Bull Market

  • 16 Aug
    Why You Need To Prepare For All Hell To Break Loose

    Why You Need To Prepare For All Hell To Break Loose

    • The last stock bull market was influenced by central bank activity, that’s clear. What’s next is the question.
    • I’ll describe three potential scenarios that could impact our financial system.
    • One is good, the second is interesting, while the third is ugly.

    Introduction

    The general expectation is that the FED will start selling securities in order to tighten monetary policy, that the ECB will slowly stop buying, and that nothing will change in Japan. Nevertheless, such a situation would lead to an environment where the additional liquidity created by central banks finally dries up. As the liquidity provided by central banks is the main reason behind this bull market, should investors begin to cut their positions?

    In order to elaborate on this question, we’ll first analyze the situation, the expected situation, and then possible scenarios in order to give you the best answer on how to prepare yourself for what might happen. It’s extremely important to do so and, as you will see, it isn’t that difficult. 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 →

  • 26 Jun
    Don’t Follow The Herd: Why The Majority Of Investors Always Get It Wrong

    Don’t Follow The Herd: Why The Majority Of Investors Always Get It Wrong

    • Consider this, the question always remains the same: “What will my return on investment be?” But the answer changes all the time.
    • Thinking costs energy and humans prefer to let others do the thinking for them. Are you like that?
    • It’s important to know when to use history as a teacher.

    Introduction

    “Whenever you find yourself on the side of the majority, it is time to pause and reflect.” 

    – Mark Twain

    When Albert Einstein was teaching at Oxford University, he gave his senior physics students exactly the same exam he had given them the year before. His assistant was disturbed by such a mistake, but before intervening he asked Einstein whether he actually made a mistake. Einstein replied that the exam was exactly the same. The assistant was even more concerned and asked why he would do such a thing. Einstein replied, “Well, the questions are still the same, but the answers have changed.” More →

  • 06 Mar
    The Market Is Euphoric – It’s Time To Get Rid Of Your Overvalued Stocks

    The Market Is Euphoric – It’s Time To Get Rid Of Your Overvalued Stocks

    • Market timing is tricky because if you missed the best 40 days in the last 20 years, your annual returns quickly turn from positive 8.19% to negative -1.96%.
    • But the fact remains that we are looking at a euphoric market with shaky economic foundations.
    • You don’t have to get out of the market. Getting out of overvalued stocks should suffice.

    Introduction

    With every new high reached by the DOW or the S&P 500, the market gets riskier. However, I don’t want to be another analyst that just predicts doom and gloom so today I want to discuss the best risk reward allocation and what an investor can do in these exciting but risky times. 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 →

  • 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 →

  • 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 →

  • 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 →

  • 20 Sep
    7 Years In & Valuations Matter More Now Than Ever Before

    7 Years In & Valuations Matter More Now Than Ever Before

    • Volatility can tell you when to buy, but valuations tell you when to sell.
    • In the 2000s, faster than expected earnings growth, low transaction costs and reduced risks from lower volatility were considered factors of the “New Era” for stocks.
    • These days, low interest rates and low inflation are new factors that create the “New Era,” while the PE ratios just grow and grow. Does this sound familiar?

    Introduction

    Apart from professionals, you rarely find investors who are passionate enough about their investments to make it their day-to-day and weather through the peaks and troughs in the market.

    There are many traders, especially young ones, who were unaware of what stocks were back in 2009 that now believe they are the kings of the world as a result of the tailwinds of the current bull market. In such an environment, valuations are ignored and investors become euphoric which makes them believe, for example, that the merging of Tesla and Solar City is a good idea, or that Facebook will have everlasting growth. In reality, our “new normal” is one of negative interest rates and low yields. More →