Weekly Update

Model-driven investing

Published August 26, 2016


Anyone who has experienced the loss from an investment can tell you that the emotional pain from that loss not only stings, it lingers. Studies show that our emotional response to loss far exceeds the joy experienced when our investments provide a positive return. (more…)

Weekly Update

August 19, 2016 Update


Option basics

Options are contracts to buy or sell a stock at a certain price. We can buy them as a proxy for buying or selling securities. We can sell them to generate income. Or we can buy them to protect other positions we own. (more…)

Weekly Update

August 12, 2016 Update


The doomsayers

We ran across the graphic below this week and found it amusing. We’ve often taken to task the doomsday prophets in the investment community. They make their living trying to convince the world’s investors that another financial catastrophe is just around the corner. Given that there is always a reasonable chunk of the population who shares the view of the doomsayers, it’s a pretty lucrative gig. Of course their track record of predicting doom is extremely poor. (more…)

Weekly Update

August 5, 2016 Update


FPResearch unveils the holy grail of investing strategies

The stock market historically delivers a 10-12% annual return. That level of return will double your money every seven years. But many investors never see that doubling because that return comes with the extraordinary risk of seeing your investment account drop by a third or more once a decade on average, and by 15-20% on an almost annual basis. This level of volatility leads investors to find investing in the stock market to be extremely hard on their emotions with many choosing to simply take their money out of the market regardless of the attractiveness of the long-term returns. (more…)

Weekly Update

July 29, 2016 Update


Putting Apple’s move in context

This week, for the first time in quite a while, former market darling Apple popped higher following a surprisingly strong earnings report. The stock gapped higher delivering another upward push to a powerful Nasdaq Composite rally in progress for five weeks now. Despite the one-day enthusiasm for the stock, more work is needed to reverse Apple’s year-plus decline as shown here: (more…)

Weekly Update

July 22, 2016 Update


Risk-on or risk-off?

Graphical ratio or “pairs” analysis is a quick way to see what preferences the market is displaying. Generally speaking, we are looking for whether the market is embracing a “risk-on” posture – e.g. choosing riskier assets to invest in – or a “risk-off” posture – showing a preference for lower-risk, defensive assets. (more…)

Weekly Update

July 15, 2016 Update


Initiation is a good thing

Sometimes stock investors just get things a-moving. We see big jumps in stock prices that clearly reflect a change of attitude. These big jumps can come late in a rally when investors fear of missing out (FOMO) kicks into high gear. We saw this FOMO on full display in September-October of 2007. Emerging market stocks had delivered a long and powerful run more than tripling in price over a four-and-a-half year period. (more…)

Weekly Update

July 8, 2016 Update


Robo-advisors – Passive gets a new package

The investment industry thrives on new products, new ways to invest that are usually just a different marketing spin on the same stuff. The basic investment strategies are well-known. You can endeavor to be a “value” investor buying low and intending to sell high. You can choose to be a momentum or growth investor buying “high” in hopes of selling at even higher prices those companies, industries, sectors, markets that are already moving up. (more…)

Weekly Update

July 1, 2016 Update


Charting the Brexit damage – outside of Europe

We might as well start where we left off last week. Then, we pointed out that the Dow Jones Industrial Average (DJIA) remained within its trading range despite the Brexit plunge. Monday’s trade this week punctured that pretty picture by dropping the DJIA below the line we drew thus heralding a change in market tone from kind of, sort of, maybe bullish to more of an unhappy view. By week’s end, however, the tone had dramatically flipped back as if the Brexit vote never happened. (more…)

Weekly Update

June 24, 2016 Update


Get on board!

Thursday’s “Brexit” vote shook up markets worldwide. Strong reactions from commodities, stocks, bonds, currencies – everything was affected by the vote. Whether that’s warranted or not time will tell. Is it the beginning of the end for the European Union? After all, the United Kingdom was not a part of the Euro currency and thus was really sort of only halfway into the EU anyway. Is this the first really serious rejection of the past couple of decades of globalization? It seems so. There appears to be those who embrace globalization as a positive force for how we can now seamlessly move goods and services around the world in one massive marketplace. (more…)