Rationalizing Stock Market Irrationality (Or, The Earth Might Be Flat)

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

The repeal-n-replace health care bill needs a “Yes” vote from the House of Representatives on Thursday, March 23rd. With it, the financial markets may move higher on the belief that Trump/Congress will be able to pass corporate-friendly legislation from tax overhaul to regulatory reform. Without it, risk assets may stumble on the fear that political leaders will be unable to provide ambitious stimulus measures down the road. The prospect of lower taxes has always been at the heart of the…

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The Fed and Cheap Money: Are We Closing In On A Swan Song?

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

Corporations have more than doubled their debt levels since 2008’s financial crisis, from $3.5 trillion to $8.1 trillion. They are carrying more leverage (e.g., debt-to-revenue, debt-to-EBITDA, etc.) than at any point since the 2000-2002 tech wreck. And the cash relative to the debt on corporate books has been dropping precipitously. Granted, one can choose to emphasize the inexpensive nature of the credit. Why shouldn’t companies borrow by the boatload as long as interest rates remain relatively contained? For one thing,…

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What If This Is As Good As It Gets?

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

There are a handful of movies that suck me in whenever they come around. Goodfellas. The Godfather. The Shawshank Redemption. Still, there’s only one production where I can never get enough of the main character’s outlandishness. Melvin Udall in As Good As It Gets. He hoards bars of soap as part of an obsessive-compulsive disorder. He sneeringly berates a woman for admiring his work as an author. He even shoves the neighbor’s dog down a laundry chute. I watched the Jack…

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Bull Market’s Health Depends More On Congress Than Trump

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

In a bull market, many investors come to believe that risk is synonymous with reward. “You’ve got to be in it to win it” or “If you don’t take chances, your wallet will forever remain empty.” In a bear market, the truth about risk is revealed. Specifically, steep financial losses are neither rewarding nor easily recovered. The average descent? 30%. And the average time to recover? Approximately three-and-one-quarter years. So, if an average bearish downtrend occurred right now, the S&P…

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Have We Reached The Emotional Stage Of Euphoria For Stocks?

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

In what world can aggregate debt of a country/business/household grow faster than its economy/income indefinitely? A world where math and logic no longer exist. Consider the circumstances for the United States. Economic growth as measured by the pace of gross domestic product (GDP) used to move in lockstep with the expansion of the country’s debt. However, in 1971, the growth rates began decoupling in earnest. That was the year President Nixon terminated gold’s relationship with the U.S. dollar. Not surprisingly, once…

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Markets Priced For Perfection Rarely Get What They ‘Price In’

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

It is almost inconceivable. Just 10 years ago, you could purchase a 3-year Treasury and sock away a risk free rate of return of nearly 6%. Right now? A paltry 1.5%. It follows that, today, one must take enormous chances to generate an income stream up and above the pace of inflation. And that’s only if you believe inflation gauges placing the annual rate in the neighborhood of 2%. For example, let’s assume an individual purchases a 5-year Treasury for…

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