Archive | Small Cap ETFs

Why You May Want To Sell Into The Post-Brexit Rally

For the better part of six years, between December of 2008 and December of 2014, the Federal Reserve created hundreds of billions of electronic dollar credits to pump up asset prices (e.g., stocks, bonds, real estate. etc.). Theoretically, the subsequent wealth effect would encourage businesses to invest in their growth, consumers to spend on discretionary items [...] Continue Reading...


Zero Rate Hikes In 2016? It Still Won’t Be Enough To Help The Economy Or Stocks

According to the Goldman Sachs Current Activity Indicator (CAI), economic well-being peaked in November of 2014. The erosion from 4.1% down to 1.3% over the last 18 months demonstrates just how vulnerable the U.S. economy currently is. Not surprisingly, economic weakness has taken its toll on stock assets. The S&P 500 has not gained meaningful ground [...] Continue Reading...


Treasury Bond Yield Curve Is Telling Stock Investors To ‘Wake Up’

How dependent is the U.S. economy on stimulus by the central bank of the United States? Take a look at what has happened in the bond market since the Federal Reserve began to reduce asset purchases as part of its quantitative easing program (“QE3″) in 2014. The spread between longer-term maturity treasuries and shorter-term maturity [...] 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...


Three Charts: What Debt, ‘CapEx,’ and Whole Profits Tell Stock Investors

For several years now, I have expressed concern about the accumulation of debt by governments, corporations and households. Some folks seem to recognize that – across the board – total debt levels are on an unsustainable path. Others have argued that the only thing of importance is the ability to service existing obligations, and that [...] Continue Reading...


Risk On Or Risk Off? Big Picture Suggests The Latter

One way to gauge the well-being of stock assets is to examine all of the 1900-plus stocks listed on the New York Stock Exchange. We can do this by evaluating the progress of the NYSE Composite Index. The first item worth noting is that stock assets have struggled to make any progress since late October of 2013 [...] Continue Reading...


Are U.S. Stocks Really The Only Game In Town?

The S&P 500 notched an all-time record high of 2130 on May 21, 2015. That was 10 months ago. Since that date, the popular gauge has suffered two faith-rattling corrections – a 12% decline in August of 2015 and a 14% pullback in February of 2016. Granted, U.S. stocks rallied back to respectable levels after each [...] Continue Reading...


Low Interest Rates Alone Cannot Prevent A Bear Market In Stocks

The most common definition of a bear market in stocks? A major index needs to fall 20% from a high-water mark. And while that is precisely what has happened for most gauges of stock health – MSCI All-Country World Index, Nikkei 225, Stoxx Europe 600, Shanghai Composite, U.S. Russell 2000, U.S. Value Line Composite – the [...] Continue Reading...


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