In a 400-page report prepared for a Senate hearing on commodities market rigging, Goldman Sachs (aka the Vampire Squid of Wall Street) was again being accused of questionable business practices. According to the Senate report, Wall Street banks may have manipulated commodities markets raising the costs on consumers. Add this to the long list of Goldman’s other indictments and it becomes clear that it is time for regulators to kill the squid. Goldman should be stripped of its bank holding status and turned back into a pure investment bank. Investors, lenders, and the market can then more … [Read more...]
Year-End Market Update
I was on the phone with a client Wednesday morning when another line lit up indicating someone was being buzzed into my office from the locked foyer area. I was surprised not only to have a visitor but to see that it was my mother. She and my dad just got back from a trip to Europe and I wasn’t expecting to see them until Thanksgiving, which we’ll spend up in the White Mountains of New Hampshire. She was in town for an appointment and stopped by afterwards and we grabbed some coffee at Starbucks. If you’ve ever been inside our Newport office then you’ll know what my mom is talking about when … [Read more...]
These are the Most Popular Stocks on Wall Street
What is popular on Wall Street? The table below lists the most followed stocks in the S&P 500. These aren't necessarily the stocks with the highest analyst ratings, they are the stocks with the most analyst coverage. According to Bloomberg, there are 61 analysts following Apple, 57 following Google, and 55 following Facebook. What possible value does the 35th analyst following Apple add, let alone the 61st, that the 34th analyst has missed? Seems like an awful waste of time and effort. Looks more like a who’s-who of speculation than a list of stocks that a long-term investor would … [Read more...]
A Furious Rally
The S&P 500 has rallied furiously from its October 15th low. Over the last 24 trading days, the index has gained 10.1%--the largest such gain in over three years. Are stocks overbought at these levels? You can be the judge of that. … [Read more...]
Yes. Gold is a Currency
Is gold a currency? “Yes. Remember what we’re looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it,” responds former Federal Reserve Chairman, Alan Greenspan. … [Read more...]
The Monday Melee: Taxes, Japan, and Princess Football
Abenomics Fails In the third quarter GDP sank for the second time in a row in Japan. It turns out printing money and raising taxes is just as bad for the economy as it ever was. Princess Football We're avid football fans here at Youngresearch.com, and this past week's SNL featured this skit with Woody Harrelson that perfectly explained what we think of the new rules in the league. What We're Reading: A perplexing rally (Gavekal Capital Blog) How to Distort Income Inequality (The Wall Street Journal) "Tax Fact of the Day" (Greg Mankiw's Blog) Sterling Hits 14-Month Low Against … [Read more...]
2% Yields: It Could be Worse
If you thought you had it bad with 10-year Treasury yields at 2.3%, take a gander across the pond. In Germany, 10-year government bonds yield only 0.80%. It would take 87 years to double your money at a 0.80% return. That is more than a life-time for many. The comparable number for the 2.3% return available on 10-year Treasuries is about 30 years. Still not great, but it could be worse. It could be worse for the Germans too. In Japan, the ten-year government bond yields only 0.48%. At 0.48% you would need two life-times to double your money. … [Read more...]
Free Lunch Alert
The Wall Street Journal did a piece on troubled stockbrokers this week. It shows how certain areas of the country are loaded with brokers that prey on the elderly. They offer a free lunch or dinner followed by a high pressured sales pitch. Most often these charlatans are pushing annuities. A couple I know were hounded for months following the dinner they attended. They also had to endure a follow-up meeting at their home. The stockbrokers in my example were friendly and seemed nice to my friends. They mailed me the stockbrokers' proposal. After I dissected the 1,000 page prospectus, I let … [Read more...]
Where do Stocks go from Here?
As measured by the Dow Jones Industrial Average, the current bull market is over 2,000 days old—2,074 to be exact. That is the fourth longest bull market in the last century. How have stocks fared once they have reached the age of 2,074? In terms of duration, every bull market that has lasted for 2,074 days, went on to last at least another two years. And the subsequent gains for the three bull markets that lasted longer than 2,074 days were all substantial. That’s the good news. The bad news is that the performance of stocks from day 2,074 of a bull market to the subsequent stock market … [Read more...]
The Power of a Strong Dollar
With dollar strength comes low oil prices and low inflation, spurring what could become a strong consumer spending season this winter (ex. fuels). Gasoline prices have dropped considerably and Americans are already enjoying lower prices at the pump. Across the South, Americans are enjoying prices in the $2.55/gallon range, with more expensive, but still falling, prices on the coasts. … [Read more...]
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