Portfolio rebalancing is a necessary chore that all investors should consider, but too few do. Portfolio rebalancing is counter to many investors' behavioral biases. When you rebalance you are often selling your winners and buying your losers. Why would anybody sell their winners and buy more of their losers? Here Fidelity offers some insight on how rebalancing can help control portfolio risk. Higher markets and risk levels Let’s say the last time you decided to rebalance your portfolio was during the bear market in January of 2009. Since then, the market will have made some big changes … [Read more...]
How to Invest in an Age of Compromised and Biased Information
In investment management where you spend much of your time reading, gathering and analyzing information. The trustworthiness and reliability of news and information is vital to your success. The same is true for all investors. You need reliable and trustworthy information to make informed investment decisions. The ugly reality is that it is getting harder and harder to find sources you can trust. The decline of print media has eroded the quality of many of the best print publications. The Wall Street Journal announced earlier this month that due to an accelerating industrywide decline in … [Read more...]
This is What Makes Investing in Technology Dangerous
The technology sector is one of the most exciting sectors of the stock market. Tech companies are on the cutting edge of innovation and opportunity. It also helps that in tech, unlike in almost any other industry, massive fortunes can be made in a relatively short period of time. The thrill of finding the next Microsoft or Apple before it takes off attracts many to tech shares, but investing in tech also has a downside. Technology may be the most innovative sector, but that also makes it one of the most competitive. For the economy competition helps increase growth and productivity, but … [Read more...]
Does Trump offer hope for Income Investors?
Eight years of near zero interest rates in the bond market have inflicted untold pain on America’s retired investors and savers. Those who saved diligently year in and year out for a comfortable retirement have been punished by an activist Fed. A Fed that has tried to use monetary policy, a tool designed to smooth out cyclical speed bumps in the economy, to repair structural economic problems best addressed by fiscal authorities. Could a Trump Presidency spell the end of America’s failed experiment with Monetary Keynesianism? As the WSJ points out here, a Trump presidency may offer hope. … [Read more...]
This is what Dr. Copper thinks of President Trump
Copper prices have soared almost 20% since Donald Trump was elected president. Copper is said to have PhD in economics because it has applications in a range of industries. Everything from the construction and automotive industries to electronics. Copper prices tend to move with the business cycle. Copper prices didn’t just start rising after Trump was elected. They started rising well ahead of the election and they have been up for 14 consecutive days. Did copper see a Trump victory when few others did? Maybe, but a new plan from China that calls for additional spending on building and … [Read more...]
This is the Currency Trend to Watch
Capital is flowing out of China again, and at an accelerating rate. The yuan has fallen to a fresh six year low as capital flows out of the country. The WSJ reports that China’s foreign currency war chest, while still formidable, has plunged by almost $46 billion in October. Goldman Sachs says that the outflows from China are running at a rate of almost $80 billion per month. While Beijing has tried to stem the outflows, the Chinese are finding ways to pull money out of the country. The WSJ offers some insight “Can anyone tell me what has happened to the renminbi’s exchange rate? How … [Read more...]
Portfolio Strategy: Shock, Awe, and Investing After the Election
Trump’s victory will undoubtedly go down as one of the biggest upsets in U.S. political history. Despite being written off by the D.C. elites, the globalists on Wall Street, the in-the-bag-for-Clinton news media, the know-nothing Hollywood crowd, and many in his own party, Trump pulled off a stunning victory. Americans across the country and especially in the rust-belt states turned out for Trump in a big way. They’ve apparently had enough of the status quo from both parties. Trump didn’t run on a traditional Republican message. He ran a populist-outsider campaign that in many ways hews … [Read more...]
World’s Biggest Coal Consumer Doubles Down on the Fuel
China is the world’s largest consumer of coal. In recent years, China has relied on coal to generate about two-thirds of its electricity. China has been signaling that it would like to reduce coal consumption to meet the promise it made to the United Nations to reduce carbon emissions. What does a smaller coal footprint look like for China? The WSJ has the story. China’s government said it would raise coal power capacity by as much as 20% by 2020, ensuring a continuing strong role for the commodity in the country’s energy sector despite a pledge to bring down pollution levels. In a … [Read more...]
Is Amazon All it’s Cracked Up to Be?
Over recent years, Amazon shares have been a Wall Street darling. The online retail franchise is what Amazon is most widely recognized for, but the most profitable business segment—Amazon Web Services (AWS)—has nothing to do with online retail. Amazon Web Services is a cloud services platform offering compute power, database storage, content delivery, and other functionality to businesses. AWS is Amazon’s fastest growing business segment and its crown jewel. While the retail operation barely turns a profit with margins of less than 1%, AWS boasts margins of more than 25% and growth in … [Read more...]
How to Invest in a Flat Stock Market
Notwithstanding this morning’s big rally, since year-end 2013 most stocks have gone nowhere. The NYSE Composite, the Russell 2000, and the MSCI All-Country World Index are all basically flat over the last 34 months. The one index on our chart below that is up during this time-period is the NASDAQ 100. Carried by the likes of Apple, Amazon, Facebook, Google, and Microsoft, the Nasdaq 100 is up about 30% since year-end 2013. If you aren’t willing to speculate with your serious money and risk another dotcom era bust in NASDAQ stocks, what’s the best way to invest in a flat market? At Young … [Read more...]
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