The widely accepted definition of a bear market is a decline of 20% or more from the bull-market high. By that definition, the S&P and the Dow aren’t officially in a bear market, (you wouldn’t have missed the flashing red headlines on CNBC or the big bold typeface on the front page of the paper) but for all practical purposes stocks are now in a bear market. Over 75% of the 3,000 largest U.S. companies are now down at least 20% from their highs. That’s a quorum by my count. The small-cap Russell 2000 index has fallen 26% from its bull-market high. And as of last week, the MSCI … [Read more...]
How to Profit from Gold Stocks
Below is a post we did on gold mining stocks about two years ago. We repost this not to boast about how well our gold stocks have done relative to the market since then, but to impress upon our readers just how vital it is for patience to play a dominant role in your investment process. It doesn’t matter what type of investor you are or what type of investment strategy you follow, if you don’t invest with patience, you are going to be challenged to achieve long-term investment success. Patience is fundamental to the investment process we follow at Young Research and for clients of our … [Read more...]
S&P Wakes up to Global Currency Wars
Leave it to the nationally recognized ratings agencies to slam the barn door after the horses have left. The clip below is from Bloomberg this morning. Standard & Poor's is about four years late to the party. Currency wars have been a major factor in global financial markets for years now. Our regular readers have been all over this. We hope you have too. Bloomberg Headline from Earlier Today … [Read more...]
Japan Jumps on the Monetary Crazy Train
Last week the Bank of Japan decided to go negative with interest rates. The BOJ cut rate on new reserve deposits held at the bank to -0.10% from +0.10% and hinted that it could reduce rates further into negative territory. Why did the BOJ decide that it needed to punish banks with negative rates to stimulate its economy? Apparently after years of running the printing presses at full tilt to buy up everything from government bonds to Japanese stocks (the BOJ owns half of the ETF market in Japan), in what has turned out to be a futile attempt to hit a 2% inflation target, the BOJ has decided … [Read more...]
Is Now the Time to Buy Apple Shares?
Last year around this time, Apple was viewed by the market as a company that could do no wrong. Coming off of the successful launch of the iPhone 6 and 6 Plus, Apple reported what was then the largest quarterly profit of a public company in history—a whopping $18 billion. That was up over 37% from the same quarter a year ago. Impressive numbers to be sure. In the first two months of 2015, Apple shares catapulted higher by over 20%. During those two months Apple’s market value increased by over $150 billion dollars—that’s about equal to the total market value of Walt Disney or IBM or Visa or … [Read more...]
Expect an Easy Money Message from the Fed
Just last month, the Fed hiked interest rates for the first time in almost a decade and told the public that it would gradually raise rates—four hikes were supposedly in the cards for 2016. Today, the Fed meets again and many are hoping Yellen & Co., will deliver a dovish message. Some are even agitating for more bond buying. Could the Fed really change its mind on the outlook for the economy after just six weeks? You betcha. I give you exhibit A and exhibit B below. The Fed claims that its monetary policy is data dependent, but by data they really mean the level of stock prices, … [Read more...]
Has Oil Hit Bottom?
Oil prices have been crushed over the last 18 months. From its high in June of 2014, the benchmark U.S. oil price is down 74%. Over the long-run prices follow fundamentals, but in the short-term, psychology and sentiment can play the dominant role. We may be seeing that today. Where is the sentiment on oil now? I don’t have to tell you that it is dismal. Just pick up a newspaper. All I see are calls for lower prices for longer and that oil is going to $10 or $15 per barrel. That wasn’t the case at this time last year. The market was still expecting a quick recovery to $60-$70 oil. When it … [Read more...]
The Silver Lining to the Correction
It has been a painful start to the year for equity investors. The S&P 500 is down 10% YTD and the smaller Russell 2000 is down 14%. Corrections are never fun when you are in the midst of one, but it is from corrections and bear markets that profound opportunity arises. The S&P hasn’t fallen enough from its May 2015 high to enter official bear territory yet—that would take another 7% from current levels, but there are many individual stocks that have. The chart below shows the percentage of Russell 3000 stocks (the largest 3,000 US stocks) that are down more than 20% from their … [Read more...]
Recession Here
The latest industrial production numbers were released this morning and they came in below estimates with the prior month revised down. The year-to-year rate of change in industrial production is now -1.75%. In the post WWII period, industrial production has never contracted by 1.75% or more without that contraction being associated with a recession. One data point does not a recession forecast make. And this time could of course be different as the industrial sector is a much smaller part of the economy than it was decades ago, but investors should have their antennae up sensing for signs of … [Read more...]
Transports Signal Trouble
Transportation stocks tend to be a leading economic indicator. The theory goes that before you can sell the goods you have to move the goods. Train, plane, and truck businesses are some of the first to see a pickup in demand or a drop in demand. When transportation stocks break down, it is an indication of potential trouble for the market and economy. The Dow Transports have been in a relative downtrend versus the Dow Industrials for the last year and half, and Young Research’s Moving the Goods Index—a measure of the performance of non-airline transportation stocks has also been in a … [Read more...]
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