FOMO: the fear of missing out. Never let emotions drive your investment bus. Despite this sage advice, that's exactly what many investors are doing, reports Amrith Ramkumar at The Wall Street Journal. He writes: Investors are putting more money into U.S. stocks as 2019’s rebound continues, a shift that some analysts expect to drive markets higher despite the recent rally in government bonds and an expected slowdown in economic growth. Optimism about trade talks and the Federal Reserve’s signaled halt to interest-rate increases propelled the S&P 500 to its best quarter since September … [Read more...]
The One Thing Investors Forget Late in A Bull Market
More than ten years into a bull market it’s easy to forget that your investment portfolio (assuming it has been crafted properly) was designed for a full investment cycle. How do you invest for a full-cycle investment cycle? When you invest for the full-cycle, you not only focus on how your portfolio will do when risk sentiment is at a peak, but you also consider how your portfolio will hold up when risk sentiment plunges. There may not be a better reminder of the power of full-cycle investing than the performance of Consumer Staples stocks over the last three decades. The Power of Full … [Read more...]
Is This a Generational Opportunity in Foreign Stocks?
The chart below shows the ratio of U.S. stocks to developed market foreign stocks. As anybody who takes a proper approach to crafting stock portfolios by diversifying globally can attest, U.S. stocks have carried the load in global equity portfolios for the last decade. But has Wall Street taken this trend too far? As things stand today, the ratio of U.S. stocks to foreign stocks sits nearly three standard deviations above its long-term mean. Assuming a normal distribution, a measure this extreme happens once every century. If global equity performance remains a cyclical business as … [Read more...]
A Keurig for Your Cocktail?
Anheuser-Busch InBev and Keurig Dr Pepper are teaming up with a plan to make single-serve cocktail machines similar to Keurig's hot beverage machines. A joint venture between the two companies called Drinkworks, will "automate home bartending" with the machine. Jennifer Maloney reports for the WSJ: The Drinkworks machine is offered for preorder for $299 and is on sale in St. Louis for $399. Using liquid-filled pods, it adds water and carbonation to serve up cocktails like a Moscow Mule, an Old Fashioned, a mojito or a gin and tonic—plus three brands of beer and cider. The machine chills … [Read more...]
The Real Reason Firms Buyback Stock
The pols are out trying to punish firms that buy back their own shares. The left wants to ban buybacks unless a company agrees to a litany of their demands. The right wants to put buybacks and dividends on equal footing by taxing buybacks. Neither approach is a good idea. If the government bans buybacks, acquisitions and conglomeration are likely to increase—both have a higher probability of destroying value. The politicians are attacking this from the wrong direction. As we have written in the past, buybacks started to soar in the 1990s after executive pay for public firms became … [Read more...]
Grantham on Stocks: You Can’t Get Blood Out of a Stone
In a recent interview with CNBC, famed investor Jeremy Grantham explained that despite new stimulus from the ECB, and a halt on tightening measures by the Fed, he isn't optimistic that a boom in stock prices is forthcoming. Mark Decambre reports at MarketWatch: Jeremy Grantham, an investor credited with predicting the 2000 and 2008 downturns, told CNBC on Thursday that investors should get inured to lackluster returns in the stock market for the next two decades, after a century of handsome gains. “In the last 100 years, we’re used to delivering perhaps 6%,” but the U.S. market will be … [Read more...]
Big Brewers Look for New Answers in Flat Beer Market
Big brewers like AB InBev are looking to turn around a market for their products that has been extremely difficult to navigate of late. Saabira Chaudhuri reports on the brewer's efforts to boost growth, writing in The Wall Street Journal: In response to the slowdown, AB InBev has launched pricier, limited-edition or flavored variants of its flagship brands and worked to diversify. Earlier in February, it bought a maker of ready-to-drink canned cocktails and high-end spirits, adding to its growing portfolio of nonbeer offerings, including spiked seltzer and energy drinks. It has also pushed … [Read more...]
Hedge Funds All-In on FAANGs. Strategy Could Come back to Bite Them
Hedge funds have been moving out of most stocks, but the few stock purchases they are making are increasingly concentrated among the big American and Chinese tech names. Bloomberg's Lu Wang and Melissa Karsh write that Goldman Sachs data shows "the top 10 holdings on average made up 70 percent of a fund’s long portfolios, the highest since at least 2002." The narrow band of stocks being traded by the hedge funds are highly correlated and basically constitute one trade. If the sector is hit, the lack of diversification could send hedge funds reeling. Wang and Karsh write: As a group, … [Read more...]
Tyson Tries to End the Cycle
The meat packing business is historically cyclical, and bad times can put unprepared companies into bankruptcy. That's why John Tyson, chairman of Tyson Foods, is trying to shift the company's business into branded prepackaged and prepared foods that perform better during market swings. Jacob Bunge reports for The Wall Street Journal: For 16 hours at a stretch, the stream of deep-brown strips and other products continues across Tyson’s 50 U.S. plants that together disassemble 37 million chickens each week, turning them into nuggets, wings and breasts. By now, another 10.5 pounds have filled … [Read more...]
Earnings Predictions Scare Investors
Earnings growth has begun to slow, and investors are getting worried. Justin Lahart reports for The Wall Street Journal: The earnings slowdown owes something to last year’s corporate tax cut reaching its anniversary date: Credit Suisse strategist Jonathan Golub calculates that the tax cut added about 7 percentage points to earnings growth in the fourth quarter. The slowdown also owes something to one big company: Apple . First-quarter estimates for the iPhone maker, which accounted for over 4% of S&P 500 net income last year, have come down sharply since the company issued a … [Read more...]
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