Cash

  • 23 Apr
    This Market Is Getting Crazy – Here’s How Buffett Says To Invest In It

    This Market Is Getting Crazy – Here’s How Buffett Says To Invest In It

    • We’ll discuss some news first, including commodity prices, chip guidance, and covenant ratios.
    • Then we’ll put things into perspective and see what an investor can do in this market.
    • I’ll give you a few tools that will make investing easy for you, if you can handle them.



    Introduction

    Last week, the stock market was positive for half of the week and then negative for the remainder. More →

  • 07 Mar
    Risks Are Piling Up – That’s A Huge Red Flag For Stocks

    Risks Are Piling Up – That’s A Huge Red Flag For Stocks

    Last week I discussed how the risk are piling up on the debt side of the equation. However, those aren’t the only risks piling up which isn’t uncommon for humans. When we stray, we usually stray in a big way.

    So, on top of the debt, there are other huge risks and today the discussion will be about valuations:

    • Debt is being used recklessly.
    • Valuations don’t matter as growth is the key and profitability will come.
    • Book values are so old fashioned.
    • Stocks can only go up and corrections and bear markets don’t last long.
    • Real estate can only go up.
    • If you invest in index funds, you will do well.



    Now, I’ll discuss a lot of macro, and even some politics on Monday, but such factors might be insignificant or very significant depending on market valuations. High market valuations make stocks fragile, while low valuations make them more robust as once stocks are low, there is little room to go lower. However, when stocks are high, a lot of bad things can happen. The sad thing is that we have been there and we are doing the same mistakes all over again.  More →

  • 05 Mar
    Stocks Are Crazy Risky Now – We’ll Reveal The Perfect Hedge

    Stocks Are Crazy Risky Now – We’ll Reveal The Perfect Hedge

    There’s some volatility in the markets that we haven’t seen for a long time.

    The increased volatility is a sign of nervousness and the market is looking for direction.

    No one knows where things will go in the short term as that’s impossible to know. Even Warren Buffett never fails to mention how he has absolutely no idea about where markets will go in the short to medium term.

    If we look at things from a macro perspective, the economy is at its limits and we’ve seen the actual GDP finally reach the potential GDP. More →

  • 15 Feb
    The Stock Market Crash Hedge You Need Now

    The Stock Market Crash Hedge You Need Now

    • I’ll explain how the key hedge for the retail investor is the cash component.
    • Further, we’ll discuss how much cash one should have now, and there is a method. In the end, it depends on one’s age.
    • Forget about options and derivatives as they are extremely sophisticated strategies for retail investors.



    Introduction

    Volatility has really spiked in the last few weeks and the stock market is in correction territory. The main question everybody would like to know the answer to is whether this slump will continue.

    Of course, even if fundamental indicators have been showing the market is overvalued for quite a while now, you can’t precisely know what will happen.  However, the market isn’t risky because of volatility, it’s risky due to extremely high valuations and rising interest rates. More →

  • 24 Nov
    These 3 Tips Will Help You Survive The Next Market Crash

    These 3 Tips Will Help You Survive The Next Market Crash

    • We’ll discuss what a good defensive stock would be for the next market crash.
    • We’ll discuss Treasury inflation protected securities (TIPS).
    • We’ll discuss how gold miners can protect your portfolio.



    Introduction

    Yesterday, I discussed how a stock market crash can happen anytime. However, most of the triggers that I mentioned would have had the same credibility in 2012. Therefore, getting out of the market now might not be the smartest idea.

    It’s important to remember that time in the market and dividends are the main contributors to long term wealth creation. More →

  • 26 Sep
    The Best Strategies For Investing Late In The Economic Cycle

    The Best Strategies For Investing Late In The Economic Cycle

    • What has to be done in the late part of the economic cycle isn’t a secret. I’ll describe the how and what.
    • However, as always in investing, the question is why we aren’t doing the rational thing.
    • I’ll ask you a question that will help you answer how much and whether you should rebalance.

    Introduction

    Yesterday, we discussed how the economy is in the late part of the economic cycle and everything is leading toward a recession.

    No one knows exactly when the next recession will start or what the trigger will be. So the only thing to do is to be prepared. 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 →

  • 05 Jun
    Why You Should Be Careful When You’re Told To Have A Defensive Portfolio

    Why You Should Be Careful When You’re Told To Have A Defensive Portfolio

    • Defensive investments are usually promoted to those in retirement or close to it. However, we should all always be defensive investors.
    • Neither bonds nor general stocks are defensive investments, no matter the diversification or quality of the bonds.
    • Cash is the only defensive investment in this market. Other options are positive asymmetric risk reward investments.

    Introduction

    Many will say that a portfolio owned by an investor who is about to retire or is retired should be a defensive one. However, I find focusing on age isn’t smart because no matter our age, we have to always protect our portfolio and try to maximize returns. After all, isn’t the first rule of investing to never lose money while the second rule of investing tells us to read rule number one again? More →

  • 26 Mar
    Sunday Edition: How Cash Can Be Like A Call Option On The Market

    Sunday Edition: How Cash Can Be Like A Call Option On The Market

    When the market reaches extreme levels—to either the upside or the downside—it’s pretty normal to see conditions generally start to become more volatile. With the market at historical highs, investors start to become more and more nervous about whether staying in the market exposes them to more risk, or whether taking profits now would mean leaving money on the table when the market surges to yet another historical high. A similar kind of uncertainty happens at or near market bottoms, as speculation centers around whether the market has dropped enough for investors to start buying obvious bargains or whether there is still even more downside to be avoided. 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 →

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