Published April 23, 2021
Some long-term investment models say that we have just begun a new secular bull market. A secular bull market is one with years of rising stock values ahead. While stock valuations currently seem quite high, rising and recovering corporate earnings will help bring those valuations somewhat back down to a more normal range. One factor behind the longer-term market optimism is the shifting demographics at play in the U.S. (more…)
Published April 16, 2021
A couple of investment stories have piqued our interest recently. We wanted to comment on them to perhaps provide some perspective on these events.
We know that cheap money, while generally good for jumpstarting the economy, eventually breeds all kinds of excesses. Often those excesses show up as one-off, seemingly random events which, when taken together, form a picture of a more serious issue. Such was the case in the summer of 2007 as two hedge funds at investment bank Bear Stearns were suddenly shut down. (more…)
Published April 9, 2021
The past few days have marked an important milestone in the market’s recovery. The volatility index (VIX) measuring the relative “fear” of investors has dropped below its key reference line as the chart below shows. Fear has subsided and the market has returned to normal levels. (more…)
Published April 2, 2021
This week’s market action reminds us that April is often a favorable month for investors, particularly for tech/consumer stocks. This week, those stocks look to have begun a rebound from their March rest period. Over the past 15 years, the Nasdaq 100 (QQQ) has posted a gain 80% of the time in April, making it the second most reliably strong month for this index. (more…)
Published March 26, 2021
Market corrections are typically defined as a decline of at least -10%. But they can also be corrections “through time”. A case in point is the chart of Amazon below. After leading the way higher for stocks from the initial Covid-19 plunge, Amazon has traded sideways for the past nine months, correcting in time. (more…)
Published March 19, 2021
These days it seems there is a high level of financial investment activity going on. Witness the recent Congressional hearings about the online-driven mania in Gamestop and other “meme” stocks. We cannot remember a time when individuals trading stocks were brought before Congress. Every week there is a new acronym, new concept, or new purported “bubble” taking shape. We will take this space this week to describe, define, and digest some of the major new areas in the investment world. (more…)
Published March 12, 2021
Below is the most recent analysis from Schwab’s Liz Ann Sonders. While some have struggled with the seeming disconnect between the stock market and economy over the past year, Ms. Sonders outlines how the market and economy have been much more in sync than we might realize. (more…)
Published March 5, 2021
The market’s preferred narrative has changed over the past month leading to a selloff in the tech & consumer-heavy Nasdaq. When the current market rally started way back in April 2020, the argument was that the stable earnings growth and global presence of the mega-cap tech and consumer stocks like Amazon, Facebook, Nike, et al. would be the best place for stock investors to park their money. These brands are substantially online or ‘digital’ in their business operations, and less likely to be impacted by the new stay-at-home lifestyle. (more…)
Published February 26, 2021
Interest rates have ripped higher along with stocks as expectations for a very strong post-pandemic economic recovery gain traction. This week, however, that rise in rates appeared to reach a point where concerns crept in. Stocks tumbled as investors worried that the rise in rates was too high, too fast. (more…)
Published February 19, 2021
Below is a good overview of the powerful forces behind the market’s seemingly endless uptrend. The market will pull back at some point. But the factors below, provided by our friends at DIM, suggest that pullback is likely to be short-lived. (more…)