Stamps.com was a major winner during the momentum-fueled market that has dominated since 2013. The stock was among the 20 best performers in the Russell 3000 Index (top 3,000 U.S. companies ranked by market capitalization) when it hit an all-time high in June of last year. Today, shareholders are likely weeping. The stock is indicated to open at $44.50—a 50% haircut from yesterday and a portfolio-decimating 84% below its high of last year. Turns out Stamps.com's business was pretty reliant on some exclusive contracts with the U.S. Postal Service that were terminated earlier this year. We … [Read more...]
Will the Stock Market Break Your Heart?
Stock market legend Jeremy Grantham has predicted that over the next 20 years, the stock market will break a lot of hearts. Mark Decambre of MarketWatch writes: 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 delivering real returns of about 2% or 3% on average over next 20 years, the value investor and … [Read more...]
American Stocks Can’t Outrun the World Forever
With profits racing ahead of economic growth in America, Mike Bird of The Wall Street Journal suggests replicating recent American stock market success will be difficult. He writes: The S&P 500 is back at a new record high, while stocks in most of the rest of the world are yet to return to 2018’s peaks. But the rampant outperformance of U.S. equities can’t last forever. Low interest rates and eye-watering valuations have been credited with driving the U.S. bull market, but financial conditions haven’t been so different elsewhere. The big reason why U.S. stocks have beaten those in … [Read more...]
Just Four Stocks Have Generated Half of the NASDAQ 100’s Gains in April
So far in April, half of the gains generated by the Nasdaq 100 were produced by the stocks from just four companies, Apple, Amazon, Microsoft and Facebook. The equal weight version of the index has been in decline. That implies relative weakness in the overall index, masked by strength in a few very large companies. Vildana Hajric and Sarah Ponczek report for Bloomberg: The Nasdaq 100 is on a tear, hitting record after record. But the upward push is being driven by just a handful of familiar names, with four adding half its gains this month. Apple Inc., Amazon.com Inc., Microsoft Corp. and … [Read more...]
As Disney Moves to Consolidate Hulu, AT&T Prepares its Own Netlflix Competitor
After many delays and false starts, it seems as though the big media companies are finally prepared to offer Netflix some real competition. Disney now owns 60% of Hulu, and could soon own more. Hulu has purchased AT&T's 9.5% share (acquired when the telecom purchased Time Warner). Now Disney and Comcast, the only two large remaining owners of Hulu will have to negotiate on how much of the purchase each receives. Disney is preparing to use Hulu as the counterpart to its family streaming offering, Disney+. Hulu will host shows with more adult themes. Meanwhile, AT&T is preparing its own … [Read more...]
This IPO Frenzy is Different
The WSJ reports that the current IPO frenzy featuring the likes of Lyft, Uber, Pinterest, Postmates, and Slack Technologies is different than the IPO frenzy in 1999. Then, many of the firms coming public had little more than a half-baked business plan. The current crop of IPOs includes more established businesses with average annual revenues approaching $200 million. Despite the higher revenue generation, profitability is just as elusive for firms coming public in 2019 as it was in 1999. Maybe this time isn’t so different after all. The WSJ has more details below. One trait that … [Read more...]
FOMO
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...]
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