According to the IEA, a host of new efficiency measures, the rise of electric vehicles, and increased usage of bioplastics could combine to cap world oil demand by 2020. All these things together, which is what the IEA says would be required to limit global warming to within 2 degrees Celsius, would mean oil demand peaking around 2020 and declining by about 20 million barrels a day by 2040. That’s 36 million barrels a day lower than the average oil company forecast for 2040—a gap larger than OPEC’s current production. Some oil companies have acknowledged the potential for demand to peak … [Read more...]
They Call This Investing?
The FT reports how tech stocks have electrified the stock market, overtaking the so-called Trump trade. The performance has been driven by FANG stocks. Mutual funds that have been lagging for years are now jumping on the bandwagon to try to outperform the S&P 500. If you have been active in the markets for more than the bull phase of this market cycle, you already know how this ends. Emphasis is mine. The US stock market climbed another 1.4 per cent last week to close at a fresh record high but the tech industry has been the rally’s dominant fuel, particularly the “FAANGtastic five” — … [Read more...]
Income Investing: The Nightmare is Ending
For eight long years, conservative investors, retired investors, and income investors have suffered through a nightmare environment. Risk-free income in the form of full-faith-and-credit U.S. Treasury bills has been held off the market by a Federal Reserve more interested in serving the interests of Goldman Sachs than America’s savers. As our chart shows, that nightmare appears to be ending. There is still a long ways to go to get back to normal, but an investment in 6 month T-bills will yield you more than a full percentage point in income today. It will only take you about 72 years to … [Read more...]
Bitcoin Mania
Is there a Bitcoin Mania? When we posted on Bitcoin last Monday we asked if you could be a millionaire by Thursday. Since that post went live, Bitcoin is up 61%. As our chart below shows, Bitcoin has gone parabolic. YTD Bitcoin is up 185% and over the last month it has gained 110%. Maybe Bitcoin will turn out to be everything its promoters claim it to be. What isn’t a maybe is that a chart of Bitcoin bares a striking resemblance to the charts of almost every bubble in financial market history. … [Read more...]
China’s Debt Downgraded for the First Time Since 1989
After lowering China's credit ratings outlook to negative in March of 2016, Moody's has now cut the country's credit rating to A1 from Aa3. Moody's cited a likely rise in China's debt as the culprit. Bloomberg reports: Stocks and the yuan slipped in early trading after Moody’s reduced the rating to A1 from Aa3 on Wednesday, with markets paring losses in the afternoon. Moody’s cited the likelihood of a “material rise” in economy-wide debt and the burden that will place on the state’s finances, while also changing the outlook to stable from negative. It’s “absolutely groundless” for Moody’s … [Read more...]
Are These Popular Funds in a Mini-Mania?
For 11 weeks straight tech focused mutual and exchange traded funds have been pulling in investor money. Since the start of 2017 the funds have gathered $8.7 billion in new investment according to BofA Merrill Lynch and EPFR Global. The tech funds are on their way to the fastest pace of growth in at least 15 years. Chris Dieterich writes at the Wall Street Journal: It’s not hard to see why big-cap tech names have been en fuego. These companies have well-known brands and dominant businesses. At the same time, middling economic growth in the U.S. has made fast profit and earnings growth harder … [Read more...]
BP Dividend Explained
British Petroleum (BP) is one of only about 50 companies in the world that paid out more than $4 billion in dividends last year. BP pays dividends both on its ordinary shares in the United Kingdom and on its American Depository Shares (ADSs) in the U.S. The BP dividend is a vital source of income to investors all over the world. Not only is it one of the top dividend payers in terms of total dollars, but it is also one of the highest yielding big dividend stocks. As of this writing, BP’s American Depository shares offered investors a yield north of 6.5%. In an environment of negative and … [Read more...]
Vanguard GNMA Outlook 2017
One of the major factors that will impact the outlook of the Vanguard GNMA fund in 2017 is the Federal Reserve. After holding rates near zero for almost a decade, the Fed finally began a process of normalizing interest rates. The Fed has explained to the public it plans to raise interest rates at a gradual pace until the overnight interest rate is at a level that neither stimulates nor restrains economic growth. Compared to prior cycles, the Fed’s normalization of interest rates has been more glacial than gradual, with only three rate hikes in the 17-month period. But with inflation and … [Read more...]
Portfolio Strategy: How Jeff Bezos Can Teach You to Be a Successful Investor
It may seem ironic that the CEO of America’s least profitable big company has insight to offer on investing in profitable businesses, but he does. Yes, Jeff Bezos ran Amazon.com for years without turning a meaningful profit—decades even, but there is no denying the guy is brilliant. In the span of about 20 years, Bezos managed to turn Amazon.com into one of America’s largest companies. He continues to disrupt and decimate brick and mortar retail, and under his leadership Amazon has spawned an entire new industry in the form of Amazon Web Services. How did Bezos do it? A relentless … [Read more...]
Here Is a Risk FANG Investors May Be Underestimating
Some investors in FANG stocks have a belief that the businesses they are investing in are so dominant that they can’t be caught by the competition. This may or may not be true. If it is though, are FANG investors ignoring regulatory risk? Here The Economist makes the case that regulators need to new approach to anti-trust to level the playing field in today’s data driven economy. These titans—Alphabet (Google’s parent company), Amazon, Apple, Facebook and Microsoft—look unstoppable. They are the five most valuable listed firms in the world. … The nature of data makes the antitrust remedies … [Read more...]
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