Monday , June 17 2019
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Tag Archives: Stocks

Why Ray Dalio Is Wrong On Capitalism

Ray Dalio is the thoughtful, somewhat controversial founder of the world’s largest hedge fund, Bridgewater Associates, which he started in 1975. While much of his writing is private, I (and many others) peruse every word we can of his and the Bridgewater team’s thinking. I find it to be some of the most interesting market commentary I read. Lately, Ray has been far more open with his thinking, posting books and essays. He posted on LinkedIn rather controversial stories: Why and How Capitalism...

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“Green New Deal” What It Means For Investors

The Green New Deal (GND) is a plan to drastically change the American economy and improve social conditions for its people. It was put forth in March by Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Sen. Ed Markey (D-Mass.) but stalled in Congress after a Senate defeat. However, the GND still is a topic of wide debate and already has spawned various copycat proposals – and its underlying movement still will have a significant effect on the economy and investors going forward. Modeled after FDR’s...

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Technically Speaking: The “Sellable Rally” Chart Review

Over the past couple of weeks, we have been discussing a “sellable rally” following the sell-off during the month of May. To wit: “This week we are going to look at the recent sell-off and the potential for a short-term ‘sellable’ rally to rebalance portfolio risks into. The markets only need some mildly positive news at this point to spur a ‘short-covering’ rally. I would encourage you to use it to reduce risk, rebalance holdings, and raise cash until the ‘trade war smoke’ clears. The market...

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Passive Proliferation – A Snake Eating Its Own Tail

Passive funds have come a long, long way from their humble beginnings. Having started as small and scrappy and distinctly out-of-consensus investment options, they have grown impressively over the last ten years and now are often considered the defaults for many investing activities. As passives have grown, however, an important dynamic has changed. When passive funds comprised only a small part of the total market, it didn’t matter much that they allocated capital according to criteria that...

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Investing On Persistent Foundations

The volatility in the investment markets over the past few months has been truly astonishing. Prices are violently fluctuating and the range of traditional volatility indicators like the VIX have exploded. Just look at the daily moves of the popular U.S. stock market indices for example. While it’s generally folly to attribute specific causes to market action (there are simply too many actors with too many motives), I think it’s fair to say that the trade negotiations with China likely played...

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Technically Speaking: Tops Are Processes, Bottoms Are Events

In April of 2018, I posted an article laying out 10-reasons why the “bull market” had likely ended for a while. To wit: “I highly suggest you use any substantial rally to reduce risk and rebalance portfolios accordingly. Why? Because I am going to out on a limb and making a call.’I think the 9-year old bull market may have ended in February.’”  As I stated then: “In 2015, the market plunged as Fed Chair Janet Yellen brought QE3 to its conclusion and started hiking interest rates for the first...

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What If There Was No Punchbowl In The First Place?

The celebration was premature. As usual, people were extrapolating reflation into recovery. Getting relatively better after being really bad is not the same as truly healing. Reflation is a necessary but by itself insufficient condition for normalcy. The latter requires the former as a first step and then needs enough momentum (of opportunity) to carry it through only then completing the journey. In July 2013, amidst the so-called taper tantrum the 30-year swap spread registered above zero...

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More What’s Behind Yield Curve: Now Two Straight Negative Quarters For Corporate Profit

The Bureau of Economic Analysis (BEA) piled on more bad news to the otherwise pleasing GDP headline for the first quarter. In its first revision to the preliminary estimate, the government agency said output advanced just a little less than first thought. This wasn’t actually the substance of their message. Accompanying this first revision was the first set of estimates for corporate profits. For the second straight quarter, net incomes in the sector fell. This part of economic life can be...

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Powell Channels Bernanke: “Subprime Debt Is Contained”

I recently discussed one of the biggest potential “flash points” for the financial markets today – corporate debt. What I find most fascinating is how quickly many dismiss the issue of corporate debt with the simple assumption of “it’s not the subprime mortgage market.” Correct, it’s not the subprime mortgage market. As I noted previously: “Combined, there is about $1.15 trillion in outstanding U.S. leveraged loans (this is effectively “subprime” corporate debt) — a record that is double the...

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