The S&P 500 leapt higher by 3.4% today on yet another plan-to-make-a-plan out of Europe and on news that the Chinese government will boost its stake in the nation’s largest banks. The benchmark index closed above its 50-day moving average for the first time since July. In the span of only five trading days, stocks have gained more than 11%. The sharp end of day bounce off of the 1,074 level last Tuesday, and the follow-through rally, have some technical analysts convinced stocks are poised for an upside breakout—see here. In only one week, the prevailing sentiment on the Street has shifted … [Read more...]
Goldman Calls it Quits
Goldman Sachs is closing up shop at its flagship Global Alpha hedge fund. Global Alpha is one of the best-known quantitative hedge funds in the world. In its heyday the fund managed $12 billion. But after a series of bad bets, assets tumbled over 90% to $1 billion. The fund’s downfall started in 2007 when computer-driven trading strategies went haywire. Global Alpha lost about 23% that August and reportedly finished the year down 40%. The fund regained some of its losses in 2008 and 2009 with gains of 4% and 30%, but it never fully recovered. Global Alpha was flat last year and it is down … [Read more...]
Is Your Money Fund Safe?
You really have to be careful what you read these days. There is loads of misguided advice pumped out of the financial press. I recently came across an article in one of the leading personal finance magazines that offered especially appalling advice. The article was about money funds and whether or not they are safe given the euro area’s sovereign debt and banking crisis. What does the euro area have to do with U.S. money funds? According to Fitch Ratings, prime U.S. money funds have almost 50% of their assets invested in European financial institutions. Not such a comforting thought when you … [Read more...]
A $65-Billion Bet
I was listening to Bloomberg radio the other day and Carly Fiorina was on as a guest. Carly is the former CEO of Hewlett Packard. She led a controversial acquisition of Compaq that turned HP into the world’s largest PC maker. Carly was on to talk about Hewlett Packard’s recently announced decision to exit the PC business and move deeper into software with a $10-billion acquisition of Autonomy Corp. HP’s decision came as a surprise to investors—an unpleasant surprise. The stock plummeted 20% on the news. As I listened to the Bloomberg interview I was struck by how often Ms. Fiorina used the … [Read more...]
Your Worst Payday
Should you have more invested in the stock market? The Dow has almost doubled from its March 2009 low. And over the last ten months, the index has gained 26%. Oil prices have started to pull back, the euro-area debt crisis is being addressed (at least temporarily) and some U.S. economic data has come in ahead of expectations. With the Dow surging 5% in only five trading days, you may be feeling more confident. Instead of hoarding cash, you might be looking to invest. But after the near doubling in the stock market, is it still a good time to invest? How can you tell? In order to gauge the … [Read more...]
Investing in Your Food Supply
You may want to start thinking and investing like a farmer. As a group, farmers’ average age continues to rise. And as their numbers decline in the coming years, the quality of our food is likely to follow suit, given the notion that more processing will pick up the slack. That’s why it’s so important to protect our heritage breeds—animals that were around when Thomas Jefferson walked the fields of Monticello. Protecting our heritage breeds may not be something you think about every day. But those who work at the SVF Foundation in Newport, Rhode Island, do. The SVF isn’t your ordinary farm. … [Read more...]
A Stacked Deck: Is your broker providing compromised investment advice?
I want to briefly touch on the subject of broker dealers (especially publically traded firms) as they relate to our private, family registered investment-advisory firm. I started our money management business over two decades ago in response to years of requests from my strategy report readers for such assistance. Back then, I was still researching and writing every word of Young’s World Money Forecast. YWMF was a 50-page monthly monetary and economics report for institutions and corporate financial officers, I was kept busy. I could only work with a handful of clients. As time passed and it … [Read more...]
Cut Your Portfolio Risk by 70% Today
Do you still have too much invested in stocks? At Young Research, we’ve long favored a balanced strategy. Why do we favor a balanced approach? The simple fact is that an all-stock portfolio has more volatility than most investors are comfortable with. This is especially true for conservative investors and those investors in or nearing retirement. If you are on the verge of retirement, can you afford to sustain a 50% loss in your portfolio? Stocks fell 50% twice in the last decade alone, and it could happen again. With a balanced portfolio, you minimize the risk of portfolio-decimating … [Read more...]
My Top Internet Investment
I have an Internet investment that I want to tell you about. It is a guaranteed winner. A guaranteed winner? Yup, and it is one of the safest investments you’ll ever make. You might be skeptical. Internet stocks are risky. Some analysts are talking about a Web 2.0 bubble. Shares of LinkedIn, the social networking site, doubled on their debut. And Yandex, Russia’s version of Google, came public at a price-to-earnings ratio over 75X—that’s not cheap. If you invested in Internet stocks in the late 1990s, this may all sound eerily familiar to you. You wouldn’t dare make an Internet investment … [Read more...]
The Two Most Important Words in Investing
The two most important words in investing are “compound interest.” Albert Einstein referred to compound interest as the eighth wonder of the world. And Ben Franklin said compound interest is “the stone that will turn all your lead into gold.” Many investors are familiar with compound interest, but few appreciate its awesome power. Until you fully appreciate the power of compounding, attempts at crafting a successful long-term investment strategy will likely fall short. If you are among the millions of Americans who still believe investing is buying a security today and selling it at a … [Read more...]