At Bloomberg, John Authers explains how Apple and other FANG+ stocks are breaking the way active mutual fund managers work. He writes: The FANG phenomenon is adding to the torture for active investment managers, as the latest report into U.S. mutual funds’ holdings from Goldman Sachs Group Inc. illustrates. It is only possible to beat a narrow market like this if you grab on to a few of the big winning growth stocks and hold them. This is a problem, because the Russell 1000 Growth index, popular as a benchmark for mutual fund managers, is reaching record levels of concentration: You can … [Read more...]
The Two Things Trump Should Do To Keep America Great
To keep America great in a lasting way, President Trump’s policy priorities #1 and #2 in a second term should be ending the Fed, and scrapping the personal income tax system in favor of a consumption tax. 1. End the Fed Ron Paul wrote in End the Fed, “A point we learn from this event [ed note: the 1907 banking panic] and every other banking panic in U.S. history is that crises have always led to greater centralization. A system that is mixed between freedom and the state is a shaky system, and its internal contradictions have been resolved not by tending toward a free market but rather … [Read more...]
Is This Time Different for Tech?
Apple is now worth more than $2 trillion, yes trillion. Apple is worth more than the sum of every company in the Russell 2000 index of small companies. Looking at this in terms of employees, there are almost 7 million people employed by the ~2,000 companies that make up the Russell 2000 index. Apple employs a mere 137,000 by comparison. That’s some pig! Exuberance in tech and mega-cap tech shares looks obvious to us. We recently questioned how Apple can be worth more than 3X what it was in 2015 when the company only makes about 6% more than it did in 2015. But Apple isn’t the only … [Read more...]
Fed Says Greatest Bailout of Investors in History Creates No Moral Hazard
Here comes the propaganda from the Fed research staff. A new research piece from the Federal Reserve Bank of New York claims the greatest intervention and bailout of speculators, leveraged hedge funds, and others who took too much risk or borrowed too much is all roses and butterflies. The researchers claim the Fed’s bailout created no moral hazard. Really? Were these guys huffing paint fumes, or is this just another in a long line of propaganda pieces that claim everything the Fed does makes the world a better place? One hopes it was only the latter, but it's difficult to distinguish … [Read more...]
The 1 Million Mile Battery
Tesla is rumored to be coming out with a 1 million mile battery that will be announced in September. Is this a game-changer for Tesla? Well no, there are other firms coming out with the same type of technology. They just aren’t as promotional or don’t have the same cult-like following as Tesla. The Economist has the details. Producers are now, though, planning to go much further than that, with the launch of “million mile” (1.6m kilometre) batteries. Zeng Yuqun, the boss of Contemporary Amperex Technology, a giant Chinese firm which produces batteries for a number of carmakers, said in … [Read more...]
Will Fortnite Lead an App Store Revolt?
Epic Games, the developer of Fortnite, has opened up a battle with Apple and Google over the fees they charge in their app stores. Will Epic lead a revolt against policies that many developers feel are unfair? Sarah E. Needleman reports for The Wall Street Journal: Apple and Google yanked “Fortnite,” one of the world’s most popular videogames, from their app stores in an escalating battle over the fees they charge developers to distribute their software and process in-app purchases. The conflict reflects growing pushback against Apple Inc.’s AAPL +0.60% App Store … [Read more...]
5 Lessons That Should Have Been Learned from the COVID Crash
S&P 500 nears a new record! It’s a shocking statement considering the economic environment. Unemployment is at 10%, personal income after backing out government assistance is still in the tank, entire industries are at risk of failing, and S&P 500 earnings are down about 30% from year-end 2019 levels. How are stock prices on the verge of hitting a new high? Look no further than the extraordinary actions of the Federal Reserve. That’s not meant to be a compliment. The Fed printed trillions in a matter of weeks and their actions to bail out everything--from money markets … [Read more...]
It Happens Suddenly
In the short-run, sentiment matters as much if not more than fundamentals. In the long run, it is fundamentals that win out. The push and pull between sentiment and fundamentals drives many investors to make emotionally charged decisions that sabotage portfolio performance. Stocks can climb higher slowly over a period of years and then crash suddenly, wiping out years of gains. Take the NYSE Composite Index as an example, because--let’s face it--the S&P is no longer representative of a broad portfolio of stocks. From year-end 2012 through February 12, 2020 (7+ years), the NYSE … [Read more...]
Here’s Why You Know Investor Enthusiasm is Overheated
Seeing the results of Apple’s decision to split its stock (a higher share price), Elon Musk, the world’s greatest stock promoter and decent car manufacturer, decided to split Tesla’s shares. Sure enough, Musk’s bet has paid off with Tesla’s shares rising almost 7% on the news. This is true even though a stock split simply divides the pie into more pieces. Institutional investors should pay attention here. The assumption that large stocks are priced rationally because there is no way the smart money in a stock this big ($250 billion plus cap) falls apart if a stock split results in a 7% … [Read more...]
Even Horrible Businesses Can Make Money at These Rates
Thanks to a bailout of the corporate bond market by the Fed that has institutionalized moral hazard (I get the reward, you take the risk), junk bond issuers are paying rates of less than 3%. Ball Corp, which is rated BB+ sold $1 billion worth of 10-year bonds at a coupon of 2.875% this week. Ball corp. isn’t a horrible business, but at rates this low, even horrible businesses can make money. The rate distortion is even more disturbing in the investment-grade market. Google, an AA-rated company, recently issued 5-year bonds at a 0.45% interest rate. What will Google, which generates … [Read more...]
- « Previous Page
- 1
- …
- 67
- 68
- 69
- 70
- 71
- …
- 218
- Next Page »