Since the Equifax security breach was reported, consumer have been guided to a number of different actions to protect themselves from potential identity theft. Some of them, like checking credit reports, are familiar to most Americans. Others are less common. At The Wall Street Journal, Daisy Maxey explains the pros and cons of freezing your credit. She writes: Should consumers be concerned about freezing their credit at credit-reporting companies beyond Equifax, Experian PLC and TransUnion? There are more than 100 consumer-reporting companies that provide data on consumers, such as their … [Read more...]
Investors Building Risk by Blindly Pouring Money into Index ETFs
So says the boss of one of the largest ETF providers in the U.S. It is hard to argue with his point that blind inflows into market-cap weighted index ETFs aren't setting the table for an ugly unwind if market sentiment turns south. The FT has the story below. The head of the fourth-largest exchange traded fund provider has warned that investors are blindly pouring money into highly concentrated stock indices, putting them at risk of outsized losses if markets tumble. Martin Flanagan, president and chief executive of Invesco, an asset manager that bought Guggenheim’s suite of ETF’s in … [Read more...]
This is Why High Growth Stocks are Dangerous
FAANG stocks continue to dominate the performance of markets YTD. Netflix hit a new all-time high again today after announcing it would raise prices yesterday. Better now than in 2019 when Disney pulls its content from Netflix. Facebook is bordering on all-time highs as are Amazon and Tesla. Tesla isn't a FAANG stock, but the investors who buy it are of the same ilk as those who buy the FAANGs. High growth stocks are for sure exciting to invest in. They are innovators and disruptors and often on the cutting edge of new technologies. Everybody wants to invest in the next big thing, but far … [Read more...]
The Pound is as Credible as it Always Was
There was a reason the Brits never adopted the euro, they already had a strong currency used as a reserve across the globe. The pound has been a cornerstone of currency markets for centuries, there's little reason to believe that "Brexit" is going to change its desirability. Mike Bird reports in the Wall Street Journal that currency markets aren't changing their fundamental views of the pound in light of Brexit, and neither should you. Following last June’s vote to leave the European Union, the pound plummeted and some analysts predicted the currency’s remaining place in the reserves of … [Read more...]
Are the Chinese Jumping Ahead on Electric Cars?
If you have ignored the electrification of the global auto fleet and marked up sales of electric cars to date simply to overzealous environmentalists and idealistic northern Europeans, this report from the WSJ should catch you attention. The Chinese government’s heavy hand in all economic matters in China is now driving electric vehicle sales in the country. China is the world’s largest electric vehicle market and it is poised to get bigger. The question now for investors isn’t whether the global auto market goes electric, but which companies will profit from the trend. If you are … [Read more...]
Are Index Funds Today’s Nifty-Fifty?
According to one seasoned value investing team that has been in the business for decades, index funds may be the next Nifty-Fifty. Many financial advisors are pushing index funds as one decision investments. Never mind the valuation ratios that have only been higher at the peak of the 1929 and the 2000 stock market bubbles these investors are told. It doesn't matter how expensive the FANG stocks are--they are winner take all businesses.t Barron's has more: Boniface (Buzz) Zaino of Royce Funds knows better than most the cost of charting a contrarian course. The value-oriented portfolio … [Read more...]
Nestle Changing its Strategy to Remain Competitive
Last week I wrote to you that Nestle is undertaking steps to provide shareholders with even more value, including setting targets for increasing profit margins for the first time ever. For most of its long history, Nestle has been focused on increasing sales as the best approach to market success. But the sector is slowing, and Nestle is focused on wringing more profits out of the sales it is already generating. SwissInfo.ch reports: Against the backdrop of lacklustre growth, the emphasis in the industry has been on cost-cutting to boost profits. Leading the way has been Kraft Heinz, … [Read more...]
This is your Cue to Start looking at Retail Stocks
Retail is a competitive business. The barriers to entry tend to be low and far too many publicly traded firms have businesses that aren't durable enough for conservative long-term investment. Amazon has put the wood to many of these firms. The WSJ reports in the article below that the "Amazon Effect," (not to be confused with "Bezos Law") has led to a souring on global retail stocks. Amazon is a darling of the financial press and in many Wall Street brokerage houses. Amazon has had a real impact on brick and mortar retailers, but the most pronounced effect has been in the stock market. As … [Read more...]
Today’s Biggest Risks
Nice piece from Stephen Roach at Project Syndicate. Little deep in the weeds on monetary policy, but worth your time. Normalization is all about a long-overdue unwinding of those distortions. Fully ten years after the onset of the Great Financial Crisis, it seems more than appropriate to move the levers of monetary policy off their emergency settings. A world in recovery – no matter how anemic that recovery may be – does not require a crisis-like approach to monetary policy. Monetary authorities have only grudgingly accepted this. Today’s generation of central bankers is almost religious … [Read more...]
You Won’t Believe What Happened to These Mutual Funds
Barron’s reported over the weekend that Third Avenue Management, the firm founded by deep value investing pioneer Marty Whitman, is undergoing yet another management shakeup. The once-venerated value-shop’s assets under management are down 85% since reaching a peak of over $26 billion in 2006. CRASH, while maybe unfair, is the only word that comes to mind. Third Avenue is a firm that Young Research was heavily involved with in the early 2000s. We advised the funds in our flagship strategy report and to our exclusive investment advisory client. We moved on from Third Avenue and all … [Read more...]
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