In light of recent events, it's worth reexamining this series I originally posted November 15, 2017. I’ve been asked the question “What do you think of Bitcoin,” as much as any question I’ve received about my website www.yoursurvivalguy.com or my series on the S&P 500. I’ve been in the weeds studying bitcoin (the currency) and Bitcoin (blockchain tech) and I’ll tell you, I haven’t had that “Aha!” religious-like moment experienced by, I’m told, its cult of followers. Count me in the “still skeptical” camp, with a distinction. Bitcoin, the technology, or blockchain, is here to stay … [Read more...]
The Truth Behind the S&P 500, Part III
“Welcome aboard!” For some reason, maybe it’s because of all the cruise ships that have visited Newport this Fall, I’m thinking about the S&P 500 as this huge cruise ship. Imagine the guests are common stocks, and to go ashore everyone is assigned to a small water taxi based on their size, or market-cap. The biggest companies, are in one water taxi. It barely floats from all their weight. Imagine that sinking water taxi, with its bow barely above water, steaming to shore with its five biggest guests: Facebook, Amazon, Apple, Google, and Microsoft. That water taxi is followed by the … [Read more...]
Investors Building Risk by Blindly Pouring Money into Index ETFs
So says the boss of one of the largest ETF providers in the U.S. It is hard to argue with his point that blind inflows into market-cap weighted index ETFs aren't setting the table for an ugly unwind if market sentiment turns south. The FT has the story below. The head of the fourth-largest exchange traded fund provider has warned that investors are blindly pouring money into highly concentrated stock indices, putting them at risk of outsized losses if markets tumble. Martin Flanagan, president and chief executive of Invesco, an asset manager that bought Guggenheim’s suite of ETF’s in … [Read more...]
This is Why High Growth Stocks are Dangerous
FAANG stocks continue to dominate the performance of markets YTD. Netflix hit a new all-time high again today after announcing it would raise prices yesterday. Better now than in 2019 when Disney pulls its content from Netflix. Facebook is bordering on all-time highs as are Amazon and Tesla. Tesla isn't a FAANG stock, but the investors who buy it are of the same ilk as those who buy the FAANGs. High growth stocks are for sure exciting to invest in. They are innovators and disruptors and often on the cutting edge of new technologies. Everybody wants to invest in the next big thing, but far … [Read more...]
Amazon Will Join the Tech Headquarters Arms Race
In the arms race to have the largest, most ostentatious tech headquarters of all, Jeff Bezos wants in. With Apple's Spaceship nearly up and running, and Google working in its moon-base-like dome called Charleston East, and the workforce of Facebook settling in nicely to their Menlo Park garden-roofed campus, Amazon wants to get in on the new headquarters action. James Mackintosh writes that the roll out of new headquarters is the latest warning sign for investors. He explains that high capital spending is usually a sign of pending under-performance. The list of warning signals for … [Read more...]
Is Wal-Mart Ready to Compete with Amazon Online?
A surge in e-commerce sales boosted Wal-Mart last quarter. After aquiring Jet.com, Bonobos.com, and beefing up Walmart.com, Wal-Mart is beginning to get some traction in online retail. Sarah Nassauer and Austen Hufford report: The strong sales figures come at a time of stiff competition among retailers facing Amazon.com Inc. While U.S. consumer spending appears strong, according to July sales data at retailers and restaurants released Tuesday, some apparel and department-store chains are struggling with customers’ changing shopping habits. U.S. grocers, of which Wal-Mart is the largest by … [Read more...]
Are Apple and Facebook Stock Finally Losing Their Luster?
For years now hedge funds, institutions, and retail investors have been loading up the shares of a very small sliver of the stock market. The shares I'm referring to are the so-called FAANG stocks, and others like them. FAANG stands for Facebook, Apple, Amazon, Netflix and Google (now known as Alphabet). As the valuations of these stocks have pushed their company market shares ever higher, they have become a disproportionately large slice of the various indices they are included in. (Read more here and here). But now it appears that some hedge funds have tired of buying the FAANGs and … [Read more...]
Are you Brave Enough to Bet Against the FANGs?
The FANG stocks are some of the hottest stocks in the market YTD. The Young Research Bubble Basket which includes the FANGs plus Tesla is up 39% in 2017. Here, Bloomberg points out that even though the FANGs are widely recognized as a crowded trade and overpriced segment of the market, short interest is unusually low. When it comes to calling the FANG stocks a bubble, few are willing to put their money where their mouth is. A number of people have pointed out that shares of some of the most dominant technology companies, including Facebook Inc., Apple Inc., Amazon.com Inc., Netflix Inc. … [Read more...]
Tech Stocks Top DotCom Highs, Finally
After nine straight days of gains, the S&P 500's info-tech sector index has reached a new record, beating its previous peak set in 2000 just before the dotcom bubble burst. It has taken 17 years for tech investors to get back to zero if they were invested in 2000. Leading the charge have been Apple and Google. Today Apple's market cap is nearing $800 billion, and Google's is nearing the $700 billion threshold. Driving the sector have been a relatively low number of stocks, frequently referred to here on Youngresearch.com as the "Bubble Basket." It hasn't just been the info-tech … [Read more...]
Famous Last Words: “This Time It’s Different.”
Howard Gold, a columnist at MarketWatch, explains that Millennials are making the same investing mistakes their parents made. But rather than making those mistakes on a clunky old desktop, they're making them on their smartphones. Millennials' favorite stocks are those without dividends, and instead of trading for value, they're trading the stocks of companies they're familiar with. According to TD Ameritrade, the five stocks most owned by its millennial customers are—wait for it—Apple Inc. AAPL, +0.26% Facebook Inc. FB, +2.39% Amazon.com Inc. AMZN, +1.35% Tesla Inc. TSLA, +1.03% and … [Read more...]