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Non-Diversification: Free Stock Risk Without The Reward

By | Bond ETFs, Current Affairs and ETFs, Emerging Market ETFs, ETF Philosophy, Europe ETFs, Financial ETFs, International ETFs, Large Cap ETFs, Popular Posts, Small Cap ETFs, Technology ETFs, US Markets and ETFs | No Comments

Let me be quick to acknowledge that yield curve inversion can have considerable lag time before a recession. And for that matter, the U.S. Treasury bond curve can invert long before a stock market bear. For instance, 10-year yields fell below two-year yields in February of 2006. That was approximately 22 months before the recession officially hit in December of 2007. What’s more, between 2/2006-10/2007, the S&P 500 managed to climb more than 20%. There’s more. The 1990s Treasury bond…

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A Bigger Tech Bubble Today Than The One In 2000? Why You Should Question The Unicorns

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

What if I told you that today’s tech bubble is more hazardous than the one that popped in 2000? You might say, “That’s crazy. Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), Google (GOOG) — today’s internet-oriented superstars are real companies with real profits.” Granted, all of these corporations are profitable. They may be rapid growers as well. That does not mean investors are paying reasonable or rational prices for their fractional stakes. Microsoft, Cisco and Dell represented roughly 50%…

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The Fed Is About to Kill The Credit Boom

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

Did seven years of zero percent rate policy, three rounds of quantitative easing (QE) and “Operation Twist” provide a consequence-free credit boom? Or will “too-low-for-too-long” monetary manipulation eventually lead to a credit bust – one with adverse effects for asset prices as well as economic growth? It is not particularly difficult to understand that the mid-2000s credit expansion became an unsustainable bubble for households. At the pre-crisis peak in the fourth quarter of 2007, household financial obligations as a percent…

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The Big Bad Bull Gets Meeker And Weaker

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

Can the U.S. economy grow without the federal government overspending? Apparently not. Since the financial crisis in 2008, GDP has only grown alongside massive Treasury debt issuance. Some might argue that it does not matter how the economy expands as long as it is expanding. After all, the U.S. is still capable of paying the interest on its mushrooming obligations. On the flip side, the bond market does not believe that the near-term economic picture will be quite so rosy. The paltry 0.18%…

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Do Not Blame China For U.S. Dependence On Debt, Deficits And Low Rates

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

Over the 10 trading days (2 weeks) through April 6, the S&P 500 averaged a daily range of 2.3%. According to Dana Lyons of the Lyons Share, that kind of volatility ranks in the 94th percentile since the S&P 500 began in 1950. Similarly, it is uncommon to see at least seven 1%-plus price swings in a brief period like two weeks. We actually had eight. More remarkably, it is rare to witness this type of price movement when it…

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Why Aren’t Stocks Climbing The Wall of Worry Anymore?

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

According to Bank of America’s research team, 87% of prior bull-to-bear transitions involved increases in volatility. That’s not particularly surprising. Anyone who has experienced a stock bear probably remembers months and months of extraordinary price swings. In the current bull portion of the bull-bear cycle (3/09-?), each of the previous corrections offered buying opportunities. For example, there were two 10%-plus volatile price pullbacks during the earnings recession (2015-2016). Earnings per share across the S&P 500 kept shrinking, yet buying the…

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Trade Wars and Currency Wars: Financial Markets Have Good Reason To Be Wary

By | Asia ETFs, Currency ETFs, Current Affairs and ETFs, ETF Philosophy, ETF Strategy, International ETFs, Popular Posts, Special Sectors ETFs, US Markets and ETFs | No Comments

On Tuesday, market watchers did not witness the buying or selling of a single 10-year Japanese Government Bond (JGB) on an exchange. Not a one. Let that sink in for a moment. The Bank of Japan has swallowed up so much of the country’s debt obligations in its quantitative easing endeavors, trading activity across the entire JGB space has become “razor thin.” Theoretically, the circumstances could present liquidity risk. The bid-ask spread for JGBs could widen to such an extent…

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The Most Dangerous Stock Market Ever? Either Way, Have A Plan

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

Today’s stock market may not be as dangerous as 2000’s dot-com euphoria or 2008’s asset balloon. Why not? Global central banks are likely to act quicker and with far more “shock-n-awe” to minimize bearish price depreciation than they did in the previous sell-offs. Some argue that policy efforts would fail to reinvigorate yet another wealth effect because central banks are out of ammunition. I disagree. Indeed, I expect that monetary gamesmanship in the near future will result in an average…

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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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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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