Market Forecast

  • 10 Jan
    Don’t Be Fooled By Projections

    Don’t Be Fooled By Projections

    • Forecasts are extremely positive, but know that a bear market or a recession are never in the picture.
    • Of all the S&P 500 ratings, 49% are Buy ratings, 45% are Hold ratings, and 6% are Sell ratings.
    • Be sure to understand the risks of what you’re doing and know history. It may not repeat itself but it rhymes.

    Introduction

    Market bulls base their positivity on strong earnings and economic growth in 2017. However, analysts are usually very optimistic about future developments. But as the forecasted events come closer, most of them cut their estimations.

    Similarly to what analysts do, policy makers are also usually very positive about future economic developments. We could say that positivity is in their job descriptions. More →

  • 05 Jan
    If You Don’t Own Gold, You Know Neither History Nor Economics

    If You Don’t Own Gold, You Know Neither History Nor Economics

    • The bull case for gold is getting stronger for monetary, fundamental, and technical reasons.
    • Gold miners offer a positive asymmetric risk reward opportunity.
    • However, in the short term, anything is possible.

    Introduction

    I’ve borrowed the title of today’s article from Ray Dalio, the manager of the $150 billion Bridgewater hedge fund.

    Historically I have been against owning gold as it is not a yielding asset. However, after seeing how the global monetary base expands and will probably expand further when the next recession comes along, it’s a good time to contemplate an investment in gold as a hedge against human stupidity and greed.

    Today, I’ll elaborate on the bull case for gold, the risks, investment options, and why I think some of those options have extremely positive asymmetric risks. More →

  • 04 Jan
    Fundamentals & Sentiment: Sven Dissects 1,626 U.S. Stocks

    Fundamentals & Sentiment: Sven Dissects 1,626 U.S. Stocks

    • It is possible to build a well-diversified portfolio with low PE ratio stocks that have equal the growth of high PE ratio stocks.
    • Short exposure and analysts’ targets indicate the market is in a very positive mode.
    • The market is extremely short term focused. We’ll identify where to look to find the opportunities.

    Introduction

    Using data from Quant, I’ve analyzed 1,626 U.S. stocks.

    The factors I’ve analyzed are: market capitalization, current and forward PE ratios, price to book value, dividend yield, percentage short, analysts’ targets, 52-week highs and lows, and earnings per share growth.

    The goal of this analysis is to provide insight into how to beat the market in 2017. I believe that research, thorough analysis, and patience will always outperform the market, especially because the distribution of the above-mentioned factors is all over the place as you will see below. More →

  • 30 Dec
    Why Big Pharma Isn’t A Good Investment Right Now

    Why Big Pharma Isn’t A Good Investment Right Now

    • The pharmaceutical industry is facing regulatory headwinds amidst positive global trends.
    • Fundamentals show that all the positives are already priced in leaving more downside room than upside potential.

    Introduction

    The pharmaceutical sector has been one of the worst performers in 2016. It’s down 11.22% year-to-date while the S&P 500 is up 13.37%.

    From a longer-term perspective, the pharma sector has largely outperformed the S&P 500. From the low point in the 2009 financial crisis, the iShares U.S. Pharmaceuticals ETF (IHE) has gained 291% while the S&P 500 has gained 233%.

    Today, we’ll analyze sector trends, risks, and the fundamentals of potential pharmaceutical investments to see if the recent pullback is an investment opportunity. More →

  • 27 Nov
    Sunday Edition: Extreme Investor Sentiment Indicates A Tradable Bottom In Gold

    Sunday Edition: Extreme Investor Sentiment Indicates A Tradable Bottom In Gold

    The longer you’ve invested in, or traded financial markets, the more you probably realize just how difficult it is to accurately time financial markets. Pundits and talking heads will tell you it’s impossible. However, after 20 years of trading and investing, including stocks, bonds, currencies, futures, and options, I do believe it’s possible to identify key characteristics that are present at or near every major turning point in virtually every market. More →

  • 24 Nov
    Vacation In Europe? Definitely. Invest There? Not So Fast…

    Vacation In Europe? Definitely. Invest There? Not So Fast…

    • The situation in Europe is getting better and will improve further due to its weak currency.
    • The stock market is, however, still risky due to high valuations. But as inflation picks up and required returns increase, stocks should become cheaper.
    • As Europe is very segmented, many risks can arise, so waiting for better risk reward opportunities will pay off.

