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ETF Philosophy

Brakes Applied To The Borrowing Tires Can Hurt Stock Investors

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

Mainstream media commentators regularly tell you that higher interest rates in 2018 will not threaten your portfolio. After all, they assure you, tax reform added piles of dollars to the bottom line profits of corporations as well as placed mounds of money back into the pockets of millions of households. Can one be certain, however, that fiscal stimulus (e.g., new spending package, recent tax overhaul, etc.) will neutralize increased borrowing costs? For example, a large chunk of prospective homeowners have already dropped…

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Are American Stocks Great Again?

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

The U.S Department of the Treasury currently forecasts that the national debt will reach the $25 trillion mark by the 3rd quarter of 2020. That’s just two and a half years from now. What is $25 trillion among American friends? If you combine the debts of every other sovereign state on the planet, you still do not reach $25 trillion. Our nation is a serial debtor. It is easier to dismiss the enormity of the obligation when government is capable of…

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Shock the “Short S&P 500 Volatility” Monkey

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

A top-tier financial web site interviews me at the start of every year. The interviewer typically asks me about specific securities, asset allocation, economic backdrop as well as the impact of events (e.g., central bank monetary policy, mid-term elections, tax reform, etc.) This year, at the tail end of the interview, I fielded an atypical query. He wanted to know what “market surprise” might occur in 2018 (good or bad) that the financial media are not talking about. I thought…

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State of the Stock Market (#SOTSM)

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

The U.S. stock market has rarely notched 150 trading days without back-to-back 0.5%-plus declines. It happened on one occasion prior to the financial crisis in 2007. It also occurred once in the mid-1990s and twice in the 1960s. More recently, the S&P 500 logged an additional streak for consecutive trading sessions. This time, however, 150 days did not serve as the high-water mark. Nor was it 200 or 250 days. The new record streak that culminated on January 30, 2018? Try…

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Nothing To Fear In The Stock Market But The Fear Of Missing Out Itself

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

I have quite a few clients in their eighties and a number in their late eighties. That is not particularly surprising when your client base is chock-full of retirees and near retirees. What did surprise me a bit is a call from an 87-year old client yesterday afternoon. She called to inquire why her friends are making more money in the stock market than she has been making recently. “Are most of your friends in their 40s or 50s?” I…

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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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