Last April, I wrote that the Chinese stock market was red hot and that I didn’t watch China closely enough to say whether it was in a bubble, but it was an expensive market (click here for the article). By the end of summer, it was pretty clear that there was a bubble and that it was bursting (click here for the article), as we can see in the chart… Read More
One of the puzzling aspects of yesterday’s trading was that oil prices fell. When I read about the malaise between Saudi Arabia and Iran over the weekend, I assumed that oil prices would gap higher yesterday morning. Violence in the Middle East has always meant threats to output, which meant potentially lower supply or other disruptions that resulted in higher prices. In this case, though, the geopolitical tension between these… Read More
For me, reading the Wall Street Journal is a bit like eating, drinking and sleeping – I can’t really go without any of these things for very long. I think that their reporting is fair and accurate and definitely of interest to me. So, I was a bit annoyed when the Friday headlines read ‘US stocks Post Worst Annual Losses Since 2008.’ Now that headline is accurate – last year… Read More
Yesterday I posted some of the questions and answers from the Barron’s annual ‘Test Your Wall Street Skills’ quiz. Here’s a link to my article from yesterday and here is the link to the article in Barron’s (a subscription may be required). Most of the ‘big’ questions have already been answered, but there are still some fun ones: 1. Which ‘FANG’ stocks will fare worst in 2016 – Facebook, Amazon,… Read More
Over the weekend, Barron’s put out their annual quiz for readers to predict market related events in the coming year (you can find the quiz here, but a subscription may be required). I thought it would be fun to share some of my answers – but keep in mind the quote from Warren Buffet, who said that ‘the only value of stock forecasters is to make fortune-tellers look good.’ I… Read More
One of my favorite long-timer readers asked me today to follow up on the chart from yesterday to include the performance of energy stocks (click here to see yesterday’s chart). The best quality sector data from S&P only dates back to 1989, so this data set isn’t quite as long as what I showed yesterday, but the story is basically the same and I have to admit that I was surprised… Read More
Although oil ultimately finished higher yesterday, West Texas Intermediate (WTI) crude touched on a 2004 low during the day. I know I am repeating myself, but I continue to be surprised by how far oil has dropped in the last 18 months. As you know, I think a chart is worth 1,000 words, so I’ve plotted the spot price for WTI as far back as my Bloomberg data would take… Read More
I read an interesting story recently about risk management in a book titled Red Blooded Risk by Aaron Brown. During World War II, the Air Force was trying to figure out the optimal amount of armor that should be added to it’s bombers. Since every pound of armor means one few pound of bombs, it means that more bombing runs will be needed to deliver the same payload. The Air… Read More
There was fairly downbeat sentiment surrounding commodities and commodity-linked stocks yesterday. The Bloomberg Commodity index hit its lowest level in 16 years, and is close to setting an all-time low since its launch in 1991. Not surprisingly, the dollar’s strength (up 1.93 percent yesterday and 9.66 percent year-to-date) in the wake of the Fed liftoff yesterday has been getting a lot of attention. Some investors thought that the increase in rates… Read More
As expected the Federal Open Market Committee (FOMC) raised interest rates a quarter of one percent so that the target range for overnight lending is now 0.25-0.50 percent. Importantly, the Fed said that rates would rise gradually from here, actually using the word ‘gradual’ twice in the statement. Also, somewhat surprisingly, the vote to increase rates was unanimous. I believed, and heard other commentators say, that there would likely be… Read More
