Investing Strategy

  • 14 Jul
    As The S&P 500 Reaches New Highs, Asset Inflation Continues

    As The S&P 500 Reaches New Highs, Asset Inflation Continues

    • All factors are indicating an artificially created asset inflation.
    • Earnings are expected to decline with economic outlook being constantly revised downwards.
    • Gold is gaining alongside stocks which confirms that all assets are inflated.

    Introduction

    Amidst all the turmoil from BREXIT, negative interest rates and global downward economic growth forecasts, the S&P 500 has reached a new high. On Monday it closed at 2,137.16 points, overtaking the previous high of 2,130.82 from May 21, 2015. The Monday record was surpassed again on Tuesday and Wednesday, with Wednesday closing at 2,152.43. More →

  • 07 Jul
    Major Indicators Are All Positive, But Is It Time To Get Fearful?

    Major Indicators Are All Positive, But Is It Time To Get Fearful?

    • Economic data is strong and positive.
    • Neither jobless claims nor consumer spending show signs of weakness.
    • The issues remain in valuations, optimism and low yields.

    Introduction

    In the post-BREXIT world, there is a lot of speculation but no one knows what will happen. This article is going to provide a general outlook on how the economy is doing and try to extrapolate trends while ignoring the noise provided by the media. More →

  • 06 Jul
    How Diversified Should You Be?

    How Diversified Should You Be?

    • Extreme diversification is good but only provides ordinary results results.
    • Concentrated portfolios proved better in some cases as they allow investors to select the best companies.

    Introduction

    A few days ago we discussed passive and active strategies given that there is a looming risk of a recession and that the markets are unable to break new highs which makes just holding stocks for the sake of holding stocks very risky. In this article we are going to discuss how diversified a portfolio should be as it is easier to pursue an active strategy with a concentrated portfolio of stocks. More →

  • 01 Jul
    Should You Switch to a More Active Investing Strategy?

    Should You Switch to a More Active Investing Strategy?

    • Passive investing has been excellent in the past decade but has gone nowhere in the last two years.
    • Higher valuations are increasing volatility and risk which gives opportunities for more active strategies.
    • Due to the high valuations in 1968, only an active strategy would have produced positive returns in the period up to 1982.

    Introduction

    The S&P 500 has gone nowhere since December 2014. Several reasons have influenced such a performance, but the most impactful factors seem to be market fundamentals deteriorating while central banks keep limiting the downside by increasing available liquidity. The FED was supposed to begin raising interest rates, but the 0.25% hike was insignificant, and now there is even speculation that the FED could lower interest rates again. More →

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