A majority of American men now say college isn’t worth the cost. The WSJ reports on the changing attitudes toward higher education. Americans are losing faith in the value of a college degree, with majorities of young adults, men and rural residents saying college isn’t worth the cost, a new Wall Street Journal/NBC News survey shows. The findings reflect an increase in public skepticism of higher education from just four years ago and highlight a growing divide in opinion falling along gender, educational, regional and partisan lines. They also carry political implications for … [Read more...]
Nordstrom Uses Local To Fight Amazon Dominance
In a bid to fight against Amazon's retail dominance, Nordstrom is trying a new strategy it calls Nordstrom Local. The strategy will employ small stores, only 2% the size of its average property. The small stores will be service focused, with no dedicated inventory. Instead shoppers will be able to have merchandise brought to the store for them to try and can buy online and pick up there in the store the same day. The small stores will also offer personal stylists, alterations and tailoring, Trunk Club services and more. A statement from Nordstrom reports: The full list of services available … [Read more...]
Portfolio Strategy: Watch the Divergences
The global economy is in recovery mode. Europe is on the mend. China is improving. Economic growth in the U.S. is accelerating. It’s all clear for the economy and stock market then, right? That seems to be the opinion of the average investor. The Conference Board’s consumer expectations survey for stocks shows that investor sentiment is near its highest level of the bull market. So what’s the rub? The bond market, the gold market, and stock market internals tell a different story. The 30-year bond ended yesterday at a yield of 2.66%--giving up almost all of its post-election … [Read more...]
Is Your Portfolio Sitting on an Earnings Torpedo?
In Today's Financial Times, John Authers explains companies' motivations behind manipulating earnings. With plenty of companies "managing" their earnings, it's a concern that your portfolio may be sitting on what Authers calls an "earnings torpedo." “Within GAAP” manipulation involves dipping further into accruals than they would otherwise do, without resorting to outright fraud. After a while, even this will not work, and so they move on to fraud. In part this is driven by the asymmetric pressure from the market — the longer a company takes to come clean, the bigger and more damaging the … [Read more...]
Are Investors Too Bullish?
As a group, the retail investing public tends to arrive to the party late and stays too long. This chart comes courtesy of the WSJ Daily Shot and TD Ameritrade. According to TD Ameritrade, retail investors are more bullish than they have been in years. Elevated levels of investor sentiment tend to be most useful as a contrary indicator. The higher investor sentiment, the lower you should set your return expectations and the more you should demand those returns in the form of dividend payments. Share prices tend to fluctuate wildly as sentiment shifts, dividend payments do not. … [Read more...]
What’s Next for Commodities? Ask D.C. and Beijing
Since early 2016, commodities prices have been making up some of their massive post-2011 losses (see chart below). Some of the increase in commodity prices is thanks to strong demand. More of the increase relies on dollar weakness and Chinese stimulus plans. At the FT, John Authers explains the current bullishness in commodities. The US stock market has outstripped the rest of the planet ever since the financial crisis. But rising raw materials prices historically help the rest of the world outperform the US. That did not happen when metals prices rallied in the wake of the crisis — but … [Read more...]
Is this a Huge Red Flag for the Bull Market?
You know something isn’t quite right in financial markets when you start reading articles in mainstream newspapers about newly minted millionaires who made their fortunes day trading. Right on cue, the NY Times recently ran a story about a former logistics manager at Target, who has become a multi-millionaire day trading volatility. If you’ve wondered why markets are so calm and why volatility has been so subdued, this piece offers some insight. Each morning, at the market’s open, Seth M. Golden, a former logistics manager at a Target store, fires up the computer in his home office in … [Read more...]
How to Earn 7% Yields in the Bond Market
The Economist reports on more yield reaching in the bond market. We’ve written about the 100-year Argentina bond that was issued without a hitch, but Argentina isn’t the only country where we are seeing historic yield reaching behavior. With rates on high yield bonds offering little more than 5%, some investors apparently see no harm in loading up on Iraqi bonds. Yup, Iraq recently issued a $1 billion bond with an expected yield of 7%, but demand that was six times the available supply ultimately drove the yield on those Iraqi bonds down to 6.75%. Today they yield about 6.3%. Such eagerness … [Read more...]
Pet Care is a Business You Want to Be invested In
Pet care is a lucrative business. Historically much of the spending on pets has come from developed world economies like the U.S. and U.K., but as the FT reports here, pet ownership has risen dramatically in developing countries. A growing middle class in emerging markets is driving worldwide pet ownership higher. Since 2003, the number of pet dogs in emerging market countries has jumped 51% compared to a 5% rise in the developed world. “In poor countries people are more focused on a chicken that will lay eggs or a pig that might eat their waste. It’s only as they get a little bit richer … [Read more...]
Are the Euro’s Days Numbered?
In less than a year, Italy could have a government that is committed to either dropping out of the euro altogether, or to some other scheme such as creating a so-called 'parallel currency.' Either of these are obviously bad for the euro-zone as a whole. Italy is one of Europe's largest economies, and unhinging it from the euro would be a catastrophe for the currency bloc. But political momentum points toward a more euro-skeptic party winning in Italy's coming elections. The FT's Tony Barber explains how that could happen: Neither the left, nor the right nor Five Star has much hope of outright … [Read more...]
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