Investors have become so accustomed to the notion of “risk on” and “risk off,” many have cast aside one of the most hallowed principles of success. Specifically, reducing the possibility of loss (a.k.a. “risk”) requires individual assets that do not all move in the same direction. How does an ETF investor know whether his/her investments are zigging simultaneously, rather than zigging and [...] Continue Reading...
Stocks haven’t quite “gone away” in May. In fact, the S&P 500 at 1346 remains within spitting distance of its multi-year peak of 1370. In spite of remarkable stock resilience, the 10-year treasury bond yield has dropped to a jaw-droppingly low 3.14%. That has helped Bond ETFs hit 52-week highs for the fourth consecutive week. (Remember, it wasn’t that [...] Continue Reading...
It wasn’t that long ago when I criticized terms such as “overbought” and “undervalued.” (See April’s Going Global: Rethinking the Overbought Concept.) In essence, I explained why investors may give more credence to powerful-sounding words than they give to common sense information. With that said, you should look at a sector’s P/E ratio and compare it against the sector’s P/E [...] Continue Reading...
Although I can’t prove it, 90% of mutual fund managers interviewed on CNBC love energy and technology. They loved the same sectors last year. And who could blame them? Both sectors are tied to a global economic cycle that has been expanding. What’s more, mutual fund managers are paid to be bullish on stocks. Worse yet, I can’t [...] Continue Reading...
For the past eleven trading days, the S&P 500 sported an average daily trading range of 1.3%. That’s a far cry from the 7% intra-day swings of late ‘08. On the other hand, it’s significantly more volatile than what we had been experiencing before the rebellion in Libya. Indeed, the CBOE Volatility Index (VIX) has traded above its 50-day trendline since February 22. What’s [...] Continue Reading...
Face it… you’ve probably been waiting for a more siginificant equity pullback. And you’ve been wondering why market participants haven’t taken more profits or waited for larger dips to put new money to work. In some ways, it may or may not be as simple as this: Short-sellers have yet to throw in the towel. It is true that investors [...] Continue Reading...
Pick your rationale for the 3.8% sell-off on the S&P 500 since 11/5/2010. Is it a case of buying the gridlock/QE2, and selling the eventual news? Is it a belief that China’s modest hike in both interest rates and bank reserve requirements will ultimately lead to less global demand for natural resources? Is unresolved tax [...] Continue Reading...
Throughout September, a monster rally for stock assets captured most of the headlines. Nevertheless, commodities, corporate bonds, high yield bonds, foreign currencies… heck, most real estate investment trusts… are all logging 52-week highs. The “all-assets-are-climbing” phenomenon goes hand-in-hand with the Fed’s implied use of additional quantitative easing. Simply stated, the Fed’s planned monetary stimulus to buy U.S. treasuries [...] Continue Reading...
There may be more than 1000 ETFs worth $850 billion in assets. However, when you remove leveraged “long”/”short” investments, and when you discard those with limited assets under management (i.e., less than $100 million), you pare that list down to 380 ETFs. Most of the themes for 2010 are readily recognizable in this ETF roll call. Current [...] Continue Reading...
The S&P 500 is more than 15% off its April peak. In fact, nearly all sector and industry investments have fallen more than a corrective 10% from the top. Yet there may be another approach for assessing the damage. For example, the S&P 500 index itself hasn’t been at this price level since October of 2009… more than eight months [...] Continue Reading...
