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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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Stock Market Levity: What Goes Down Must Come Up?

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Issac Newton is famous for having said, “What goes up must come down.” He is equally well-remembered for a falling apple striking his noggin, supposedly inspiring the physicist to develop the theory of gravity. Near market tops, bullish investors embrace the notion of an opposite force: levity. They maintain that what goes down must come back up, implying that one should ignore price depreciation since assets always recover. The problem? The belief in stock market levity does not account for the time…

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Here Is What You Should Know About The Last Three Bear Markets

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

Earnings per share (EPS) for the S&P 500 for Q2 came in at $87. Those results are no better than the EPS data from four years earlier. Worse yet, the $87 GAAP-based earnings are 18% lower than the $106 reached in Q3 of 2014. Now look at the price-to-earnings (P/E) ratio chart below. For the better part of three years (circa 2013 -2016), the traditional metric held relatively stable between 18x-21x previous 12 months earnings. Since the start of 2015…

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Why Aren’t Businesses Investing In Their Futures?

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

The last three times that private businesses cut back on fixed asset expenditures – plants, trucks, tools, software, hardware, equipment, office buildings and other capital goods – the country slipped into recession. Is this time different? Or does company reluctance to buy machinery, commercial real estate and electrical appliances signify that economic contraction is around the corner? Most analysts seem to believe that the investment slowdown by the business sector is temporary. Some have even opined that spending on fixed capital…

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The Mad Scramble For Yield Ignores A Real Risk Of Financial Loss

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

Is debt inherently bad? Probably not. After all, most homeowners require a mortgage to afford the “American dream.” Indeed, most folks believe that financing real estate is a venerable wealth-building endeavor. They trust property appreciation more than they trust market-based securities like stocks. Bear in mind, low mortgage rates in the 5.5%-6.5% range coupled with variable rate loans that were even lower sent property prices surging in the first five years of the 21st century; at the same time, the…

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Do Celebrated Fund Managers Know More About the Credit Balloon Than You Know?

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

There was a time when hedge funds may have offered something unique in the way of performance. You may have been able to make a case for them alongside a mix of stocks and intermediate-term treasury bonds. Over the last three years, however, hedge funds have been downright abysmal. Consider the IQ Hedge Multi-Strategy Index ETF (QAI). It endeavors to replicate hedge fund performance across a variety of investment styles, including long/short equity, market neutral, fixed-income arbitrage, volatility and event-driven financial gain (e.g., “Brexit,”…

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How Should You Address The Existing Risk Of Disastrous Loss In The Market?

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

The previous decade’s financial crisis did not begin in earnest until 2008. Bear Stearns. Lehman Brothers. AIG. And yet, the warning signs had appeared long beforehand. Real estate sales had turned negative on a year-over-year basis in 2006, even as prices kept climbing. Meanwhile, SPDR Select Sector Financials (XLF) logged -21% in 2007, even as the broader S&P 500 had notched a record high as late as October. In mid-2015, European financial stocks peaked. And in much the same way…

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