As the popularity of ETFs grows, so too does the popularity of investing in market capitalization weighted indices. The largest ETFs with the most YTD inflows are the capitalization weighted SPDR S&P 500 ETF, the iShares Core S&P 500 ETF, and the Vanguard S&P 500 ETF. According to Bloomberg, YTD inflows are almost $50 billion at these three ETFs and assets under management amount to $375 billion. All three funds of course track the 500 stocks in the S&P 500. Most investors then logically assume that if they own an S&P 500 ETF, their assets are diversified across 500 … [Read more...]
This is the Bull Case for AT&T
AT&T is a stock we have long followed at Young Research. Here, Barron's outlines a bull case for the stock. You can read our latest thinking on AT&T in Intelligence Report. AT&T investors are getting the best of both worlds today. The stock’s 4.85% dividend yield is almost twice that of the 10-year Treasury and well above the 2% paid by the S&P 500. And with AT&T’s (ticker: T) stock trading at 13 times forward earnings, its valuation looks attractive. AT&T also offers growth potential. Under a President Trump, the telecom giant should benefit from a kinder … [Read more...]
How to Know When to Buy Stocks
One of my favorite financial writers of all-time, the late, great Richard Russell would be making a huge call this week in his Dow Theory Letters. Why? Because on Wednesday, the Dow Jones Transportation Average reached a new record high—previously set in 2014—and the Dow Jones Industrial Average also hit a record high. According to Dow Theory, if the transports stocks, such as railroad, shipping, delivery trucks etc., which move the goods that are used to produce things, are hitting new highs and at the same time the industrial stocks that make the end product are also hitting new highs, … [Read more...]
The Best Performing Dow Stock Since the Election
This is disturbing. Since the surprise victory of Donald Trump, who of course ran as a populist, the best performing stock in the Dow is Goldman Sachs—the everyman New York investment bank. In the words of Matt Taibbi, Goldman is a “vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Let’s hope the recent price action in Goldman shares isn’t an indicator of the bank’s influence in Washington over the next four years. … [Read more...]
Have Small-Cap Stocks Gone too Far?
Small-cap stocks continue their end of the year tear. From their November low, small-caps are up over 17%. Small-caps have rallied this much this fast a few times over the last three and half decades, but it was most often following a big-sell off or bear market. Small-caps may be higher a year from now, but overbought is probably an understatement at these levels. Note the two horizontal lines on the chart represent plus and minus two standard deviations. … [Read more...]
Portfolio Strategy: This is the Opportunity in Small Company Stocks
Small-cap stocks are on a tear. After crashing into bear market territory early this year, small company shares are up almost 40% from their lows. Since the election, small stocks have been smoking hot. Trump’s surprise victory lit a match under small company shares. The Russell 2000 index is up 11.6% from its November 8 closing level—that was only 11 trading days ago. According to Bloomberg’s exchange traded fund (ETFs) flow data, the four largest small-cap ETFs have gathered over $7 billion in assets since the election. As our chart shows, the magnitude of the inflows dwarfs anything … [Read more...]
This is What You Want to Hire a Stockpicker For
In recent years, the active investment management industry has taken a beating in the financial press and at the hands of the exchange traded funds market. That is partly an issue of the press putting too much emphasis on returns instead of focusing on risk-adjusted returns, but also a result of bad investment management. There is no doubt it is a tall order for investment managers to beat the large-cap U.S. indices on a return only basis. This is especially true if you are running a big mutual fund that doesn’t have the agility to move into or out of positions without incurring meaningful … [Read more...]
Is Amazon All it’s Cracked Up to Be?
Over recent years, Amazon shares have been a Wall Street darling. The online retail franchise is what Amazon is most widely recognized for, but the most profitable business segment—Amazon Web Services (AWS)—has nothing to do with online retail. Amazon Web Services is a cloud services platform offering compute power, database storage, content delivery, and other functionality to businesses. AWS is Amazon’s fastest growing business segment and its crown jewel. While the retail operation barely turns a profit with margins of less than 1%, AWS boasts margins of more than 25% and growth in … [Read more...]
How to Invest in a Flat Stock Market
Notwithstanding this morning’s big rally, since year-end 2013 most stocks have gone nowhere. The NYSE Composite, the Russell 2000, and the MSCI All-Country World Index are all basically flat over the last 34 months. The one index on our chart below that is up during this time-period is the NASDAQ 100. Carried by the likes of Apple, Amazon, Facebook, Google, and Microsoft, the Nasdaq 100 is up about 30% since year-end 2013. If you aren’t willing to speculate with your serious money and risk another dotcom era bust in NASDAQ stocks, what’s the best way to invest in a flat market? At Young … [Read more...]
A First of its Kind Building in the U.S.
To deal with a growing shortage of space for building high in demand industrial warehouses in many American cities, Prologis is building new three story 580,000 square foot warehouse just outside of Seattle. The WSJ has the story. Prologis Inc., the world’s biggest warehouse owner, is starting construction next year on a three-floor 580,000-square-foot warehouse just outside downtown Seattle that is scheduled to be completed in 2018, the company told The Wall Street Journal. The building will look like two warehouses stacked on top of each other, with a truck ramp to loading docks on the … [Read more...]
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