The risk budget this month shifts slightly as we add cash to the portfolio. For the moderate risk investor the allocation to bonds is unchanged at 50%, risk assets are reduced to 45% and cash is raised to 5%. The changes this month are modest and may prove temporary but I felt a move to reduce risk was prudent given [...]
The economic reports of the last two weeks were generally of a more positive tone. The majority of reports were better than expected although it must be noted that many of those reports were of the sentiment variety, reflecting optimism about the future that may or may not prove warranted. Markets have certainly responded to the dreams of tax reform [...]
There is no change to the risk budget this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. There are no changes to the portfolio this month. Growth and inflation expectations rose somewhat since last month's update. The change is minor though and within the range of what we've seen in recent [...]
Snapchat, a company that describes itself as a camera company yet makes no cameras, went public last week at a valuation of $24 billion. The company is growing fast, revenue up from $58 million to $405 million in just the last year. And as one publication put it, the company "earned" a loss of $514.6 million in the process. The [...]
Economic Reports Scorecard The economic data released since my last update has been fairly positive but future growth and inflation expectations, as measured by our market indicators, have waned considerably. There is now a distinct divergence between the current data, stocks and bonds. Bond yields, both real and nominal, have fallen recently even as stocks continue their relentless march higher. The [...]
Well, thank goodness that's over. The Fed met last week and decided to maintain the Fed funds rate in the 0 - 0.25% range in which it has been confined since the great financial crisis of 2008. Of course, the fed funds market is essentially kaput having been usurped by the Fed itself during the crisis so the rate charged [...]
US stocks declined for the seventh straight day on Friday, a dismal streak not seen for almost four years. The S&P 500 is now down 5 of the last 7 weeks although in total it is just 2.5% below the all time high. If you just own the index I suppose that is not much to be concerned about but [...]
It's been almost 4 years since the last 10% correction in US stock prices, one of the longest stretches on record. Historically, on average, we get a 10% correction about every 18 months. More severe bear markets, declines of 20% or more, are associated with recessions which are hard to predict and fairly rare. Corrections are most often associated with [...]
The US stock market made another all time high last week amid more mediocre - at best - US economic data. Much of the gain was credited to positive developments in the geopolitical arena as a ceasefire was announced in Ukraine and negotiations continued on Greek debt relief with some positive signs that an agreement might be reached. Whether either [...]
Mr. Market is the fictional business partner Benjamin Graham invented in his classic value investing book, The Intelligent Investor. As Mr. Graham describes him, Mr. Market is the business partner of the investor, offering on a daily basis to buy your share in the business or alternatively to sell you his share. There are times when he is wildly optimistic [...]
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