLAC, LRCX, and today’s spotlight, Benchmark Electronics Inc. (BHE) are almost always going to pique my interest. More →

  • 25 Dec
    The S&P 500 is on the cusp of a bear market – is it really this bad?

    The S&P 500 is on the cusp of a bear market – is it really this bad?

    If we wanted to try to find some kind of holiday-appropriate description for the stock market this Christmas season, I suppose it would make sense to compare it to the infamous Grinch from from Dr. Seuss’ How the Grinch Stole Christmas. It certainly seems that as we moved from Thanksgiving into December, much of the prevailing tone and sentiment in the market turned increasingly sour. Even yesterday, on a holiday-shortened trading session traders seemed to chose to emphasize the negative, focusing on the prospect of a long government shutdown and the job security of Fed chair Jerome Powell. More →

  • 11 Aug
    Is Value Investing Dead?

    Is Value Investing Dead?

    • The last 10 years have been terrible for value investors as it has seemed like fundamentals don’t matter at all anymore.
    • There are limited options to be a value investor as the Russell 1000 value index has a price to book ratio above 2.
    • I’ll discuss three options for what a value investor can do and the historical results of such approaches.

    Introduction

    If you’re a value investor or have been invested in a value fund, you probably aren’t the happiest investor in the world right now. More →

  • 21 Apr
    Are We Already In A New Bear Market?

    Are We Already In A New Bear Market?

    • The biggest investor of them all just said that he will start cashing out. Hopefully, this won’t lead to a bear market, but it will certainly put the brakes on further growth.
    • Economic signals are mixed, the outlook is uncertain and as much as the low unemployment rate is positive, historically, that isn’t a good sign for the future.
    • As always, we’ll discuss what to do in this environment.

    Introduction

    It seems that the S&P 500 peaked on March 1, 2017. More →

  • 19 Apr
    The Next Bear Market Is Coming. Here’s Where It Will Start.

    The Next Bear Market Is Coming. Here’s Where It Will Start.

    • $2 billion a day flows into Vanguard to be mindlessly invested in the market through index funds.
    • When the only reason people invest is because staying on the sidelines means getting sore while others get rich, it usually spells trouble ahead.
    • When the investors plowing $2 billion per day understand what are they buying at extreme valuations, the next bear market will arrive and it will be terrible as the buying reverses to selling.

    Introduction

    A recent The New York Times article described how Vanguard, the $4.2 trillion mutual fund, is the fastest growing fund due to the attractiveness of passive investment vehicles and the average 0.12% fee the fund charges. The low fee is something I applaud as I strongly believe fees in the financial world should be minimal or performance related where nothing is paid if the manager doesn’t deliver. More →

  • 20 Mar
    Is This The Beginning Of The End For The Era Of Financial Engineering?

    Is This The Beginning Of The End For The Era Of Financial Engineering?

    • Most developed world economies can’t continue to grow without financial engineering.
    • However, inflation forced tightening will eventually have a significant impact on credit.
    • This will only lead to more accommodation and toward an eventual crash, so be prepared.

    Introduction

    Each significant historical bear market has an initial trigger. Weak home and car sales killed the 2003 – 2007 bull market, while the realization that stock valuations had gone too far initiated the bear market in March 2000.

    But what will trigger the next bear market? Well, there’s a great possibility that it will be monetary tightening. Perhaps it won’t be the latest quarter percentage point rate increase, but it will probably be one of the next rate hikes. 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 →

  • 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 →

  • 20 Oct
    The Economy Is Stuck – What Does It Mean For Your Investments?

    The Economy Is Stuck – What Does It Mean For Your Investments?

    • According to the FED Vice Chairman, economic prospects are dim.
    • As the S&P 500 is at all-time highs, you’re probably overweight in an aging, slow growing, low investment economy.
    • Use the amazing returns of the past 7 years to diversify as the FED will not be able to save the economy from a bad recession like it has in the last 50 years.

    Introduction

    In a speech at the Economic Club of New York, FED Vice Chairman Stanley Fischer discussed the causes and implications of sustained low interest rates. In today’s article, we’ll analyze his perspective and extrapolate on the implications of such an economic environment on long term investment returns. More →

  • 17 Oct
    Why A Market Crash Could Be Just Around The Corner

    Why A Market Crash Could Be Just Around The Corner

    • We’ll discuss some risks first and then discuss potential rewards.
    • Valuations are the tipping point toward a riskier perspective.
    • After reading this article you’ll be able to decide for yourself what the best strategy is for you to follow.

    Introduction

    In order to see where the market is going, let us first take a look at what the market has been doing in the last two years.

    The market has had a 7% yearly return if we look at it from October 15, 2014, however, if we wait a month, the yearly return for the last two years will fall to 1.8% per year. 1.8% a year plus a dividend yield of 2% isn’t bad in the current low yield environment, but it is bad when compared to the risks stock investors are running. More →

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