    Introduction

    In the last two years, the dollar has moved strongly against the Euro while the European stock indexes practically haven’t gone anywhere despite the BREXIT, the Deutsche Bank crisis, and the upcoming Italian referendum.

    Today we’ll analyze the current risk reward situation for U.S. investors wanting to diversify into Europe by analyzing currencies, valuations, and the general politic and economic risks Europe holds. More →

  • 22 Nov
    Things Are Finally Changing – Are You Ready To Seize The Opportunities?

    Things Are Finally Changing – Are You Ready To Seize The Opportunities?

    • Economic growth has been fueled by credit in the last 30 years with increasingly lower interest rates.
    • A reversal is inevitable and will lower consumption and investments as credit tightens.
    • A 100-basis point increase in corporate debt costs would lower S&P 500 pretax earnings by 6.3%.

    Introduction

    In her latest speech, FED Chair Janet Yellen clearly stated that she expects global economic growth to firm up, supported by accommodative monetary policies abroad, U.S. inflation to reach the targeted 2% level, and the FED to raise interest rates relatively soon.

    After seven years of low interest rates and low inflation, the impact of the above mentioned changes has to be assessed very carefully as there is no recent historical precedent. More →

  • 11 Nov
    Forget About The Election Noise, Let’s Talk About China

    Forget About The Election Noise, Let’s Talk About China

    • China’s long term outlook is very positive and its debt is not worrying.
    • However, due to the nature of economic cycles, we have to expect and prepare for potential trouble coming from China.
    • When trouble will happen is anybody’s guess as many have called negative scenarios several times, but those have so far failed to materialize.

    Where China Is Now & Where It Is Going

    China is the growth motor of the global economy. It consumes about half of the global produced copper and produces half of the global steel output. This is due to the incredible GDP growth China has achieved in the last 25 years, which has averaged 9% per year. More →

  • 04 Nov
    This Metal Offers The Best Risk Reward Potential… And Has A Minimum 50% Upside Potential.

    This Metal Offers The Best Risk Reward Potential… And Has A Minimum 50% Upside Potential.

    • Copper consumption in relation to GDP per capita is essential for understanding the future demand for the metal.
    • At higher than $1.5 per pound, the copper cost curve becomes very steep indicating a sharp boom in copper prices when deficits eventually arise.
    • The five-year investment perspective necessary for copper seems long, but returns of 1,000% are on the table.

    Introduction

    Yesterday we discussed iron ore, aluminum, platinum and zinc. Today we will focus in on copper.

    Copper prices haven’t moved much since the beginning of this year, trading in a range between $2 and $2.2 per ounce. More →

  • 01 Nov
    GDP Is Up But Stocks Are Down – How You Should Respond

    GDP Is Up But Stocks Are Down – How You Should Respond

    • Inflation is approaching 2% as the current dollar GDP has increased to 4.4%.
    • Both inflation and GDP growth will force the FED to take action – the selloff in yielding assets will continue.
    • Nondurables consumption leads to GDP growth alongside exports and inventories buildups questioning GDP growth sustainability.

    Introduction

    Last Friday, the Bureau of Economic Analysis released the GDP data for Q3 2016. At first, it looked surprisingly good with the GDP growing at an annual rate of 2.9% for the quarter. This is excellent news as it takes the economy out of its anemic growth rhythm seen in the last two years. More →

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