Stocks

13 Apr
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 →
By Sven Carlin Bonds Investiv Daily Pension Funds Retirement S&P 500 Stocks US Economy
12 Apr
How To Prepare For Anything The Economy Throws At You
All stocks will rise with a rising tide, therefore it’s wise to buy those stocks that won’t fall off a cliff in a recession.

The usual suspects—like consumer staples, utilities, and healthcare—are good ideas, but not at any price.

Bonds are close to becoming a win win situation.

Introduction

Yesterday we analyzed the FED’s latest meeting minutes, and saw how when the FED applies historical probability calculations to their own estimations, the result is that anything can happen.

The FED itself stated that, in the next few years, economic growth could be anywhere between -0.5% and 4%, unemployment between 2% and 7%, and inflation between 1% and 3% with a 70% confidence interval. A 70% confidence interval means that there is a 30% chance economic indicators end up outside the above mentioned ranges. More →
By Sven Carlin Bonds Commodities Gold Investing Strategy Investiv Daily Market Forecast Recession Stocks US Economy
06 Apr
Read This Before Investing In The Next “Cool” Company
The investment thesis behind investing in cool businesses is based on stellar growth. As no business can grow forever, sentiment often changes and stock prices plunge.

We’ll discuss, Tesla, Nike, Lululemon, Whole Foods, Under Armour, GoPro, Fitbit, and Microsoft to find the best way to invest in such businesses, because many of them are great businesses.

In the end, it all boils down to earnings. If you’re a long-term investor, focus on the business and its long-term health.

Introduction

I’m a value investor and as one, I always try to invest with a margin of safety. However, sometimes I get carried away and invest in companies that don’t really meet my investing criteria.

The last investing mistake I made—where I invested in something because it was a cool brand, my wife loved shopping there, and it was growing fast—that perfectly relates to the topic of this article, was Whole Foods Market (NASDAQ: WFM). More →
By Sven Carlin Investing Strategy Investiv Daily Stocks
05 Apr
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 →
By Sven Carlin Healthcare Investiv Daily S&P 500 Stocks Trends
08 Mar
Inflation Has Arrived – Here’s What That Could Mean For Markets
After 7 years of enjoying interest rates close to zero, the party is over.

There are several scenarios that can develop, but the long-term outcome is clear.

In the short term, higher interest rates should increase demand for the dollar and U.S. assets, so we could see a higher S&P 500 in combination with higher interest rates.

Introduction

For the past year I have been writing about how things are bound to change when inflation finally arrives. Well, inflation has arrived and it’s quickly going higher which means that we’ll have to start talking in nominal and real returns, the FED will be forced to take action no matter the economic environment, and it will have significant repercussions on the economy and markets.

Usually when I’ve written about inflation, it was about something that will happen somewhere in the future. Now that inflation is finally here, I’ll discuss what will happen in the short term. More →
By Sven Carlin Dollar FED Inflation Interest Rates Investiv Daily Janet Yellen Stocks US Economy
07 Mar
The Superinvestors Of Graham And Doddsville – Is Buffett A Hypocrite?
According to Warren Buffet in 1984, investing and beating the market is simple: just use value investing and a margin of safety.

For this market, value investing is irrelevant. However if things change, value investing will become essential.

Spoiler alert: What I’ve written in this article you will either immediately like or totally disregard. Unfortunately, the latter will have a negative impact on your wealth.

Introduction

One short, 15-page article holds more investing insight than all the content published by the media in a year. It’s Warren Buffett’s article The Superinvestors of Graham and Doddsville.

As the article was written in 1984, it gives you the real, non-political and unconstrained Buffett. Today’s Buffet is a hypocrite because he is forced to say index funds are a good investment even though stocks are at valuations he would never approve of. He has become so big that anything opposite to positive statements would lead to a possible market meltdown. Plus, don’t be confused by the fact that he recently bought $12 billion of stocks, as he bought into extremely cheap sectors, you can read more about that here.

Today, I’ll summarize Buffett’s article and put it into today’s context. More →
By Sven Carlin Index Funds Investing Strategy Investiv Daily Stocks Valuations Warren Buffett
06 Mar
The Market Is Euphoric – It’s Time To Get Rid Of Your Overvalued Stocks
Market timing is tricky because if you missed the best 40 days in the last 20 years, your annual returns quickly turn from positive 8.19% to negative -1.96%.

But the fact remains that we are looking at a euphoric market with shaky economic foundations.

You don’t have to get out of the market. Getting out of overvalued stocks should suffice.

Introduction

With every new high reached by the DOW or the S&P 500, the market gets riskier. However, I don’t want to be another analyst that just predicts doom and gloom so today I want to discuss the best risk reward allocation and what an investor can do in these exciting but risky times. More →
By Sven Carlin Bull Market Investiv Daily Stocks Valuations
16 Feb
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 →
By Sven Carlin Bear Market Cash Investiv Daily Recession Stocks US Economy
14 Feb
A Look At The Crazy World Of Chinese Stocks
It isn’t unusual that a Chinese stock loses 75% to 90% of its IPO value after a year or two.

Delisting, lack of transparency, obscure companies, fraud, buyouts at large discounts, and fears around the economy are some reasons for such performance.

You should require at least 50% per year from Chinese stocks with minimum risk. Such opportunities can be found.

Introduction

Chinese stocks are, to say it in one simple word, crazy. And apart from crazy, looking at Chinese stocks that are trading on the NYSE seems like walking through a graveyard.

Companies like China Xiniya Fashion Limited (NYSE: XNY), China Zenix Auto International (NYSE: ZX), ChinaCache International (NASDAQ: CCIH), or Kingtone Wirelessinfo Solution Holding Ltd (NASDAQ: KONE) all seized the craziness going on in 2011 around China and listed themselves on American markets. The results for initial investors were disastrous. More →
By Sven Carlin China Emerging Markets Investiv Daily Stocks
03 Feb
Debunking Rebalancing Myths
The standard 60% stocks, 40% bonds allocation is extremely dangerous as bonds and stocks move together more often than not.

If something is overvalued, it doesn’t mean you should immediately invest in something that looks undervalued as it might just be less overvalued. If you think as a business owner would, it’s easy to know whether an asset is over or under valued.

Yearly rebalancing has the same effect as quarterly rebalancing, therefore it’s more time effective.

The Usual Stocks, Bonds 60/40 Rebalancing

I hate when I see fixed rules in how a person should approach a portfolio, and find the 60/40 rule—that says you should hold 60% of your portfolio in stocks and 40% in bonds—the dumbest of all because there is no causality between stock and bond prices.

The investing 101 theory says that stocks do well in economic booms while bonds do well in recessions. However, the correlation between stocks and bonds has been very variegated in the past. More →
By Sven Carlin Bonds Investiv Daily Rebalancing Risk Stocks