Asset Bubbles Lead To Recessions… Not The Other Way Around

By | Current Affairs and ETFs, ETF Philosophy, ETF Strategy, Large Cap ETFs, Popular Posts, Special Sectors ETFs, US Markets and ETFs | No Comments

Stock market bearishness is practically extinct. You would have to travel back in time to 1987 to find a greater level of disparity between investment adviser bulls (64.4%) and bears (13.3%). The mainstream media continue to fuel the enthusiasm for equities by touting desirable tailwinds, including tax cut-led economic growth, low inflation and full employment. Indeed, these conditions are favorable for the time being. What the mainstream media are missing, however, is the nature of asset bubbles themselves. Specifically, asset…

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Regression to the Trend: Will S&P 500 Prices Ever Revisit Their Mean?

By | Current Affairs and ETFs, ETF Philosophy, ETF Strategy, Large Cap ETFs, Special Sectors ETFs, Technology ETFs, US Markets and ETFs | No Comments

Richard Russell, an exceptionally well-regarded Dow Theorist, explained that a stock market can do absolutely anything over short periods of time. Yet, over longer periods, the greatest certainty is “regression to the mean.” “Regression to the mean” refers to the inevitability of prices revisiting a long-term trend. For example, near the beginning of the Roaring ’20s, stock prices sat nearly 60% below their long-term historical trend. As the Roaring ’20s rolled along, demand for equities outstripped supply to such an extent,…

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Warning: Side Effects May Include Rapid Stock Price Depreciation

By | Bond ETFs, Current Affairs and ETFs, ETF Philosophy, ETF Strategy, Large Cap ETFs, Leveraged ETFs, Popular Posts, Small Cap ETFs, Special Sectors ETFs, US Markets and ETFs | No Comments

Over the last decade, the most influential central banks around the world have printed electronic currency credits to acquire $14 trillion in assets. The effect on stocks, bonds and real estate? Remarkable price gains as well as records galore. On the other hand, quantitative easing (QE) activity by the U.S. Federal Reserve, People’s Bank of China, European Central Bank and others has created a variety of implausible circumstances. The Swiss National Bank has become one of the largest shareholders in…

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Speculative Frenzy Smells More And More Like 2000

By | Bond ETFs, Current Affairs and ETFs, ETF Philosophy, ETF Strategy, International ETFs, Special Sectors ETFs, Technology ETFs, US Markets and ETFs | No Comments

Scores of extremely bullish investors insist that the financial markets today do not resemble the technology stock craze near the tail end of the late 1990s. That position is getting more difficult to defend. For example, market capitalization to GDP is a long-term stock valuation indicator with a high correlation (0.89) to subsequent 10-year returns. The valuation tool is frequently referred to as the “Warren Buffett Indicator.” The reason? In 2001, the Oracle of Omaha dubbed it as “…the best single measure of…

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If You Bought The Tax Reform Rumors, Will You Be Selling The Tax Cut News?

By | Bond ETFs, Current Affairs and ETFs, ETF Philosophy, ETF Strategy, Large Cap ETFs, Popular Posts, Special Sectors ETFs, US Markets and ETFs | No Comments

Since the Great Recession, each time that the U.S. economy bogged down, the U.S. Federal Reserve began printing additional electronic dollar credits to acquire billions in assets (a.k.a. “quantitative easing” or “QE”). And the efforts were primarily responsible for pushing interest rates lower, as well as stock and real estate prices higher. Take a look at the blue line in the chart below. It represents the electronic money printing activity of central banks across the world. Not only did stocks surge ahead…

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Managing Assets When Markets Become Irrationally Effervescent

By | Bond ETFs, Current Affairs and ETFs, ETF Philosophy, ETF Strategy, Special Sectors ETFs, Technology ETFs, US Markets and ETFs | No Comments

When I co-hosted a national talk radio show in 2000, tech stock inquiries came furious and fast. JDSU or Sun Micro? Powerwave or Cisco? Webvan or theGlobe.com? Few expressed concern about a recession. Few wondered if they might lose money by investing in the New Economy’s Internet favorites. Even fewer callers believed that they might want to take less risk rather than more. Granted, tech stocks may not be as wildly overvalued as they were in 2000. That said, the U.S….

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