Tag Archive: Investing

Permabull? Hardly.

2024-12-17

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2024-12-17

I never thought someone would label me a "Permabull." This is particularly true of the numerous articles I wrote over the years about the risks of excess valuations, monetary interventions, and artificially suppressed interest rates. However, here we are. "Lance, you are just another permabull talking your book. When this market crashes you will still be telling …

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Economic Indicators And The Trajectory Of Earnings

2024-12-13

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2024-12-13

Understanding the trajectory of corporate earnings is crucial for investors, as these earnings significantly influence stock valuations and market performance. Economic indicators such as Gross Domestic Product (GDP), the Institute for Supply Management (ISM) Manufacturing Index, and the Chicago Fed National Activity Index (CFNAI) provide valuable insights into the economic environment that shapes company profitability. …

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Portfolio Rebalancing And Valuations. Two Risks We Are Watching.

2024-12-10

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2024-12-10

While analysts are currently very optimistic about the market, the combined risk of high valuations and the need to rebalance portfolios in the short term may pose an unanticipated threat. This is particularly the case given the current high degree of speculation and leverage in the market.

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How to Build a Diversified Investment Portfolio for Long-Term Growth

2024-12-09

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2024-12-09

Investing for the long term is a journey that requires careful planning, patience, and, most importantly, diversification. Building a diversified investment portfolio is essential for mitigating risk and ensuring steady growth over time. By spreading your investments across different asset classes, you can weather market fluctuations and achieve your financial goals more effectively. In this …

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How to Assess Your Risk Tolerance Before Investing

2024-12-06

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2024-12-06

Investing is an essential part of building wealth, but the key to success lies in aligning your investments with your personal comfort level. Assessing risk tolerance is the foundation of a successful investment strategy. By understanding how much risk you’re willing and able to take, you can make informed decisions about your portfolio and achieve …

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The Kalecki Profit Equation And The Coming Reversion

2024-12-06

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2024-12-06

Corporations are currently producing the highest level of profitability, as a percentage of GDP, in history. However, understanding corporate profitability involves more than glancing at quarterly earnings reports. At its core, the Kalecki Profit Equation provides a valuable framework, especially when exploring the reasons behind today’s elevated profit margins and what could disrupt them. James …

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Leverage And Speculation Are At Extremes

2024-12-03

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2024-12-03

Financial markets often move in cycles where enthusiasm drives prices higher, sometimes far beyond what fundamentals justify. As discussed in last week's #BullBearReport, leverage and speculation are at the heart of many such cycles. These two powerful forces support the amplification of gains during upswings but can accelerate losses in downturns. Today’s market environment shows …

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Credit Spreads: The Markets Early Warning Indicators

2024-11-26

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2024-11-26

Credit spreads are critical to understanding market sentiment and predicting potential stock market downturns. A credit spread refers to the difference in yield between two bonds of similar maturity but different credit quality. This comparison often involves Treasury bonds (considered risk-free) and corporate bonds (which carry default risk). By observing these spreads, investors can gauge …

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“Trumpflation” Risks Likely Overstated

2024-11-22

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2024-11-22

With the re-election of President Donald Trump, the worries about tariffs and pro-business policies sparked concerns of "Trumpflation." Inflation has been a top concern for policymakers, businesses, and everyday consumers, especially following the sharp price increases experienced over the past few years. However, growing evidence shows inflationary pressures continue to ease significantly, paving the way …

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Yardeni And The Long History Of Prediction Problems

2024-11-19

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2024-11-19

Following President Trump's re-election, the S&P 500 has seen an impressive surge, climbing past 6,000 and sparking significant optimism in the financial markets. Unsurprisingly, the rush by perma-bulls to make long-term predictions is remarkable.

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Paul Tudor Jones: I Won’t Own Fixed Income

2024-11-15

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2024-11-15

Paul Tudor Jones recently voiced concerns that rising U.S. deficits and debt and increasing interest rates could lead to a fiscal crisis. His perspective reflects the long-standing fear that sustained borrowing will trigger inflation, raise interest rates, and eventually overwhelm the government’s ability to manage its debt obligations. In short, his thesis is that interest …

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The MACD: A Guide To This Powerful Momentum Gauge

2024-11-13

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2024-11-13

When we discuss technical analysis in our articles and podcasts, we often examine the moving average convergence divergence indicator, better known as the MACD, or colloquially the Mac D. The MACD is one of our favored technical indicators to help forecast prices and manage risk. Accordingly, let's learn more about the MACD to see how …

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Exuberance – Investors Have Rarely Been So Optimistic

2024-11-12

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2024-11-12

Investor exuberance has rarely been so optimistic. In a recent post, we discussed investor expectations of returns over the next year, according to the Conference Board's Sentiment Index. To wit: "Consumer confidence in higher stock prices in the next year remains at the highest since 2018, following the 2017 “Trump” tax cuts." (Note: this survey was …

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Exuberance – Investors Have Rarely Been So Optimistic

2024-11-12

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2024-11-12

Investor exuberance has rarely been so optimistic. In a recent post, we discussed investor expectations of returns over the next year, according to the Conference Board’s Sentiment Index. To wit: “Consumer confidence in higher stock prices in the next year remains at the highest since 2018, following the 2017 “Trump” tax cuts.“ (Note: this survey was completed before the Presidential Election.) We also discussed households’ allocations...

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Trump Presidency – Quick Thoughts On Market Impact

2024-11-08

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2024-11-08

The prospect of a Trump presidency has led to much debate and speculation about how markets might react. Depending on what policies are eventually passed, there are potential risks and opportunities in both the stock and bond markets. While the market surged immediately following the election, many potential future headwinds may impact returns from economic …

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Trump Presidency – Quick Thoughts On Market Impact

2024-11-08

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2024-11-08

The prospect of a Trump presidency has led to much debate and speculation about how markets might react. Depending on what policies are eventually passed, there are potential risks and opportunities in both the stock and bond markets. While the market surged immediately following the election, many potential future headwinds may impact returns from economic growth, monetary and fiscal policy, and geopolitical events. Here are some quick...

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Why Is Gold Surging?

2024-11-06

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2024-11-06

Record deficit spending, soaring money supply, and inflation are among the likely responses we would hear from investors to the question of why gold is surging. Instead of presuming those or other market narratives about gold prices are correct, let's analyze historical correlations between gold and economic and market data. In addition to helping you …

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Why Is Gold Surging?

2024-11-06

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2024-11-06

Record deficit spending, soaring money supply, and inflation are among the likely responses we would hear from investors to the question of why gold is surging. Instead of presuming those or other market narratives about gold prices are correct, let’s analyze historical correlations between gold and economic and market data. In addition to helping you better appreciate why gold is surging, our analysis will help you recognize that market...

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Election Day! Plan For Volatility

2024-11-05

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2024-11-05

With Election Day finally here, markets are bracing for potential volatility. History shows that the stock market can react unpredictably to election outcomes, especially when the results are unclear or contested. In past elections, sudden policy shifts, political uncertainty, or contentious outcomes caused heightened volatility—making it essential to prepare your portfolio now to weather whatever …

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Election Day! Plan For Volatility

2024-11-05

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2024-11-05

With Election Day finally here, markets are bracing for potential volatility. History shows that the stock market can react unpredictably to election outcomes, especially when the results are unclear or contested. In past elections, sudden policy shifts, political uncertainty, or contentious outcomes caused heightened volatility—making it essential to prepare your portfolio now to weather whatever the day brings. The S&P 500 has averaged a...

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