For those of you that read my latest letter to clients (which I’m sure everyone did…but if you haven’t had a chance yet, you can find it here), the S&P 500 is about to enter what I consider “Phase 3”. This means it’s time to aggressively hedge/reduce stock risk. I spent a good bit of…
Why the Stock Market Dropped So Sharply
Two words – “The Fed.” The two primary goals of the Federal Reserve’s Quantitative Easing efforts over the past few years were to inflate asset prices (stocks, real estate, etc.) and lower interest rates. They call this the “wealth effect.” In theory, they think that higher asset prices will increase confidence, which will increase spending, business…
Market Updates
Well that was exciting! Please keep in mind that, as a long-term investor, what matters is the earnings power and yield of the companies in which you are invested. Just because the price of a stock drops doesn’t mean that the underlying company is deteriorating – it simply means you have the chance to buy…
The Merger & Acquisition (M&A) Train Keeps on Rolling…
This morning it was announced that another company we own is being taken over: Precision Castparts (PCP) is being bought by Berkshire Hathaway (Warren Buffett) in a ~$37 billion deal. Shareholders will be paid $235/share (a 21% premium to Friday’s closing price) in cash when the deal closes in the first quarter of 2016. PCP…
The Stock Market is Approaching Another Turning Point
The S&P 500 has essentially flat-lined since March but we’ve been losing breadth, meaning fewer stocks are participating in the rally, as shown in the chart below. The black line shows the S&P 500 over the past 2 years and the green line shows the number of stocks in the S&P 500 trading above their…
What’s the Safest Long-Term Investment Theme When it Comes to Stocks?
I suppose I should define “safest” before giving my opinion. If we define safety as our confidence that the industry, business model or product will withstand the test of time, I believe the safest long-term investment theme is food. Think about it for a minute. Everyone eats food. Not everyone buys a smartphone, an electric…
The Future of Europe
I haven’t chimed in with my two cents on Greece yet but I figured you might be wondering what I think, and more importantly, how it might affect investment markets. It’s no secret that I’ve been pretty critical of the Eurozone the past few years. A monetary union without a fiscal union just cannot work…
Thank You Sir, May I Have Another?
It’s not every day the market screws up and offers us an opportunity like it’s doing today with Oracle, which is down around 8% (as of this writing) after reporting quarterly earnings last night. Apparently Wall Street isn’t happy that revenue and earnings missed their forecasts this quarter…? Just another example of Wall Street’s short-sightedness…