Category: Markets
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Most Dangerous Groups to Financial Stability
Today’s market is frothy, no doubt about it. Everything’s near all time highs, even as central banks are set to cut rates again. There’s over 16 trillion dollars in negative yielding debt outstanding in global bond markets. Global growth and inflation have been tepid. Corporate debt issuance in the US is booming with cheap credit…
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Global Investment Themes
Main themes as I saw them from the 2019 CFA Annual Conference in London: Growing Inequality Sustainable Investment and Climate Change Artificial Intelligence and Machine Learning Big Data The first of these themes can be tied to the remaining three. Inequality There is a tangible dispersion between the haves and have-nots of the world, in…
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Recipe for a Market Crash
Earnings season is upon us and a diabolical mash of market conditions is converging to make it an interesting one. Let’s get cooking. Ingredients: Two tablespoons of rising stock prices One cup rising price to earnings ratios One cup falling dividend yields 2 cups falling earnings estimates A dash of slowing global growth One scoop…
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Two Kinds of Smart
How do you define intelligence? A scene from Good Will Hunting comes to mind. “My boy’s wicked smaht.” What does wicked smaht leadership look like? Here’s how the hard sciences are defining intelligence: The equation above was developed by Shane Legg (Deepmind) and Marcus Hutter. It states that intelligence is directly related to achieving positive outcomes across…
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Choices We Make
“Accidents” allowed life to be possible on Earth. For example, the leading theory is that the moon formed when an object smashed into early Earth. It knocked earth on a tilt so we have seasons. World destroying meteors would have hit the Earth if Jupiter’s gravity hadn’t been our protector. If this hadn’t happened, the…
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Jingle Bells, Batman Smells: YTD Reflection & 2019 Positioning
Christmas season is upon us and geez has the year flown by. Below is a reflection on the year’s returns and what to expect/how to position going forward. Returns year to date have been tepid in the US and abysmal in Europe and Asia. The question is, what should investors expect moving into 2019? Growth…
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The Climate Change Conspiracy and How to Position Your Investment Account in 2019
President Trump tweeted the following on Nov 6, 2012: US manufacturing is not competitive even without regard to climate change! It’s common economic sense. Chinese production costs are lower than the United States. Chinese manufacturing yearly wages amounted to $9,207 in 2017. The Federal Reserve Bank of Saint Louis Economic Research division estimates the average hourly…
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Patterns in the Numbers
Ray Dalio emphasizes credit cycles as integral to his firm’s investment strategy. Watch this video on how the economy functions: While we can be sure the pattern will repeat itself in some form or another, we can only be sure how the pattern played out in the past and play the game of averages. With…
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Get Paid to Take Risk
Is the risk-reward trade-off broken? Historically smaller companies have higher stock price returns, but this relationship has faded since 2008. What happened and why aren’t investors being compensated for taking more risk? Table 1.1 shows how small-cap stocks have performed relative to large-cap stocks since the Great Financial Crisis in 2007-08. There is more volatility…
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Government vs. Free Market: Crashes of the Past 100 Years
Were the most significant drops in financial markets a function of unstable free markets or government intervention? Nassim Taleb, author of bestseller The Black Swan, often speaks on the danger of putting abnormal events in tidy boxes. Readers should be aware that there are many factors influencing markets at any given time, and by assigning…
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