Stocks

  • 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 →

  • 01 Jul
    Should You Switch to a More Active Investing Strategy?

    Should You Switch to a More Active Investing Strategy?

    • Passive investing has been excellent in the past decade but has gone nowhere in the last two years.
    • Higher valuations are increasing volatility and risk which gives opportunities for more active strategies.
    • Due to the high valuations in 1968, only an active strategy would have produced positive returns in the period up to 1982.

    Introduction

    The S&P 500 has gone nowhere since December 2014. Several reasons have influenced such a performance, but the most impactful factors seem to be market fundamentals deteriorating while central banks keep limiting the downside by increasing available liquidity. The FED was supposed to begin raising interest rates, but the 0.25% hike was insignificant, and now there is even speculation that the FED could lower interest rates again. More →

  • 29 Jun
    BREXIT Aftermath: Where to Look for Returns & What to Avoid Now

    BREXIT Aftermath: Where to Look for Returns & What to Avoid Now

    • U.S. and Europe are overvalued, especially seeing the current political situation and economic fragility.
    • What’s about to hit Europe and the U.S. already hit emerging markets in 2015. There are opportunities in emerging markets now, but where?
    • Bonds seem the riskiest asset of all with no yield and huge potential downside.

    Introduction

    After last week’s BREXIT vote the markets have been in a free fall with a slight recovery yesterday. But savvy investors have been expecting this and it has been a recurring theme at Investiv Daily that stocks are overvalued. In such an overvalued environment it is normal that inflated asset prices take a beating at any sign of future uncertainty. More →

  • 24 Jun
    How to Prepare Your Portfolio For The Next Recession or Stock Market Crash

    How to Prepare Your Portfolio For The Next Recession or Stock Market Crash

    • The risks of a slowdown are higher than the upside.
    • Fundamental trends are negative in advanced economies while emerging markets show higher growth rates and are cheaper.
    • It is important to create a diversified portfolio with uncorrelated assets.

    Introduction

    In an environment where it seems maximum potential for the U.S. economy has been reached, the St. Louis FED chief, James Bullard, has said in his most recent report that he favors only one interest rate increase through 2018, which would at best keep things stable. His view is further supported by the fact that the unemployment rate is sitting at below 5%, and the Personal Consumption Expenditures PCE inflation—measured by the Dallas FED—is at 1.84%, both of which signal that the economy has reached its maximum potential. More →

  • 20 Jun
    Dividend Aristocrats: Should You Buy?

    Dividend Aristocrats: Should You Buy?

    • Stock picking amid dividend aristocrats should give even better results.
    • Dividend aristocrats come from recession-proof industry sectors.
    • PE ratios vary from 11 to 155 and dividend yields from 0.4% to 6.5%.

    Introduction

    A company receives the title of ‘dividend aristocrat’ when it has continuously increased its dividend for the last 25 or more years. This means that the company manages to go through recessions and market shocks with a growing, healthy cash flow that enables constant dividend increases. More →

  • 15 Jun
    If Stocks Are Risky, What About Bonds?

    If Stocks Are Risky, What About Bonds?

    • Yields should be the main factor when choosing whether to invest in bonds or stocks.
    • As yields cannot go much lower, bonds become risky too.
    • Historically any significant increase in bond yields brings to negative returns.

    Introduction

    It is almost common knowledge that in the long term stocks outperform bonds as bonds are less risky and therefore have lower yields. But if we look at the question from the title of this article from a long term perspective where stocks always outperform, then there is no risk in investing in stocks as eventually you will be rewarded with higher returns. And this is exactly the current market’s perception on the stocks vs. bonds issue. More →

    By Sven Carlin Bonds Investiv Daily Stocks
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