11 Aug 2015

Buffett Bags an Elephant

Warren Buffett wrote in Berkshire Hathaway’s 2010 annual report that they ‘will need both good performance from our current businesses and major acquisitions.  We’re prepared.  Our elephant gun has been reloaded, and my trigger finger is itchy.’ At that time, he was just coming off his largest deal ever, purchasing the railroad Burlington Northern Sante Fe for $26.7 billion in 2009.  In 2013, it appeared that he had bagged his… Read More

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5 Aug 2015

The Secret to Stock Buyback Returns

As I wrote earlier this week, the plunge in oil prices has dramatically cut profits for energy firms (see the article here). Some of those companies have been using their excess cash over the last few years to buy back shares of their own stock, which reduces the number of shares outstanding held by investors. Last year, I looked at buybacks versus dividends (read the article here) and today I… Read More

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4 Aug 2015

Greek Stocks Fall 16% in One Day; Markets Still Efficient

Thankfully, Greece has been out of the headlines for a few weeks as the Mediterranean country continues to negotiate their third bailout in five years. In the meantime, some of the capital controls are beginning to lift: banks reopened on July 20 (although withdrawals are still severely limited) and yesterday, the Greek stock market opened again, albeit -16 percent lower. Obviously, that’s an enormous decline – the S&P 500 has… Read More

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3 Aug 2015

Lower Oil and Earnings: A Tough Combo

We are now almost three quarters of the way through the current earnings season and, so far, earnings are down around -1.3 percent from last year according to FactSet. That’s much better than what markets were expecting at the outset of the quarter, which was -4.6 percent as 73 percent of companies reported results better than analyst estimates. Results in the energy sector have been especially terrible, falling -57 percent… Read More

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31 Jul 2015

Acropolis Dodged a Bullet

One of the hottest trends in investing over the past five to ten years has been investing in master limited partnerships (MLPs). As the name states, an MLP is a limited partnership that is somehow engaged in the natural resources business.  MLPs engage in the exploration and development (upstream), processing and transportation (midstream) and distribution and marketing to end consumers (downstream) of products like timber, coal, minerals, oil natural gas… Read More

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30 Jul 2015

Get Out Your Smelling Salts: The Fed Speaks

As expected, the Federal Reserve Open Market Committee (FOMC) left short-term interest rates unchanged yesterday. Their statement yesterday along with other comments from Fed officials imply that the Fed is on course to raise rates later this year, citing solid job gains and lower unemployment. Specifically, the statement yesterday added the word ‘some’ to a key phrase: ‘The Committee anticipates that it will be appropriate to raise the target range… Read More

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29 Jul 2015

When the Index is Wrong

When you buy an index fund, it’s natural to expect that your fund will earn basically the same return as the index. In a perfect world, you should expect an index fund to earn the index returns minus the cost of the index fund.  If an index fund charges 0.1 percent annually and an index earns 10 percent, you should expect to earn 9.9 percent. There are other reasons why… Read More

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28 Jul 2015

Bear Markets in Oil and Energy

Oil entered another bear market after falling approximately 21 percent from the recent high in May, although you can see that the current bear market for oil is nothing like the one that occurred at the end of last year. The rout in Chinse stocks is partly to blame because China is the world’s largest oil importer and second largest oil consuming country and an economic slowdown would further cut… Read More

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27 Jul 2015

Diversification in Today’s Market

One of the bedrock ideas behind Modern Portfolio Theory (MPT) is that diversification lowers risk. A simple view of that concept is that a portfolio of many stocks is less risky than a portfolio that contains one stock because the impact of a failure like Lehman Brothers or Enron won’t blow apart your whole portfolio.  Of course, all stocks can go down substantially, like they did in 2008, so diversification… Read More

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15 Jul 2015

Portfolio Insights

We are pleased to provide a digital copy of Portfolio Insights, our quarterly newsletter. Table of Contents: Protect Yourself From Fraud Inside the Economy Stock Market Summary Maximizing Social Security Is Janet Yellen Bluffing? Click here to read this issue: 2015 Q2 Portfolio Insights

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