stocks (9)

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Macro And Credit - Buckling

Watching with interest the slowly grind higher in US interest rates with some weakening signs coming from US economic data such as the US trade deficit in goods getting spanked with orders for larger domestic appliances and other durable goods falling by a cool 3.7% from the month before, led by a hard drop in vehicle demand, when it came to choosing our title analogy for this week's conversation we reminded ourselves of "buckling" being a mathematical instability that leads to a failure mode. When a structure is subjected to compressive stress, buckling may occur. Buckling is characterized by a sudden sideways deflection of a structural member. This may occur even though the stresses that develop in the structure are well below those needed to cause failure of the material of which the structure is composed. As an applied load is increased (US interest rate hikes) on a member, such as a column, it will ultimately become large enough to cause the member to become unstable and it is sai

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“Low volatility could be ‘the quiet before the storm,’” Nobel laureate Robert Shiller told CNBC last week, adding: “I lie awake worrying.” Over the past 20 years, the CBOE Volatility Index (VIX) has closed below 10 on only 21 days, 13 of which have been in the past two months. The current streak of 270-plus days without a 5% drawdown in any of the major U.S. indices is the longest since 1996. Meanwhile, U.S. equity values continue to diverge from earnings — Schiller’s Cyclically Adjusted PE Ratio (CAPE) has only been higher two times in market history: 1929 and 2000.

Yet, despite the many bulls claiming low volatility is historically normal, and therefore not a warning sign, evidence is beginning to mount that U.S. equity markets may be near a volatility-driven tipping point. With the market consolidated (WILTW June 29, 2017) and buoyed by the lowest interest rates in 5,000 years, investors have taken on more and riskier leverage in search of yield. Compounding the risk, much of t

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Admin

Don't Be Fooled The Bond Rally Continues

1291344?profile=RESIZE_480x480We’ve been bulls on 30-year Treasury bonds since 1981 when we stated, “We’re entering the bond rally of a lifetime.” It’s still under way, in our opinion. Their yields back then were 15.2%, but our forecast called for huge declines in inflation and, with it, a gigantic fall in bond yields to our then-target of 3%.

The Cause of Inflation

We’ve argued that the root of inflation is excess demand, and historically it’s caused by huge government spending on top of a fully-employed economy.  That happens during wars, and so inflation and wars always go together, going back to the French and Indian War, the Revolutionary War, the War of 1812, the Mexican War of 1846, the Civil War, the Spanish American War of 1898, World Wars I and II and the Korean War.  In the late 1960s and 1970s, huge government spending, and the associated double-digit inflation (Chart 1), resulted from the Vietnam War on top's LBJ’s War on Poverty.

By the late 1970s, however, the frustrations over military stalemat

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Admin

When Stocks Are On Sale

This caught my eye as I tend to look at stocks when they near a significant, long-term support such as a 100 month or 200 month EMA or SMA.  Of course I'm buying with a long term perspective in this approach but it got me wondering: Is is better to hold your breath and simply buy stocks when they've sold off 20%? The downside still terrifies me but looking at historical returns is intriguing.   From Awelathofcommonsense:

Large cap U.S. equities continue to hold up well with the S&P 500 down roughly 12% from its all-time highs reached last spring. To some degree, this performance has masked the global bear market going on in the rest of the world. Take a look at this list of country ETFs from Bespoke Investment Group:

 

Screen Shot 2016-02-10 at 10.21.57 AM

The average drop from the 52-week high on this list is just shy of 30%. Not too pretty. But beauty is in the eye of the beholder in these situations. Historically, buying global stocks after they have fallen into bear market territory has been rewarding for investors.

I

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Admin

The Long Road Of Proving Yourself As A Investor

A reader asked the other day, "How much time do you need before you can separate skill versus luck in investing?" 

My answer was "probably 20-30 years," which he found astounding. He thought I'd say five years. But here's my reasoning. 

If a doctor performed one successful surgery, you can be pretty sure he's an expert. If he does one successful surgery every day for a year, he clearly knows what he's doing.

Investing is different. There are thousands of stocks, and at any given time, a fair number of them will be exploding higher. With millions of investors, some will be holding disproportionate amounts of those winners at any given moment. It can take five or 10 years of successful returns for an investor to make a case that results aren't entirely due to chance.

But even then -- with, say a 10-year track record of success -- an investor can't claim expertise. Or at least reliable expertise you'd expect from a doctor or an engineer. That's because the world is always changing, and th

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Admin

Which Is Wrong? Bonds Or Stocks?

1290848?profile=RESIZE_1024x1024With so much money flowing into bonds and treasuries (TLT shown) in 2014 while the stock market rose, one must wonder..........which one is going to give?  (click chart to enlarge)

Certainly it would seem not everyone believes the economy is strong enough to support future earnings and rising profits.

Is the five-year bull run finally running out of steam?

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Stock Buybacks; Sustainable Smoke And Mirrors

1290774?profile=RESIZE_480x480My simplistic view of the stock market, the one my muddled brain is able to wrap around, is to imagine that of the waterfalls at the Continental Divide at Glacier National Park in Montana.  Numerous rivers, all converging into to one.  Hedge funds, pension funds, investment firms, your own 401k, option flows, you name it.........and share buybacks.

Throughout the recovery, the amount of cash being held on corporate balance sheets was in some instances, astounding, leaving many investors wondering if/when the cash would be deployed. 

Well if you haven't noticed, they have been deploying more and more.  Just imagine the many streams you see in this image to the right.  One is M&A which can be the acquisition of a company to compliment ones existing structure OR a direct competitor which is a plus for a stock by making your space that much smaller.  Another stream, a small one, is (hopefully) R&D, another stream represents cash being returned to shareholders via higher dividends and las

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10 Apps For Investing And Finance

We've spoken numerous times in Chat about various apps for our smart phones and tablet, but how many apps are truly out there?  Google is alleged to have over 700 apps in Google Play however I've never counted and I'd imagine that number fluctuates continually as old, blah apps are deleted and replaced with hip, upbeat inspirations.  Of course this still does not include apps for Apple iPhones/tablets and those apps just sitting out there on blogs and websites.  It boggles the mind so I began a search and came across this list, which strangely misses tdAmeritrade's Think or Swim app; but what apps do YOU use?  Please add them to the comments below or give us your opinion on those shown.  I'd love to hear from you!

1. CNBC Real-time - Download - Free app that allows you to view real-time quotes before, during and after market hours. Other features include watching CNBC video clips, viewing charts, and managing a watch list.

2. Yahoo! Finance - Download - Yahoo's free stock app offers

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