Value-oriented thinkers have labored to persuade investors to invest in Europe for nearly three years. Specifically, they’ve pushed forward the idea that miraculously low price-to-book ratios offer compelling bargains in European ETFs, in spite of the ongoing sovereign debt crisis and negligible economic growth. However, deep discount investing during financial crises is a recipe for failure. [...] Continue Reading...
Far too frequently, commentators focus on one of two potential outcomes. For example, one writer may explain why riskier assets will navigate the fiscal cliff and rocket substantially higher into the New Year. Meanwhile, another may predict the collapse of market-based investing altogether, with the Dow plummeting 3000 points before Christmas. Greed and fear. Bull and [...] Continue Reading...
It may not take much to send the markets down these days. A profit miss by Google. A weak revenue showing by McDonalds. Or perhaps the most detrimental data point of the week: Existing home sales fell 1.7% on a year-over-year basis. With interest rates this low, properties have become increasingly affordable. Yet existing homeowners who [...] Continue Reading...
In the steamy September days (9/13-9-14) of central bank euphoria, Federal Reserve Chairman Ben Bernanke announced that the Fed would immediately begin purchasing $40 billion in mortgage-backed securities each month. What’s more, the chairman did not include an end date for the quantitative easing program known as “QE3.” Bernanke’s summertime bazooka sent S&P 500 stocks skyward, [...] Continue Reading...
Back on July 26, Mario Draghi, the president of the European Central Bank (ECB), promised to do whatever it takes to protect the euro. Yet the pledge was not a direct reference to strengthening the region’s currency. Instead, it was a signal to the global financial system that — much like the U.S. Federal Reserve’s [...] Continue Reading...
The Federal Reserve’s quantitative easing in 2010 (a.k.a. QE2) significantly boosted the share prices of resources-related ETFs. Some of the biggest winners from QE2 included iShares Oil Equipment (IEZ), SPDR Oil & Gas Exploration/Production (XOP), Market Vectors Russia (RSX), SPDR Metals & Mining (XME) and First Trust Natural Gas (FCG). Indeed, FCG went on a [...] Continue Reading...
The United States of America is frequently credited with being the largest economy in the world. Indeed, the U.S. produces the greatest market value of final goods and services per year. On the other hand, when an economy is not defined by national borders, the European Union can be credited with the largest Gross Domestic Product (GDP). And it is this fact that [...] Continue Reading...
The average debt-to-GDP ratio for developed world nations approximates 100%. In the United States, the ratio is close to 105% when one includes debt that is held in government accounts. The average debt-to-GDP ratio in emerging market countries? Typically, you’re looking at something less than 40%. Without question, from a perspective of country credit, the emergers are far more capable of paying back the [...] Continue Reading...
In a recent screen of stock ETF performers since the October 2011 bottom, I came across PowerShares Small Cap Financials Portfolio (PSCF). The fund has catapulted 45% off the 52-week low through 7/16/12 versus 30% for its large-cap brother, SPDR Select Financials (XLF). The PSCF:XLF price ratio demonstrates that the relative outperformance has… for the most part… stayed intact over 18 months. PowerShares [...] Continue Reading...
For those who are able to see a glass when it is half-full, sales of newly built homes in May tagged the highest level in two years. Residential home construction is up 55% from the bottom. Gasoline prices are significantly lower than they were three months ago. And emerging markets like China are committing large [...] Continue Reading...
