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Bought the Super-Charged Growth Rumor? Prepare to Sell the Mediocre Growth News

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

If I had to identify a half-dozen of my favorite movies, The Shawshank Redemption would definitely make the cut. It may even be on your Top Five list. Why am I bringing it up? In essence, the film produced one of the more inspirational quotes in motion picture history. The hero pens a letter to his incarcerated friend and he included, “Remember, Red, hope is a good thing, maybe the best of things. And no good thing ever dies.” Ironically, hope is not particularly…

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You’re Gonna Pay How Much? Valuation Extremes Are No Longer ‘Justified’ By Ultra-Low Rates

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

For several years, ultra-low interest rates “justified” paying higher stock prices for anemic earnings growth. The 10-year Treasury yield traded in a tight range between 2.0%-2.5%. Borrowing costs remained stable or continued to fall. Indeed, the notion that rates would remain extremely low for a very long time encouraged many to pony up for a price-to-earnings (P/E) multiple of 19. Throughout the first ten months of 2016, though, a sub-2% 10-year Treasury prompted investors to pay even higher equity valuations….

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Three Reasons Why The 30-Year Bond Bull Market Is Still Intact

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

How quickly they forget. For 30 years, mainstream analysts have been declaring the end of the secular bull market in bonds. And for 30 years, they’ve been dead wrong. Consider the recent history of the economic recovery since the Great Recession. Specifically, bond yields spiked after the Federal Reserve wrapped up quantitative easing (QE) in the spring of 2010. Scores of analysts declared the end of the bond bull. Were they right? Hardly. Rates cratered alongside the Fed’s about-face on…

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Monster Stock Rally On A Clinton Victory? Don’t Bank On It

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

The S&P 500 fell approximately 3% over the course of nine days on election angst. The FBI’s decision to close the books on the Clinton private server investigation propelled the popular index toward reclaiming two-thirds of those losses (2%) during Monday’s session; it continued gaining ground in early Tuesday trading. Will the relief rally be meaningful? Will it help send stocks surging upward through the inauguration of the next president by the third week of January? Probably not. For one thing, the…

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Stock Market Anxiety? It’s Not Clinton-Trump, It’s The U.S. Federal Reserve

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

The financial media rely heavily on advertising sales from financial firms. Conflict of interest? Possibly. If scores of folks make “risk-off” adjustments to portfolios such that the demand for riskier assets (e.g., stocks, low-grade corporate bonds, etc.) falls of a cliff, Wall Street corporations may lose hundreds of billions in asset management revenue. And if investment companies struggle, the financial media will see a sharp decline in the advertising dollars necessary to turn a profit. For the most part, then,…

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No Soup For You! Companies Will Slow Down Their Dividend Payouts And Stock Buybacks

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

Public companies seldom distribute more to shareholders than what they earn in a given year. It is categorically uncommon for those corporations to pay out more in dividends and share buybacks than what they earn for two years in a row. Three years? That’s never happened. Take a look at the total payout ratio dating back to 1964. The ratio (dividends + buybacks/corporate earnings) surpassed 100% for two consecutive years as the U.S. dealt with the early ’90s economic downturn…

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Recession In 2017 For Clinton, Trump Or Johnson?

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

Recessions occurring in a new president’s first year in office? Over the last 100 years, they have taken place three times as often as in other periods. In fact, the initial year of a president’s tenure has dovetailed with eight of the previous eleven economic contractions. George W. Bush had to deal with the fallout from the dot-com bubble. Barack Obama had to address the financial crisis. And Clinton? Trump? Gary Johnson? The next president is exceptionally likely to face…

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Wondering What Stocks Are Going To Do? Watch The Greenback

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Last week, I wrote about the deteriorating employment picture. This week, investors received additional evidence that the “job growth is solid” crowd is inattentive. Consider the Federal Reserve’s own Labor Market Conditions Index (LMCI) – a dynamic factor model that incorporates data from 19 labor market indicators (e.g., wages, unemployment rates, layoffs, business surveys, etc.). The change in the LMCI has steadily broken down since mid-2014. The beginning of the fall from grace? It roughly corresponds to a peak in corporate…

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Why Ultra-Low Rates Cannot Help U.S. Stocks The Way That They Used To Help Them

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There’s no doubt that stocks have recovered handsomely from their January lows. And there has been precious little stress on the road to stock asset recovery since the start of 2016. Nevertheless, the fact that equities have toiled for the better part of two years… that’s not something that the media talk about in the papers or on TV. Let’s take a look at a chart of the Wilshire 5000 – an index that accounts for listings of all U.S….

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Probability: Should It Play A Part In Your Asset Allocation?

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We live in the moment. We have short attention spans (and shorter memories). For the most part, we want to know how stocks will perform over the next few weeks or months. 2026? 2027? Few “long-term” investors have the fortitude to regard today’s equity market decisions the way that a red wine vintner treats a Cabernet. Nevertheless, Meb Faber, Chief Investment Office of Cambria Investment Management, recently posted an insightful piece on probable investment outcomes over long time frames. He…

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