In the 5-year bull market from 10/2002 through 9/2007, large-cap indexes typically carried price-to-earnings (P/E) ratios ranging from 17-18. Perma-bears harped on these “valuations” throughout the period, expressing that major benchmarks had not reverted back to a historical average of 15.
With the real estate lending bubble bursting in dramatic fashion, stock assets plummeted 40%. Separately, the P/E price tag for the S&P [...] Continue Reading...
Foreign bonds have always been one of my favorite areas for genuine diversification. Historically speaking, foreign bonds do not correlate negatively or positively with stocks.
Until recently, however, ETF investors had slim pickings. You had vehicles such as SPDR DB International Gov’t Inflation Protected (WIP) as well as SPDR Barclays International Treasury (BWX). Yet WIP and BWX experienced enormous difficulties during [...] Continue Reading...
Last October, enthusiasm for Brazil had reached epic proportions. And why not? Not only had the iShares MSCI Brazil Fund (EWZ) risen 175% off its November 2008 lows, but the country constitutes one of the essential building blocks in the BRIC (Brazil, Russia, China, India) fortress.
Indeed, the country boasts the world’s 7th largest economy, a consumption-oriented middle [...] Continue Reading...
With a variety of benchmark ETFs hitting multi-year highs on 7/7/11 – Powershares Nasdaq 100 (QQQ), iShares Russell 2000 (IWM), iShares DJ Transports (IYT) — investors have placed the May-June swoon in their rear view. What’s more, economically sensitive sectors like tech and consumer discretionary are leading the charge. In fact, some analysts believe that the momentum in cyclicals is a clear sign that the [...] Continue Reading...
Even the bulls have been hedging their commentary lately. For example, Blackrock’s Bob Doll frequently points to accommodative monetary policy, strong corporate results and an increasingly self-sustaining economy as reasons for stocks to grind higher. More recently, though, the chief equity strategist acknowledged economic malaise by philosophizing, “A significant acceleration or deceleration in the pace of jobs growth has [...] Continue Reading...
Yesterday, June 2, 2011, 14-year old Sukanya Roy rocked the 1st place trophy at the 2011 Scripps National Spelling Bee. For some reason, I thought of my 14-year old daughter, and wondered whether she could spell, “perescii.”
Then my mind shifted to something else entirely. Specifically, I wondered how many Americans could spell the word, “ethnocentrism.“ It is essentially spelled like it sounds. What’s more, it [...] Continue Reading...
On the last day of May, stocks gained significant ground in Japan, China, Europe and the United States. Jim Cramer of CNBC Mad Money fame announced that you don’t get that type of across-the-board activity often, and that a rising tide for a global rally would lift all equity boats going forward.
On the first day of June, however, worldwide markets hammered stock assets by 1.5%-3%. Mr. [...] Continue Reading...
Demand for foreign bonds in foreign currencies have obliterated analyst expectations. For instance, Wisdom Tree Emerging Market Local Debt (ELD) swelled to nearly $1 billion in net assets in 9 months time. By way of comparison, the dollar-denominated PowerShares Emerging Market Sovereign Debt Fund (PCY) began nearly 3+ years before ELD, though both PCY and ELD have roughly the [...] Continue Reading...
The emerging market growth story is beautiful in its simplicity. Younger people with increasing amounts of income in industrializing countries should drive demand for more products, services, infrastructure and housing.
Of course, the emergers are not without their concerns. They face more vexing inflation than developed economies. They’re more dependent on the natural resources they can or cannot export. [...] Continue Reading...
U.S. stock assets fell in each of the first two weeks of May. And they’re not off to a rousing start in the third.
In spite of apparent weakness, however, the glass can hardly be considered half-empty. The SPDR Dividend Fund (SDY) is only 1% off 52-week highs. Even the SPDR S&P 500 Trust (SPY) is within 3% [...] Continue Reading...
