12 Jun 2015

What Drives Long Run Economic Growth?

It’s Friday in the summertime, so I thought I would do something a little light and easy today. I was reading an article by a St. Louis Federal Reserve economist titled ‘What Drives Long-Run Economic Growth?‘ I’ve been writing about short-term economic issues like the impact of the cold weather on the first quarter and when the Fed might raise interest rates (June, September or January?), so the long-run idea was appealing. The author,… Read More

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11 Jun 2015

How to Tell Emerging from Developed Markets

Last week, I wrote that the emerging market stock indexes that Vanguard tracks will be adding mainland China A-shares to their index (click here and for a refresher).  On Tuesday, MSCI, the world’s most popular index creator for non-US stock indexes announced they would not be adding Chinese A-shares to their emerging markets indexes. MSCI believes there are too many regulatory issues related to non-Chinese owners that could make owning… Read More

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10 Jun 2015

The Law of Unintended Consequences

Last week, I wrote that the recent changes in bond yields were nothing more than volatility.  That’s true, but the increase in volatility has been unusually high in Europe. To help visualize the volatility, I charted the rolling five day volatility of the 10-year note in the US and the Eurozone (which is 100 percent correlated to the German 10-year bond). The blue, and most dramatic line, reflects the yield… Read More

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9 Jun 2015

Is It Too Late to Sell in May and Go Away?

Yesterday, one my favorite long-time clients and Daily Insights readers emailed and asked whether we had ever looked into the old saying, ‘Sell in May and stay away!’ As it happens, I did do a write up on this topic last May, but we have a new website since then and for reasons that I don’t know, that article didn’t make it onto the new site.  So, it was a… Read More

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8 Jun 2015

The Right Time Horizon for Stocks

When people ask me how long their time horizon ought to be when investing in stocks, I usually say 10 years.  It occurred to me the other day that either I’ve never really looked into this in a very detailed way or I’ve forgotten about it.  In either case, it’s now time to look. To answer this question, I looked at rolling returns for the S&P 500 since 1926 for… Read More

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5 Jun 2015

Interest Rates Rising

Long-term interest rates have moved up swiftly in recent weeks.  On April 20th, the 10-year German government bond had a yield of 0.06 percent. Around that time, I couldn’t stop writing about negative interest rates (see here and here) because the 10-year Swiss government bond yielded -0.13 percent along with the government bonds of a half-dozen other European countries at shorter maturities.  I read at one point that one-third of all outstanding… Read More

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4 Jun 2015

How Stocks Have Stayed Higher

There is no doubt that the current bull market is remarkable.  Yes, it’s true that this bull market was born in a panic and the first three or four years the market was simply getting back to even from the pre-crisis peak. Since we broke even back in August of 2012, the S&P 500 is up almost 60 percent, which is just a little more than 18 percent per annum. … Read More

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3 Jun 2015

Emerging Powerhouse

When the Communist People’s Republic of China (PRC) took control of China in 1949, all privately owned assets were expropriated by the government and what were once vibrant capital markets went dark until December, 1990 when eight companies started to trade publicly on the Shanghai Stock Exchange. Now, as I wrote in April, the mainland Chinese stock markets are red hot and many people believe they are in the middle of… Read More

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2 Jun 2015

Where is GDP Headed?

As noted in yesterday’s Daily Insights, Gross Domestic Product (GDP) in the first quarter was pretty bad – we actually contracted at an annualized rate of -0.7 percent.  As bad as that is (and it’s pretty bad), it’s actually better than the first quarter of last year, which saw an annualized contraction of -2.1 percent. Last year, we could blame the drop in output on the polar vortex that made… Read More

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1 Jun 2015

ETF Deathwatch

Not too long ago, someone sent me an advertisement for an exchange-traded fund (ETF) that tracks the global airline industry.  The ticker for the ETF is very cute: JETS. Personally, I think an index that tracks the airlines industry is nuts.  Although it can’t be attributed to anyone specifically, it’s been said that the airline industry, in its entire history, has never made any money. I don’t have the data… Read More

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