Archive | Dividend 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...


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...


Should Investors Take Notice When Reward Prospects Diminish?

The world’s central banks devise conventional and unconventional ways to depress interest rates. The impact? Consumers purchase goods and services on credit with favorable financing terms. Corporations issue low-yielding debt in order to buy back shares of their own stock. And governments issue low-yielding treasuries to continue spending far more than they generate in tax [...] Continue Reading...


The S&P 500’s 788,400 Minutes: Measuring One Year-And-A-Half In The Life Of An Index

There may be 525,600 minutes in a normal calendar year. However, there have been 788,400 minutes since the S&P 500 first hit 2050 in November of 2014; there have been 1,314,000 minutes since the NYSE Composite Index rose above the 10,000 level in November of 2013. In other words, lost in the narrative that “there [...] Continue Reading...


Earnings Growth Based On Debt and Buybacks? Totally Unsustainable

My grandfather was never rich. He did have some money in the 1920s, but he lost most of it at the tail end of the decade. Some of it disappeared in the stock market crash in October of 1929. The rest of his deposits fell victim to the collapse of New York’s Bank of the [...] Continue Reading...


Has The “Smart Money” Or The “Dumb Money” Been Reducing Risk?

Is it the “smart money” or the “dumb money” that has been seeking safer portfolio pastures throughout 2015? Time itself will tell. That said, riskier assets have been buckling clear across the asset board. Consider the iShares 7-10 Year Treasury Bond ETF (IEF): iShares iBoxx High Yield Bond ETF (HYG) price ratio. A rising IEF:HYG [...] Continue Reading...


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