S&P 500

  • 13 Apr
    Why You Should Consider Defined Benefit Pension Plans Before Investing

    Why You Should Consider Defined Benefit Pension Plans Before Investing

    • By adjusting a few percentage points on expected returns and discount rates, unfunded amounts become huge.
    • It’s essential to check the possible future pension obligations of your investments as they can easily cost you your returns. I’ll show a possible impact on General Electric.
    • If you have a defined benefit plan of any kind, don’t take it for granted. The only certain retirement income is the one you provide by yourself.

    Introduction

    A good way to see what’s going on in the pension fund industry is to analyze the 50 largest defined pension plans of the S&P 500 through Goldman Sachs’s 2016 Pension Review. More →

  • 05 Apr
    Healthcare Is The Only Sector Where Investing Now Isn’t That Bad Of An Idea

    Healthcare Is The Only Sector Where Investing Now Isn’t That Bad Of An Idea

    • Fundamentals and the long-term demographic trend show that the healthcare sector is undervalued.
    • As it’s a recession-proof sector, largely diversified investors should be overweight healthcare and seize the current halt in price growth.
    • We’ll discuss the top ten healthcare stocks and show that there is something for everybody to invest in: dividends, stability, low valuation, high valuation, growth, takeovers, etc.

    Introduction

    Yesterday’s article focused on how baby boomers will put downward pressure on stocks in the next 15 years. Today we’ll discuss a way to make money on the same trend. More →

  • 24 Mar
    Using Intrinsic Value To Measure Portfolio Performance

    Using Intrinsic Value To Measure Portfolio Performance

    • The market is irrational and can’t be used as the only measure of investment performance.
    • Imagine if all the businesses you own suddenly delisted, you’d look at their value in a different way.
    • Intrinsic value is based on the business owner perspective which is essential for reaching healthy long term returns.

    Introduction

    This past Tuesday was a bad day for stocks with both the Dow and the S&P 500 falling more than 1%. This isn’t very significant for now, apart from the fact that it broke the longest run the S&P 500 has ever seen without a 1% decline (64 days in comparison to 34 days in August 1995). However, it’s an excellent introduction to today’s topic on how we measure investment performance. More →

  • 17 Mar
    Do You Really Know What Risk Is & Can You Handle It?

    Do You Really Know What Risk Is & Can You Handle It?

    • Risk can’t be defined as volatility as it includes factors like your retirement, your children’s college tuitions, mortgage payments, unemployment, etc.
    • In life altering situations, nobody thinks about the highest expected utility hypothesis.
    • The personal side of risk is more important than any ratio, coefficient, or return potential.

    Introduction

    Defining investing risk is crucial for a healthy approach to investing. Some say risk is the chance that something goes wrong, some define it as volatility, others as the risk of permanent loss. However, 99.9% of the articles, news reports, and videos, don’t even mention risk, let alone define it or quantify it for the discussed investment. This is because 99.9% of people don’t like to face reality. It’s human nature to put our heads in the sand and postpone difficult decisions. More →

  • 27 Feb
    A Value Investment Philosophy

    A Value Investment Philosophy

    • If you want to succeed in investing for the long term, your focus has to be on potential losses, only later should you look at potential gains.
    • Risk can’t be determined from historical data, it only depends on the price paid.
    • Risk avoidance is compatible with investing success when the correct approach is used.

    Introduction

    Given the great response, I’ll continue with breaking down Seth Klarman’s legendary book Margin of Safety.

    You can read my introduction to Klarman’s Margin of Safety here, my review of chapter one, Where Most Investors Stumblehere, my review of chapter two, The Nature of Wall Street Works Against Investorshere, and The Institutional Performance Derby: The Client Is the Loser chapter, here.

    Today, we’ll focus on the second part of the book, A Value Investment Philosophy.  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 →

  • 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 →

  • 08 Aug
    Signs of Fragility in the Economy Point to an Impending Bear Market. What To Do Now To Protect Yourself.

    Signs of Fragility in the Economy Point to an Impending Bear Market. What To Do Now To Protect Yourself.

    • The last jobs report was good news but it also indicates higher costs and full employment.
    • An “easy to hire, easy to fire” mentality is in the air.
    • Healthcare, cash or short term trades should be the best options in this situation.

    Introduction

    Last week the Nasdaq and S&P 500 reached yet another record high. Aggressive central bank stimulation pushes investors to disregard risks and look for any kind of yield or growth. Not looking at risk is the worst thing an investor can do, but they also shouldn’t fight the trend. More →

  • 02 Aug
    Euphoria & Denial Point to the Last Days of the Bull Market

    Euphoria & Denial Point to the Last Days of the Bull Market

    • Risks are cumulating and getting bigger.
    • U.S. GDP growth is slower than expected, earnings and oil prices continue to decline.
    • Japan is unable to grow while BREXIT risks are still unfolding.

    Introduction

    It is difficult to find good news lately. The last really good news was the June jobs report when 287,000 jobs were added. Since then, most of the news seems dismal, however, it has yet to have a negative impact on financial markets. It’s as though investors are just hoping for something good to happen in the future. As hopes are an immaterial human feeling, they should not be the base for investment decisions. More →

  • 29 Jul
    Corporate Earnings of the S&P 500’s Top 10: Why It Is Important for You

    Corporate Earnings of the S&P 500’s Top 10: Why It Is Important for You

    • Corporate earnings and fundamentals are variable, pick the stocks that best suit you.
    • There are low PE ratio stocks, high growth stocks, and high dividend yielders – anything you might want.
    • But be aware: some companies engage in buybacks that are detrimental to shareholders’ value.

    Introduction

    When you add up the top ten companies by weight, they account for 17.7% of the total weight of the S&P 500. For investors who are heavily invested in the S&P 500, following the earnings of its top ten companies is essential in order to understand the risks and rewards of being invested in the index. In this article we are going to assess the current market situation by looking at what has been going on with the 10 biggest companies in the S&P 500 index. More →

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