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What hope can there be for motivated stock pickers – no matter how much they sweat and toil – to outperform the low-cost index funds that simply mechanically track the market? Well – in spite of the absurd rise of the Nobel-acclaimed, and highly promoted, Efficient Market Hypothesis that claims that individual investors can’t beat the market – it turns out there is plenty! Just ask Warren Buffett, for one. [Let me explain.] Words: 1574
February 5th, 2012 | Posted in Investing,Stock Indices | Read More »
The stock markets in the West are stealthily forming bullish ascending triangle patterns and looking for breakouts while those in the East are all in a downward spiral. The U.S. dollar is also in an ascending triangle offset by gold which is transitioning from a bump phase to a run phase and could possibly fall as low as $1,420 per troy ounce in this correction. Silver is already in the run phase and could drop down to as low as $26. Analyses of these markets suggest that the Year of the Water Dragon may be full of surprises. Let me explain my determinations with a number of graphs. Words: 1122
January 6th, 2012 | Posted in Asset Allocation,Investing | Read More »
Third-quarter reporting season is set to begin [and,] as a result, the troubles in Europe are about to become background music as investors once again focus on individual company fundamentals and when it does, here are the three most important statistics we need to track. Words: 545
October 12th, 2011 | Posted in Investing | Read More »
Many investors believe the market will rise if the economy is growing and sink if it’s shrinking but that is the wrong way to think about it. Instead, the real focus should be on whether the economy is growing at a slow pace or a moderate pace. Indeed, with 2% growth, the stock market could steadily fall. Yet with 3% Gross Domestic Product (GDP) growth, the market could surge. The difference between 2% and 3% may not seem like much, but it is. [Let me explain.] Words: 730
July 9th, 2011 | Posted in Asset Allocation,Economy | Read More »
A market is not built solely on fundamental realities, but how broadly those realities are expected by investors. So it goes without saying that it can be very insightful to compare market expectations to reality. When expectations are high there is the likelihood for disappointment. When expectations are low there is a potential for upside surprise. There is actually an index that measures the relationship between economic reality and crowd expectations. It is the Citigroup Economic Surprise Index (CESI). [Let's take a look at what it is saying these days.] Words: 773
June 5th, 2011 | Posted in Investing,Stock Indices | Read More »
From a historical standpoint, the dividend yield of 2% on the S&P 500 is too low. It smacks of a stock market top and underscores the point that the market is too optimistic in the sense that investors are willing to forgo yield because they assume that they will get the return via the capital gain. The last time S&P yields were around this level was in the summer of 2000, and we know what happened shortly after that! Words: 888
December 28th, 2010 | Posted in Economic Overview,Economy,Investing,Stock Indices | Read More »
There are plenty of reasons to be concerned about the U.S. economy in 2011 [but not for U.S. stocks if the history of] the Presidential Cycle is any indication. The third year of a president’s [four year] term is typically the strongest producing an average annual gain of 14.12% for the S&P 500 and, under Democratic leadership, that number moves even higher to an average gain of 17.7%! Words: 436
December 25th, 2010 | Posted in Investing,Stock Indices | Read More »
Larry Edelson’s proprietary cycle analyses suggests that we could experience declines in the Dow 30 and S&P 500 to 9,000 and 1,000, respectively, by April of 2011; a potential decline in the price of gold to as low as $1126 by August of 2011 and a decline in the price of crude oil to as low as $69 next year – before taking off to record highs. Words: 781
November 29th, 2010 | Posted in Gold/Silver,Investing,Oil and Gas,Stock Indices | Read More »
In spite of the continuing ascent of the stock market we are not in a perfectly bullish scenario because a major concern going forward is whether or not the Bush tax cuts will be extended. I am of the opinion that they will be, because if they are not, then the markets will have a very ugly December.
November 15th, 2010 | Posted in Asset Allocation,Economy,Investing | Read More »
Gold and silver have had a sharp move downward in response to China’s first interest rate hike last week while the stock market inched up. It raises the question of whether gold is decoupling from the stock market. Words: 897
October 20th, 2010 | Posted in Gold/Silver,Investing,Stock Indices | Read More »
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