In The Wall Street Journal, John Greenwood and Steve H. Hanke, both economists at Johns Hopkins, discuss the similarities of today's markets to that of 1987, and October 19 of that year, which is known as "Black Monday." They write: This brings us to the stock-market crash of 1987. In that year the key 10-year bond yield rose steeply from January onward (from 7% in January to 10% by Black Monday in October) and the money supply slowed sharply. In 1987 growth of M2 declined by almost half, from 9.7% year-on-year in January to 4.9% in September, while M3—no longer published by the Fed—slowed … [Read more...]
“Stocks Always Comeback,” They Say
“Stocks always come back,” they say. “Just look at the history of the markets.” OK, thinks Your Survival Guy. Let's. Take a look at how markets did from 1965 through the 70’s, a time not unlike today, where inflation soared, the country was in decline, and stocks did basically nothing good. That’s a long time for markets to do nothing—a good chunk of retirement for those who were retired. That’s why building a margin of safety is so important for the retired investor. You need to have a line of defense in case stocks don’t save the day. You need to understand risk and know that … [Read more...]
Has Tupperware Survived Its Brush with Death?
Tupperware was nearly out of business, but, reports The Robin Report, it may have been saved, for now. Arick Wierson writes: Way back in May of this year – I know that’s only a few months ago but with the entirety of summer sandwiched in between now and then it now seems like an eternity has passed – business scribes were getting ready to write their eulogies for the iconic American household brand Tupperware (TUP). Why? It had just announced that there was “substantial doubt about the company’s ability to continue as a going concern.” (In case you’re wondering, that’s business-speak for … [Read more...]
You Can’t Time the Market: When Hubris Fails
Originally posted on May 18, 2020. Coronavirus Infects Stock Market: Part XLVIII You can’t time the market. Don’t even try, because you just might end up being wrong. Consider commercial real estate, for example. Anyone want to buy a high rise in Manhattan? Let’s hop in our time machine and look back to 2018 when the stock market was having a rough year. The DJIA ended the year down close to six percent. Big bad pensions wanted nothing to do with stocks. They wanted the “safety,” the “reliability of,” wait for it—commercial real estate. Let’s roll the footage (WSJ article Nov. … [Read more...]
Is this the Dawn of the Ex-China Investment Age?
Investors are looking for investment opportunities in Asian markets that exclude China. Fear of geopolitical risks surrounding China has created the demand for investment opportunities in countries deemed safer. Hudson Lockett and Leo Lewis report in the Financial Times: Global fund managers say they are rushing to meet client demand for new Asian investment products that exclude China, as investor appetite for the region’s largest economy is hit by slowing growth and mounting geopolitical risk. Fund managers said requests for “ex-China” products included the possibility of “Asian allies” … [Read more...]
Forbes Global 2000: The Bigger They Are, the Harder They Fall?
This from Forbes; "Every year since 2003, the Global 2000 has ranked the world’s publicly traded companies by sales, profit, assets and market value, with all four variables given equal weights. This year’s ranking looks far different from the list’s first installment 20 years ago, when Citigroup was No. 1 and AIG, Fannie Mae and IBM were among the 10 largest companies in America. None are in the top 20 today." These are the twenty-five largest publicly traded companies by sales, profit, assets, and market value [with all four variables given equal weights] in the world. JPMorgan … [Read more...]
ALLIGATOR MARKET: Calm Surface Hides Danger Below
The S&P 500 is a market cap-weighted index meaning the largest companies by market cap have the greatest impact on its direction. A handful of companies comprise a third of the index today. I explained this in-depth in my series, The Truth Behind the S&P 500. Caitlin McCabe explains in The Wall Street Journal that despite a rally in the overall index driven by a few star names, investors are worried about what lies beneath. She writes: Major indexes have overcome a series of challenges to power higher this year. But some investors are worried that this performance rests on just a … [Read more...]
Here Come the Adjustments to Earnings
Often when companies are experiencing troubling financial times, you'll see more adjustments to earnings. According to Ben Foldy in The Wall Street Journal, the use of that financial tool is increasing. He writes: Business slowed last year for Google’s parent, Alphabet GOOG -1.02%decrease; red down pointing triangle. The tech giant still beat earnings expectations in this year’s first quarter, in part because it said that its computer servers would last longer than expected. The shift reduced its depreciation expense by nearly $1 billion and helped push per-share earnings ahead of … [Read more...]
Is There Hope in Stocks?
In The Wall Street Journal, Jack Pitcher discusses the big outflows in stocks and the potential for a turnaround. He writes: Investors have a sour outlook on U.S. stocks. Contrarians say that is good news for the market. Turmoil in the banking sector has dragged fund managers’ enthusiasm for stocks to a 2023 ebb, according to Bank of America’s most recent monthly survey. The stress adds to worries including lingering inflation, higher interest rates and a slowing economy that have driven them to cut their stockholdings to their lowest levels relative to bonds since 2009. Institutions have … [Read more...]
Blank Check Company Boom Goes Bust
The Boom in blank check companies has turned into a bust. According to the WSJ, many blank check firms or SPACs, are down more 90% or more from their IPO price. The SPAC boom took hundreds of risky companies to the stock market. The next stop for many is bankruptcy court. Dozens of companies that merged with SPACs are running out of cash, joining at least 12 that have already gone bankrupt after combining with special-purpose acquisition companies. More than 100 companies, including electric-scooter firm Bird Global Inc., smart-sock baby-monitor maker Owlet Inc., and electric-car … [Read more...]
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