Let’s get right into this. Yesterday you saw the stock market make a complete reversal after being down enough to have the talking heads going crazy. What to do? How about this: “don’t just do something, stand there?” In times like these you need to think like a Rich Man, not a Poor Man. It’s the Rich Man who doesn’t need the market, and if it’s a buying opportunity, he buys. That’s how Your Survival Guy wants you to think about markets, ALWAYS. Do you go crazy when the value of your home changes month to month? It might be nice to see what you could “get” on Zillow, but if you sell where … [Read more...]
BUY THE DIP? No One Wants to Save the Stock Market
Despite tumbling stock prices, options traders don't appear eager to step in to buy the dip. Reuters reports: Even as stocks tumbled, however, there were few signs in the options market that traders were expecting the sell-off to abate soon. "I am not seeing much along the line of 'quick end to the sell-off'," said Chris Murphy, co-head of derivatives strategy at Susquehanna International Group. "It still looks pretty fearful," Murphy said. On Monday, overall trading in put options, typically used to place defensive or bearish bets on stock and index prices, outnumbered trading in … [Read more...]
Has Grantham’s “Super-Bubble” Sell Off Begun?
Has the sell off of a "Super Bubble" already begun? That's what investor Jeremy Grantham, cofounder of GMO, believes today. Bloomberg's Erik Schatzker reports: Jeremy Grantham, the famed investor who for decades has been calling market bubbles, said the historic collapse in stocks he predicted a year ago is underway and even intervention by the Federal Reserve can’t prevent an eventual plunge of almost 50%. In a note posted Thursday, Grantham, the co-founder of Boston asset manager GMO, describes U.S. stocks as being in a “super bubble,” only the fourth of the past century. And just as … [Read more...]
Hedge Funds, BlackRock, Fight SEC’s Transparency Plans
Hedge funds and big money managers like BlackRock are fighting transparency plans being pushed by the SEC in an attempt to avoid the type of "meme stock" madness that occurred last year. Chris Flood and Harriet Agnew report for The Financial Times: Gary Gensler, the SEC chair, said in November that it was time to bring securities lending “out of the dark”. The SEC has proposed extensive reforms to securities lending arrangements which allow hedge funds to pay a fee to borrow stocks and bonds in order to bet that an asset will fall in value — the process known as “short selling”. Lenders … [Read more...]
INFLATION EFFECT: Stocks Threatened by Rising Real Yields
Stock prices for shares with high valuations are being threatened by rising real yields. The Financial Times reports: A jump in real yields — the return bond investors can expect once inflation is taken into account — has jolted markets in early 2022 and is behind a pullback in high-flying technology stocks, investors say. The yield on 10-year inflation-linked US government bonds has surged 0.24 percentage points since the end of December to minus 0.86 per cent, as investors position for the end of the Federal Reserve’s bond-buying programme and bet on interest rate rises from the US … [Read more...]
SELL OFF? Taking a Bite Out of Apple
I want you to understand that stocks, like trees, don’t grow forever. Look at Apple stock. During the first trading day of 2022, Apple’s market cap surpassed $3 trillion. Did you know that on the same day with $3 trillion, you could have owned all of McDonald's, Walmart, AT&T, Philip Morris, Berkshire Hathaway, Proctor & Gamble, JP Morgan Chase, Starbucks, Boeing, Deere, and American Express combined? Does that mean Apple’s going down from here? Listen, I’m Your Survival Guy, not Johnny Appleseed. But here’s the deal. When you get older, you can’t afford to lose money (can you … [Read more...]
TECH WRECK: NASDAQ Stocks Suffering
The mostly tech oriented stocks of the NASDAQ Composite Index have not been faring well. Nearly 40% are down 50% from their 52-week highs. Vildana Hajric reports on the carnage for Bloomberg, writing: Roughly four in every 10 companies on the Nasdaq Composite Index have seen their market values cut in half from their 52-week highs, while the majority of gauge members are mired in bear markets, according to Jason Goepfert, chief research officer at Sundial Capital Research. “Whatever the fundamental and macro considerations, there is no doubt that investors have been selling first and … [Read more...]
Looking Back at a Strange Year in Markets
People often look back at the end of a year and evaluate what happened. The year 2021 was strange in many ways, and markets were no different. In the Financial Times, Katie Martin remembers the year's biggest moments, writing: This has felt like a long year in financial markets, studded with events that offered insight in to the rapidly changing nature of trading and investment. From across the Financial Times’ markets team, here is our pick of the standout moments of 2021. GameStop: revenge of the nerds In January, US stock markets were transfixed by the outsized trading volumes and … [Read more...]
Record Buybacks in 2021 as Companies Plan Even More Next Year
Companies bought back a record-breaking $850 billion worth of shares in 2021, and are planning even more buybacks in 2022. Mark Maurer reports in The Wall Street Journal: Sitting atop a haul of strong earnings, companies are planning to spend even more in 2022 on share buybacks and dividends, a trend finance executives don’t expect to slow despite a proposed 1% excise tax on repurchases. Many companies have bounced back from the blow dealt by the coronavirus pandemic and are in a period of hale growth, giving them ample leeway to reward their shareholders, said Howard Silverblatt, a senior … [Read more...]
JUST BELOW THE SURFACE: Stock Index Strength Hides Danger Below
If you're only looking at the movement of the major stock market indexes, you're missing out on what's going on under the surface. A divergence in the performance of the biggest stocks by market cap, which have more influence over the index's movements, and that of smaller stocks is a signal that trouble may be ahead. Eric Platt reports in the Financial Times: On the tech-heavy Nasdaq Composite the figures are even more striking, with more than 1,300 stocks down 50 per cent or more from their highest level of the past year. And roughly 80 per cent of the more than 3,000 stocks on the exchange … [Read more...]
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