Stocks

  • 16 Sep
    Want To Retire Comfortably? Do You Have $2,000,000?

    Want To Retire Comfortably? Do You Have $2,000,000?

    • The low yields we have now increase the amount necessary for a comfy retirement nest egg.
    • $500,000 is only estimated to last for a 13 year retirement. Most retirees will completely miss the mark.
    • Avoid risky assets no matter how tempting might the yield be.

    Introduction

    Last week we discussed the true cost of low interest rates with particular attention paid to pension funding. Many defined pension plans are underfunded, and it’s a situation that has to be dealt with now despite it being against human nature to think about a problem that will only arise in the distant future.

    On top of the problems in defined pension funds, low interest rates have a detrimental effect on general pensions and your retirement. More →

  • 13 Sep
    What To Expect From The Markets Now

    What To Expect From The Markets Now

    • The German bond’s 3% loss on a 12 basis point yield move shows how risky bonds are right now.
    • The value of the S&P 500 should be around 1,600 but could go lower with bad economic news.
    • Bonds and stocks seem very risky as they both have low yields and large downsides.

    Introduction

    Last Friday was a pretty scary day in the financial markets. The S&P 500 lost 2.45% and bonds also lost ground due to higher yields.

    Stocks and bonds are correlated and don’t provide quality diversification. We have been warning about the risks inherent to bond investing for a while with warnings that the low yields mean high risk and low returns. More →

  • 12 Sep
    Is Cash An Opportunity Cost, Or An Opportunity?

    Is Cash An Opportunity Cost, Or An Opportunity?

    • Holding cash may be considered an opportunity cost, but its also a call option with no expiration date.
    • The yield you can expect from bonds is 1.5% and the yield from stocks is 2% or 4% when earnings are included.
    • Holding cash will give you the liquidity to load up the truck when opportunities come knocking.

    Introduction

    We’re often taught that action is the way to solve all issues; the more you work the more you have, and as good economists, we have to use all available resources. But that isn’t always the best way to approach investing because all that action may sometimes be just like rowing toward a cliff.

    The other option is to do nothing,—or even better, to do something completely separate from investing, like playing with your kids, traveling, etc.—and sticking to cash with a significant part of your portfolio for a while. More →

    By Sven Carlin Bonds Cash Investiv Daily Stocks
  • 28 Aug
    Sunday Edition: The Misunderstood Role of Stock Dividends

    Sunday Edition: The Misunderstood Role of Stock Dividends

    In Today’s reprint of Thomas’ Rebel Income newsletter ($1,164 annual subscription), he discusses the often overlooked but incredibly important role dividends play in your overall returns.  

    As you’ll see, over the last 25 years, $1 invested in 1990 has grown to almost $10 today including dividends. Whereas that same $1 without dividends has only grown to $6. That’s a 40% difference in overall wealth creation.

    In the Rebel Income picks, Thomas always looks to sell put options on fundamentally solid companies that pay strong dividends, since dividends are the single best indicator of true company strength. More →

  • 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 →

  • 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 →

  • 14 Aug
    Sunday Edition: Why Stock Assignments AREN’T a Bad Thing

    Sunday Edition: Why Stock Assignments AREN’T a Bad Thing

    If an investors is looking for a quick entry into a highly liquid stock he may choose to use a market order rather than a limit order.  

    However, if he wants to guarantee the price he pays for his shares he will always place a limit order, which will typically be at or below the current quote, unless he is a breakout trader, then his buy limit order may actually be above the current stock price.

    Another stock entry technique—which is arguably better than a limit or a market order, especially when trying to buy at or below the current market quote—is to first sell a put option on the stock you wish to acquire and hope for assignment. 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 →

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