Investing Strategy

  • 26 Aug
    How Dangerous Is Common Retirement Advice?

    How Dangerous Is Common Retirement Advice?

    • Things are much different than they were 10 or 20 years ago but everyone seems to follow the same retirement investing advice.
    • As retirees are in need of more security they are now forced into more risk as bonds have become riskier than stocks while also giving a lower yield.
    • If you’re looking for security, cash may be your best bet.

    Introduction

    You’ve likely heard the advice that as you get closer to retirement you should move toward having a bigger chunk of your portfolio in bonds rather than stocks. Most retirement funds are structured in that way. Vanguard Target Retirement Funds allocate 90% of assets in equities and 10% in bonds if you are going to retire between 2058 and 2062, thus 45 years from now. More →

  • 25 Aug
    The Future Will Blow Your Mind. How Can You Take Advantage Of It?

    The Future Will Blow Your Mind. How Can You Take Advantage Of It?

    • Global GDP has quadrupled in the last 35 years and will probably do so again in the next 35 years.
    • By 2050 it’s expected there will be 10 billion people on earth and most of them will be living a western lifestyle.
    • While the forecasts are pretty certain, the issue is that the way towards those forecasts will not be linear. Investors should be careful not to get excited and jump into bubbles.

    Introduction 

    Investing is both complicated and simple at the same time. Today we are going to show the simple side of investing by analyzing a few factors that are almost certain and that will have a huge influence on your investing returns. By analyzing a few global demographic and economic trends we can see where the world will be in the future and connect that with our investments pictures, a scenario that is actually mind-blowing. Keep reading… More →

  • 23 Aug
    Are You An Investing Optimist? Check Your Portfolio

    Are You An Investing Optimist? Check Your Portfolio

    • Investors are very optimistic in bull markets and allocate much of their portfolio to stocks, increasing their risk.
    • Analysts and economists expect more spending which will consequently push GDP and inflation up, but low rates push people to save more for their retirement.
    • If the GDP and earnings don’t grow as expected, we could see a bear market in 2017.

    Introduction

    Stock markets keep going up while fundamentals keep going down and the economic situation isn’t that great either. The S&P 500 is dancing around new highs despite corporate earnings for Q2 falling by 3.6%, and the economy only growing by 1.2% on an annualized basis. Economic growth for the whole of 2016 is only at 1%. More →

  • 19 Aug
    The U.S. Dollar: Should You Stick To It Or Diversify Now?

    The U.S. Dollar: Should You Stick To It Or Diversify Now?

    • The dollar has been positively correlated with stocks for the last 4 years which is unusual.
    • Potential FED interest rate increases don’t make international diversification a great idea right now.
    • Any sign of a U.S. recession should be a good time to think about international diversification with emerging markets.

    Introduction

    On big news sites like Bloomberg you often come across headlines related to the movement of the U.S. dollar. The headline below is a good example. More →

  • 15 Aug
    Small Cap Value Stocks Have The Best Returns, But Can You Stomach The Catch?

    Small Cap Value Stocks Have The Best Returns, But Can You Stomach The Catch?

    • Historically, small cap value stocks are the best performers.
    • They don’t trade in sync with the market and often are waiting to be discovered.
    • The “waiting to be discovered” period can last for a few years.

    Introduction

    Almost a month ago we discussed how, from a risk-reward perspective given current valuations and historic performance, it isn’t a smart idea to invest in small cap growth stocks at the moment. Today we are going to discuss small cap value stocks to see if they will fare better on our long-term risk-reward scale. More →

  • 11 Aug
    Minimize Risk Without Sacrificing Returns? Sven Tells You How

    Minimize Risk Without Sacrificing Returns? Sven Tells You How

    • By dissecting the S&P 500 per valuation quintiles we see that only parts of the market are overvalued.
    • Historically, buying the lowest PE quintile stocks has increased annual returns by 360 basis points.
    • High PE stocks have large market capitalizations which force you to own more of them through index funds, increasing your risks and lowering your returns.

    Introduction 

    Beyond the top news stories about central banks increasing stimulus to fight the BREXIT or sluggish economic data with high hopes for the future, there is one recurrent theme that still flies under the radar. The recurring theme is that financial markets are overvalued. More →

  • 07 Aug
    Sunday Edition: Setting Reasonable Investing Expectations

    Sunday Edition: Setting Reasonable Investing Expectations

    The story of the tortoise and the hare teaches us that the prize doesn’t always go to the swift, who are sometimes easily distracted, but often ends up in the hands of the one who perseveres regardless of speed.

    This apologue is even more true when applied to investing. Many investors are too easily lured by “get rich quick” investing schemes and strategies, rather than safe and consistent compounding month after month, using what some might consider a boring strategy. More →

  • 28 Jul
    Can Your Portfolio Withstand Any Economic Environment? See What Ray Dalio Has To Say

    Can Your Portfolio Withstand Any Economic Environment? See What Ray Dalio Has To Say

    • With 86 months of economic growth and growing money supply, the current economic environment might soon change.
    • On top of the beta returns, specific alpha asset allocation can further increase your returns.
    • In this article you will find a strategy that works at all times.

    Introduction

    Ray Dalio is the most successful hedge fund manager by net gains. His Bridgewater Pure Alpha fund reached $45 billion in net gains in 2016 beating George Soros with $42.8 billion in gains since inception. What’s even more impressive is that Dalio has reached such a performance with only 4 negative years in the 40 year period. More →

  • 25 Jul
    Beware of “Thinkless” Investing

    Beware of “Thinkless” Investing

    • Passively managed funds do offer the lowest fees but invest in stocks without “thinking”.
    • High positive net inflows into passively managed funds push large caps higher regardless of fundamentals.
    • If non “thinking” investors panic when things turn, large caps will be the worst performers.

    Introduction

    Today we are going to discuss two related topics: fees and the general market consequences of passively managed investing funds.

    Fees are charged by funds for their services, be it active or passive management. Passively managed funds, which have the lowest fees, merely track an index. Over the last several years a trend has developed toward lower fees and passively managed funds which may also be creating a growing risk that equities are held by “weak” hands.  If panic comes, and investors pull their money out, passive fund managers will be forced to sell, creating further market havoc. More →

  • 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 →

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