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Tag Archives: Cycles

BBRG: How to Invest and Profit in the Next Recession

June 17, 2019 9:00am by Barry Ritholtz How to Invest and Profit in the Next RecessionA slump is likely in the next year or so. There are ways to prepare for it.Bloomberg, June 17, 2019 Today, I want to discuss the next recession. I do not know when that is coming, only I do know that one will eventually be here. In the post-Great Recession era, which ended in June 2009, the economy has seen gradual improvements but...

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60 Days of Light

May 21, 2019 5:30pm by Barry Ritholtz We are now in one of the most delightful stretches of the year: The month on each side of the Summer solstice — in the Northern Hemisphere, it occurs at 11:54 am on June 21, the longest day of the year. What flows from that: the most amount of sunlight each day, the latest sunsets, longest days, etc. In NYC + surrounding areas, it is still fairly light out at 9pm. I love to take...

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Valuations, Returns & The Real Value Of Cash

Since the beginning of 2019, the market has risen sharply. That increase was not due to rising earnings and revenues, which have weakened, but rather from multiple expansion. In other words, investors are willing to pay higher prices for weaker earnings. The issue, of course, is that while it may not seem to matter in the short-term, valuations matter a lot in the long-run. I know what you are thinking. “There is NO WAY cash will outperform stocks over the next decade.”  I understand. After a...

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Has The Fed Done It? No More Recessions?

“Wow!” That is all I could utter as my brain spun listening to an interview with Chamrath Palihapitiya on CNBC last week. “I don’t see a world in which we have any form of meaningful contraction nor any form of meaningful expansion. We have completely taken away the toolkit of how normal economies should work when we started with QE. I mean, the odds that there’s a recession anymore in any Western country of the world is almost next to impossible now, save a complete financial externality...

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Trying To Be Consistently “Not Stupid”

“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” – Charlie Munger As described in a recent article, Has This Cycle Reached Its Tail, an appreciation for where the economy is within the cycle of economic expansion and contraction is quite important for investors. It offers a gauge, a guidepost of sorts, to know when to take a lot of risk and when to take a conservative approach....

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Has This Cycle Reached Its Tail?

We asked a few friends what the picture below looks like, and most told us they saw a badly drawn bird with a wide open beak. Based on the photograph below our colorful bird, they might be on to something.  As you might suspect, this article is not about our ability to graph a bird using Excel. The graph represents the current bull market and economic cycle as told by the yield curve and investor sentiment. As the picture is almost complete, the bird provides a clue to where...

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10-Investing Axioms Every Investor Should Learn

Martin Tarlie of GMO just recently wrote a great piece on the issue of the current U.S. Stock Market Bubble asking the question of whether or not it has finally burst. To wit: “A new model explains this dichotomy between price action and fundamentals by suggesting that a bubble in the U.S. stock market started inflating in early 2017, and continued to inflate through the third quarter of 2018. In the fourth quarter, however, indications were that the bubble had started to deflate. And when...

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The Populist Pathology

The populist pathology is incredibly simple; no one ever takes the blame. Things continually go off-track and officials merely shrug their shoulders and point their fingers. The very idea of accountability is anachronistic. Now that dark clouds are gathering, in the IMF’s words, the fingers are out again. President Donald Trump said Tuesday that he does not like the Federal Reserve’s decision to continue to hike interest rates. He also said that the United States economy does not have...

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29/11/17: Four Omens of an Incoming Markets Blowout

Forget Bitcoin (for a second) and look at the real markets.Per Goldman Sachs research, current markets valuation for bonds and stocks are out of touch with historical bubbles reality: https://www.bloomberg.com/news/articles/2017-11-29/goldman-warns-highest-valuations-since-1900-mean-pain-is-coming. As it says on the tin,“A portfolio of 60 percent S&P 500 Index stocks and 40 percent 10-year U.S. Treasuries generated a 7.1 percent inflation-adjusted return since 1985, Goldman calculated...

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The Same Crossroads

Writing earlier this year on the topic of the Fed’s future balance sheet reductions, Ben Bernanke had occasion to recount his experience from 2013. It was a stressful time for the Fed after they panicked into QE3 (and then QE4) and then almost panicked right out of it. The then-Fed Chairman stressed from his experience the importance of communications as a means to, as he sees it, maintain control. When, as Fed chair, I indicated in testimony in 2013 that the FOMC was considering slowing...

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