I use a few different risk management systems to help in determining when to reduce exposure to higher risk investments like stocks and high yield bonds. These take into consideration economic data, market data (i.e. bond spreads, market breadth, etc.) and technical charting for trend strength. Monday was the last day of October and the…
Chart of the Week: Index vs Active Fund Flows
Here’s an interesting chart showing the cumulative change of money going into index funds and coming out of actively managed funds over the last 15 years. I’ve commented in the past on indexing. In short, I think it makes sense in some instances but not in others. Most of my concerns revolve around stock index…
Update on Quarterly Earnings Season & the Election
We’re in the heart of companies reporting their Q3 earnings and it’s been a bit of a mixed bag. There are a handful of small pockets doing well (cloud related services, electronic payments, cybersecurity, etc.) but overall I would sum it up as stagnant. The consumer is hurting from rising costs like healthcare while incomes…
Recent Portfolio Updates
Here’s a quick summary of recent stock purchases and other areas of the market I have my eye on. I almost always build positions in multiple steps to create a better average price but this has especially been the case lately as I’m starting small and hoping for an opportunity to buy more at lower…
Chart of the Week: US Interest Rates vs. Japanese Rates
Here’s a chart I saw over the weekend comparing the current path of the US Federal Funds Rate (blue line) to the path of the Japanese Policy Rate (red dotted) 16 years ago. The United States is not Japan. But our demographic structure today is very similar to Japan’s 15-20 years ago, and demographics ultimately…
The Passive Index vs. Active Management Debate
“What could be more advantageous in an intellectual contest – whether it be bridge, chess, or stock selection – than to have opponents who have been taught that thinking is a waste of energy?” ~Warren Buffett The debate between passive and actively managed money has been ongoing since the 1970’s when Jack Bogle started Vanguard. …
The Banking Crisis in Europe Continues (it never ended…)
You may have noticed in the news lately that there are a lot of concerns about Deutsche Bank (DB), Germany’s largest bank, so I thought it would be helpful to explain what all the fuss is about. Last week, Angela Merkel said that there will not be a bail out and this morning there are…
Chart of the Week: Central Banks Attempting to Monetize the Whole World
The world’s top 6 central banks have now monetized, which means purchased with “printed” money, total assets worth almost $20 trillion (40% of global GDP). Since they’re running out of government bonds to buy (you know, since they’ve pushed yields negative), they’ve moved on to corporate bonds and stocks. The Swiss National Bank (SNB) is now…