European Stocks European stocks and US stocks typically move with a fairly high correlation but they’ve diverged quite a bit over the past 3 years as both the euro currency and British pound have depreciated significantly against the US dollar. I’m thinking we’ll likely see this gap close over the next year so I started…
3 Waves of a Bull Market
Bull markets tend to evolve in 3 waves. The first phase is when the “smart money” and institutional investors are buying at relatively low valuations, typically following a bear market, that ends a decline starts a steady push higher. The second phase is when the media finally catches on after noticing that a market has…
Chart of the Week: Valuations and Forward Returns
Price is what you pay. Value is what you get. -Warren Buffett Here’s a chart showing the relationship between the S&P 500’s Price-to-Earnings (P/E) ratio and annualized returns over the next 2 years. It simply shows that your expected return is high when you buy something cheap, and low when you buy something expensive. On…
Chain Reaction: Dominoes 3 & 4
Well that didn’t take long. On Thursday afternoon France’s President, Francois Hollande, announced that he will not be seeking re-election. Could it be from his approval rating of less than 10%? Then the Italians voted against the reformation of their constitution in yesterday’s referendum, leading their Prime Minister, Matteo Renzi, to step down after just…
The Challenges Ahead for Long-Term Investors
I suppose this is my annual warning to long-term investors to tread carefully in the investment markets. 2016 has been a year of rotations with the net composite of a balanced portfolio not moving a whole lot (i.e. things that did well in the first half of the year have done poorly during the second half,…
How Systematic Investment Management Can Improve Returns
I made the decision this week to switch half of our Income Allocation within portfolios to a systematic management system. As I mentioned last week, I’m not totally sold that interest rates have bottomed but there’s a strong chance that they have, marking the end of the 35 year bull market in bonds. If rates…
Impact of the Presidential Election: The 2nd Domino has Fallen
I know this was a very emotional election so, as always, I preface this post by saying that my comments are purely from an objective point of view regarding the impact on the economy and investment markets. I realize there are many other very important social ramifications beyond just finance but I’ll leave those topics…
Impact of the Election
I wrote a post with my views on how the election results will impact the economy and markets moving forward but I’m going to wait until Monday to post it. I realize this was a very divided and emotional election so I’d like to give it some time. My goal is always to assess things…