Archive | Current Affairs and ETFs

Cash-To-Debt Ratio Demonstrates Why Riskier Assets Have Limited Upside Potential

Cash on corporate balance sheets grew at a 1% pace to $1.84 billion in 2015. That’s a record level of dollars on the books. On the other hand, debt grew at a clip of nearly 14.8% to $6.6 trillion from $5.75 trillion. That’s a 15% surge in debt obligations. In fact, American companies have grown [...] Continue Reading...


Why Low Interest Rates Do Not Imply Perpetual Increases In Stock Prices

Some investors have come to believe that ultra-low interest rates alone have made traditional valuations obsolete. The irony of the error in judgment? Experts and analysts made similar claims prior to the NASDAQ collapse in 2000. (Only then, it was the dot-com “New Economy” that made old school valuations irrelevant.) The benchmark still trades below [...] Continue Reading...


When You Exit The Stock Market, Don’t Let The Door Hit You On Your Way Out

You cannot make this stuff up. The median stock in the S&P 500 has never been more overvalued on price-to-earnings growth (PEG) and price-to-sales (P/S). On a forward price-to-earnings (P/E) basis – where profitability expectations already reflect pie-in-the-sky speculation – the median company’s shares trade in the 96th percentile. That’s pretty darn pricey! Credit Goldman [...] Continue Reading...


Real Risk Taking Will Not Return Until The Fed Flip-Flops

In a strong bull market, higher volatility stocks tend to outperform lower volatility stocks. The PowerShares S&P 500 High Beta (SPHB):iShares USA Minimum Volatility (USMV) price ratio demonstrates how the bull market in equities has been giving way since the highs in the Dow and the S&P 500 one year ago (May 2015). Similarly, in a [...] Continue Reading...


What Happens To ‘Hold-N-Hope’ Portfolios When An Economy Struggles To Expand?

Some analysts may dismiss 115 years of economic data. I do not. In particular, if one averages the results of four respected stock valuation methodologies, one finds that stocks are wildly expensive. Greater irrationality in stock price exuberance only existed during conditions prior to the Great Depression circa 1929 and the tech wreck of 2000. Consider the [...] Continue Reading...


Are You Considering “Sell In May, Go Away?”

One of the signs that a stock market may be transitioning from a bull to a bear? Participants dismiss exorbitant valuations, cast aside disturbing shifts in technical trends, disregard economic stagnation and scoff at historical comparisons. For instance, it has been 352 days since the Dow Jones Industrials Average registered an all-time record high in [...] Continue Reading...


Do You Have Rally Envy Or Bear Market Anxiety?

For those who have paid attention, the last actual bond purchase by the Federal Reserve occurred on December 18, 2014. Why does the date matter? For one thing, research demonstrated that the expansion and manipulation of the Fed’s balance sheet (i.e., QE1, QE2, Operation Twist, QE3) corresponded to 93% of the current bull market’s gains. [...] Continue Reading...


Bearish on Facebook (FB)? You Must Be Out Of Your Mind

For a number of real estate speculators, financial leverage is a path to riches. Why buy one property with $500,000 when you can buy five properties with $100,000 down on each? After all, the $2,000,000 in mortgage obligations are little more than a nuisance, particularly when the inflation-adjusted cost of borrowing is free. And the [...] Continue Reading...


The Stock Buyback Conundrum: Will Companies Keep It Up Much Longer?

Some facts are more interesting than others. For example,¬†Liz Ann Sonders, chief investment strategist and perma-bull at Charles Schwab, recently acknowledged that “…there¬†has not been a dollar added to the U.S. stock market since the end of the financial crisis by retail investors and pension funds.” Let¬†the reality sink in for a moment. “Mom-n-pop” investors [...] Continue Reading...


Why Should Stock Investors Pay 2016 Prices For 2012 Profits?

Since the S&P 500 logged an all-time record (2130.82) 11 months ago, there have been two violent price sell-offs of more than 10%. On both occasions, the popular index rallied back to recapture the 2100 mark. Yet the unknowable question still remains; that is, will the bull market demonstrate its durability by notching a new [...] Continue Reading...


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