Prior to the 2007-2009 financial meltdown in the U.S., risk-takers thoroughly embraced the idea that emerging markets would regularly trounce the developed economies. At times, this simply meant that emerging market stocks would outperform on the upside. At other times, this referred to the ability of “emergers” to hold on to gains… even if U.S. [...] Continue Reading...
Over the last 3 months, U.S. small cap stocks as well as foreign and emerging market small caps logged spectacular profits. Moreover, they beat the pants off of larger-cap competition. Consider the recent highs in various price ratios. For instance, SPDR S&P Emerging Market Small Cap (EWX):iShares MSCI Emerging Markets (EEM) demonstrates increasing relative strength for [...] Continue Reading...
The S&P 500 has not merely been resilient in its six consecutive weeks of gains. The celebrated U.S. stock benchmark has been unstoppable in its 8.3% unrealized run-up. Granted, nearly everyone expects a period of mild selling activity (a.k.a. “a breather”). Indeed, history certainly suggests that unbridled enthusiasm usually gets a reality check or three. The [...] Continue Reading...
Japanese stocks have been perennial underachievers. So when I suggested on December 20 that investors might benefit from WisdomTree Japan Hedged Equity (DXJ), I was asking certain readers to challenge conventional wisdom. (See “A Foreign Stock ETF For A Rapidly Declining Currency.”) My thought process on the matter was relatively straight-forward. The incoming prime minister of [...] Continue Reading...
Rising stock prices often have a way of covering up significant woes. Many journalists and market prognosticators had all but buried the Eurozone debt crisis, declaring that bankrupt member nations had discovered a viable path forward. Not surprisingly, the facts are starting to trip up the rhetoric. Spain’s economy shrank 0.7% in the final quarter of [...] Continue Reading...
Las Vegas odds-makers believe that the San Francisco 49ers will beat the Baltimore Ravens to win Superbowl XLVII this Sunday, February 3. That’s what is implied by a 4-point spread. In contrast, if the professionals did not feel that the 49ers had a definitive edge, there would neither be a spread nor a so-called “favorite.” And [...] Continue Reading...
ETF enthusiasts can make profitable investing decisions based upon government/central bank currency manipulation. For example, a little more than a month ago, I wrote “A Foreign Stock ETF for a Rapidly Declining Currency.” In the article, I discussed Shinzo Abe’s determination to devalue the yen substantially through aggressive monetary intervention so that Japan’s exports would be [...] Continue Reading...
What are the alternatives for an investor when a large majority of assets are fundamentally overvalued and technically overbought? One can wait to participate, of course. Even if there are no obvious reasons for sellers to enter the marketplace, they always do. On the other hand, stock fund managers are being flooded with cash that they [...] Continue Reading...
There are scores of erroneous beliefs that mislead the investing public. However, few are as dangerous to one’s portfolio as the notion that economic growth correlates to stock market performance. Consider the inglorious ride for Chinese equities via SPDR S&P China (GXC). In 2010, China’s GDP growth rate topped 10%, while GXC managed a modest total [...] Continue Reading...
In early September, the European Bank (ECB) put its money where Mario Draghi’s mouth was. Specifically, the congregation of decision makers agreed to purchase unlimited amounts of short-term, troubled country bonds in the event that a beleaguered sovereignty requested aid. (Note: A country would have to agree to certain reforms, but… who genuinely wants details?) Apparently, the ECB [...] Continue Reading...
