Famed emerging markets fund manager, Mark Mobius thinks so. Even if you think Mobius is off base in his timing, be sure your portfolio is properly positioned for a 30% correction. If you are invested in the stock market long enough, a 30% correction is a near certainty. Proper preparation is essential for all investors, but it holds doubly true for retired investors and those approaching retirement who don’t have the time to recover from a big stock market drawdown. Mark Mobius, the 81-year-old investment guru, believes the U.S. stock market is set for a 30% correction that would essentially … [Read more...]
Are Consumer Stocks Problems Fixable?
The WSJ is reporting that the big consumer brand companies are struggling to raise prices. P&G reported that prices fell by 2% in the first quarter of 2018—primarily driven by its Gillette razors. Unilever too reported that it was only able to raise prices by 0.1% in the first quarter. A combination of Amazon and a decline in brand loyalty are blamed for the lack of pricing power. A lack of meaningful innovation and a shifting ad market may have more to do with the pricing issues at the big brands than Amazon or brand loyalty. Pricing power, innovation, and quality go hand in hand. … [Read more...]
Where’s the Value in Tech?
IBM reported quarterly results this week that weren’t to Wall Street’s liking. The company beat earnings estimates, but the Street didn’t care. As is often the case in the tech sector, Wall Street is more focused on financial metrics that don’t translate into shareholder value. Revenue growth is where the brokerage community tends to focus, but it is free cash flow, dividends, and share buybacks that create shareholder value. Over the last 12 months, IBM generated $14 billion in free cash flow, paid dividends of $5.6 billion, and repurchased $3.6 billion in stock. Today, IBM is trading at less … [Read more...]
Red Alert! $164 Trillion in Global Borrowing Exceeds Pre-Financial Crisis
The IMF is sounding the clarion call on the world's excessive debt. With $164 trillion in total debt owed, the world is further in debt than pre-Financial Crisis levels. Chris Giles writes in the Financial Times: Global debt is now more than twice the size of the value of goods and services produced every year and at 225 per cent of global gross domestic product, it is now 12 percentage points higher than at its previous peak in 2009. The fund said there was now an urgent need to reduce the burden of debt in both the private and public sectors to improve the resilience of the global … [Read more...]
This Chart Has a Concerning Look
Is the Smart Money Index sending a signal of caution? While the Dow has rebounded from its lows, the Smart Money Index hasn’t been able to stage a sustainable rally. The Smart Money Index measures the performance of the market at the start of trading and the end. The "smart money" is believed to trade more heavily at the end of the day. The index isn’t infallible, but the big divergence between the Dow and the Smart Money Index isn’t a bullish signal. … [Read more...]
Bearish Concerns on Netflix
Netflix reports earnings after the close today and the Street is looking for another blowout quarter in terms of subscriber growth. Even the bears expect strong numbers, but those street analysts who have the courage to think long-term (there’s only one or two) see challenges in the long-run. As Barron’s reports, the analyst from Webush sees changes in the competitive marketplace that could shake up subscriber loyalty. To wit: Changes in the competitive marketplace could shake up subscriber loyalty. “The combination of less content from Disney (DIS) (pulling the majority of its newer … [Read more...]
Is the Apple’s HomePod a Flop?
Bloomberg is reporting that the Apple HomePod, Apple’s response to the Amazon Echo, is off to a slow start. In the first 10 weeks of sales, the HomePod has about 10% of the smart speaker market. And much of those sales came upon initial release. Price likely has something to do with the speaker’s slow start. The HomePod is $200 more than most smart speakers. Unless you are an Apple fanboy, it may be difficult to justify the premium price for what is a basic speaker with an inferior voice assistant. At first, it looked like the HomePod might be a hit. Pre-orders were strong, and in the last … [Read more...]
Is it Possible to Be Successful in Commodity-Index Investing?
The short answer to the question above is, probably not. Using an indexed based approach to commodity investing is futile. If you're investing in commodities, it's best done using an active approach. Simon Constable explains why in The Wall Street Journal writing: 1. Unlike for stocks, the influence of technology on commodities is deflationary. Consider the massive profits generated by tech companies like Facebook Inc. and Alphabet Inc. New technology has helped power big gains in those stocks. And technology has helped fuel gains in stocks outside the tech sector, as well, by improving … [Read more...]
More Good News for the Economy
Missed in all the noise about trade-wars and congressional investigations over the last few days is that the market got an employment report on Friday. The jobs numbers came in light which may say more about today’s low unemployment rate (or statistical noise) than it does about the health of the job market. One of the bright spots in the report was the growth in weekly earnings. Earnings growth is rising at its fastest pace in seven years. The hourly wage numbers aren’t yet as impressive as the Labor Department’s estimate of hours worked is up, but Americans’ paychecks are getting … [Read more...]
Surprise: Americans Still Love SUVs
The WSJ is reporting that Chevy is pulling the plug on the Chevy Sonic and Ford is doing the same with the Fiesta and Taurus. The Sonic and Fiesta compete with the Honda Civic. Both are small compact cars, whose popularity probably peaked when oil prices soared to over $140 per barrel in 2008. But with oil prices now in a modest range, car buyers have decided they actually prefer a roomier SUV/crossover or truck to the cramped compact car. The Taurus isn’t a compact car, but it has apparently fallen out of favor with car buyers. The Taurus has been in near continuous production since 1986, … [Read more...]
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