Great piece by Jason Zwieg in this weekend’s WSJ. Zwieg offers some solace to investors who still think financials and fundamentals are a more meaningful indicator of corporate performance than fantasies and fairytales about the future. Emphasis is ours. Pop quiz: Name the giant store whose customers scoff at whatever goes on sale, but flock to buy whatever costs the most. It isn’t a supermarket. It’s the stock market—especially over the past decade, when value stocks have moldered in the bargain bin. Such companies, trading at low prices relative to their earnings, net assets or other … [Read more...]
Think Your ETF Portfolio is Diversified?
If you are buying ETFs because you hope to build a more diversified portfolio than you believe you can get by purchasing individual stocks, this chart is for you. The chart below from Bespoke dispels the myth that ETFs always provide adequate diversification. The chart shows the weighting of the top two holdings in each S&P 500 sector. Like many ETFs, the S&P 500 sector ETFs are market-capitalization-weighted. As you can see, the top two stocks are driving the ship in most sectors. In the Communications Services, Energy, and Technology sectors, the top two stocks account for about … [Read more...]
If it Walks like a Duck…
In an October speech after the Fed decided to start expanding its balance sheet once again under the auspices of fixing problems in the repo market, Fed Chair Powell said, I want to emphasize that growth of our balance sheet for reserve management purposes should in no way be confused with the large-scale asset purchase programs that we deployed after the financial crisis. Neither the recent technical issues nor the purchases of Treasury bills we are contemplating to resolve them should materially affect the stance of monetary policy, to which I now turn. During the Q&A session following … [Read more...]
A Decade of Distortion: Implications for Retired and Soon-to-be Retired Investors
The 2010s were kind to U.S. stock market investors. There wasn’t a single bear market (down 20% from peak to trough) in the U.S. and stocks compounded at double-digit rates. The challenge for investors, as opposed to speculators, is that the gains were not driven entirely by improving fundamentals. The Big Driver of Stock Returns in the 2010s A convincing case can be made that the biggest driver of stock prices over the last decade was distortive monetary policy from the world’s biggest central banks. When the price of money is held at zero (negative in some countries) for nearly a … [Read more...]
Is Online Lending to Small Business This Cycle’s Sub-Prime?
Online lending to small businesses that don’t qualify for bank loans is booming. Sub-prime and Wall Street were blamed for the last crisis, but it was a prolonged period of too low interest rates that motivated investors to move capital into risky areas of the financial markets. Is the Fed making the same mistake again? The WSJ has the story. Emphasis is ours. The growth of online lending has been a boon to hair salons,bakeries and other small businesses that don't qualify for bank credit. Yetthis tech-enabled source of credit can mire some in debt they can't repay,raising concern about … [Read more...]
Best of Young Research 2019: Income Investing
Below are five of Young Research’s most popular income investing posts of 2019. Here's How to Explain Negative Interest Rates to Your Spouse Vanguard GNMA Outlook 2020 Is the World's Largest Money Manager Pushing You into an Annuity? The Dynamic Maximizers® Solution This Money Market Fund is Paying 47 Times More than its Competition … [Read more...]
Best of Young Research 2019: General Investment Strategy
Below are five of Young Research’s most popular investment strategy posts of 2019. This is Why Vanguard is Too Big Nine Ways to Powerfully Boost Your Investment Performance Is Gold a Good Long-term Investment? Value Has Never Been Less Valued Your Retirement Life: Our Cabin on Kodiak, Alaska … [Read more...]
Best of Young Research 2019: Dividend Investing
Below are five of Young Research’s most popular dividend investing posts of 2019. When Dividends Pay You to be Patient Young Research's Retirement Compounders® Investment Program Procter & Gamble (PG) Stock: The Only True Dividend King The Highest Yielding S&P 500 Stocks Dividends Then and Now Are the Answer … [Read more...]
Sweden Raises Rates—All the Way to Zero
After being one of the first countries to lead the world into the negative interest rate era, Sweden has decided to end that policy. Paul Hannon reports in The Wall Street Journal: In 2009, the Riksbank, the world’s oldest central bank, became the first to charge commercial banks to hold deposits rather than pay them interest. In 2015, it lowered its key policy rate below zero, following a similar move by the European Central Bank the year before. On Thursday, the Riksbank raised the key rate to zero from minus 0.25%. The bank moved because a majority of its policy makers expect inflation … [Read more...]
The Dividend King of the North
Which Canadian stocks are dividend kings? If you go by the internet’s definition of a dividend king (50 consecutive years of dividend increases), there aren’t any dividend kings in Canada, but as we wrote here, there can only be one true dividend king. The Dividend King of the United States is Procter & Gamble. Procter & Gamble is the dividend king of the U.S. because it has increased its dividend annually for 65 consecutive years (tied for first with one other company). Who is the Canadian Dividend King? There aren’t any Canadian companies that meet the 50-year dividend king … [Read more...]
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