I’ve always been amazed at how quickly investors forget what it feels like to lose money. One of my favorite economists, whom will remain unnamed, is a constant stock market cheerleader. He’s never met a market he hasn’t liked. I love his optimism and I too believe, like he does, that Trump’s tax cuts will keep us chugging along for some time. But that doesn’t mean stocks will always rise like the sun. Where I take issue with this perma-bull economist is his call that the bull market in bonds is over. He also says that bonds, more than stocks, are in bubble territory. He takes the … [Read more...]
RAGE Gauge: January Euphoria
Investors are in what Bloomberg writer Adam Haigh calls a euphoria today. According to my RAGE Gauge, Americans are still not factoring in much, if any, risk. While the economy is strong and the stock market is up, it's always a good idea to be wary when others are not. When you hear words like euphoria being used to describe investor mentality, it pays to be skeptical. Haigh writes: Euphoria on Wall Street that stocks can just keep on building on record highs is getting so stratospheric that it’s reaching levels that previously signaled a slump. Analysts are ratcheting up their forecasts … [Read more...]
Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future
One of my takeaways from the book Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future by Ashlee Vance, is Musk’s ability to stay focused on his long-term goal of putting humans on Mars. At his rocket company, SpaceX, there was some grumbling from employees about when the company would file for an IPO enabling them to cash in on their rigorous years of work for the task master Musk. Here’s his email to employees (my emphasis in bold): Per my recent comments, I am increasingly concerned about SpaceX going public before the Mars transport system is in place. Creating the technology … [Read more...]
The ‘Hated’ Stock Market Rally
Do investors even believe this stock market? Despite reaping the benefits of the second longest bull market on record, investors seem to hate the rally. Wall Street Journal reporters Akane Otani and Chris Dieterich report: Rather than celebrating this wealth-generating machine, individual investors have expressed in multiple surveys just how little enthusiasm they have for this stock market. For years, analysts have described an “unloved” or even “hated” stock rally, where prices defiantly rise despite one of the weakest U.S. economic recoveries on record, Washington’s policy sclerosis and … [Read more...]
Will France Succeed in Privatization Drive?
The next time you fly into Paris, you may be landing at a privatized airport. That's the plan of the administration of President Emmanuel Macron. The new president and his allies want to privatize a large chunk of the 81 companies in which the government has ownership stakes. They appear to be focused on Aéroports de Paris (ADP), operator of Paris Charles de Gaulle and Orly airports as a starting place. David Keohane reports in FT: France owns 50.6 per cent of ADP, which has a market capitalisation of €15.6bn. The next largest shareholder is Vinci, the French construction and infrastructure … [Read more...]
The Emotional Toll of the Great Recession
Despite years of distance between today and the depths of the Great Recession, many retirees and savers are still feeling the pain. Lydia Depillis, writing for CNNMoney details the despair some Americans are still in. A business lost, a life reinvented Landscape architect Dan Donohue and his wife, who ran marketing and accounting for their small firm in Batavia, Illinois, had been through downturns before in his 25 years of experience. But the Great Recession, which brought to a halt the real estate development they counted on, knocked them out. With no business and four young kids to … [Read more...]
What Will Pensions Buy in 2018?
Securities valuations are at the highest levels they've ever been. You can see on my price-to-sales ratio chart of the S&P 500 that valuations are higher today than they were during even the dotcom era. While stocks are valued at record levels, the situation in fixed income markets isn't any better. With such high valuations for stocks and bonds, there is nowhere to go for pension funds looking for bargains. Despite the expensive markets, pension funds are still buying assets. Heather Gillers reports in The Wall Street Journal: In the public pension world, the willingness to chase … [Read more...]
Happy New Year!
Your Survival Guy: Most Popular Posts of 2017
As the year draws to a close I want to review some of the most read posts on Yoursurvivalguy.com in 2017. These are the posts that got the most attention from readers like you. The Last Issue of Intelligence Report After Dick Young announced his last issue of Intelligence Report, I wrote a series of "What now?" posts for readers. Here's an excerpt from Part III: In his first issue of Richard C. Young’s Intelligence Report, Dick wrote, “Hugh Johnson is known worldwide as an expert and writer on gardening and wine. In Connoisseur’s June/85 issue Michael and Ariane Batterberry wrote about … [Read more...]
The Truth Behind the S&P 500: Part V
As I've written to you before, the S&P is constructed somewhat like an actively managed fund. Real people choose which stocks go in, and which remain out. Robin Wigglesworth writes in the Financial Times that David Blitzer, the current head of the S&P Dow Jones' index committee, has done what few others have been able to do by created decent low risk returns. But Wigglesworth also points out that it is unlikely Blitzer's success can be maintained (that's not a knock on Blitzer who isn't attempting to generate maximum returns with his picks). It's just math. As volatility increases … [Read more...]
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