When I was a senior in college, and just starting to take some finance classes, my professor expressed deep concerns about the stock market’s valuation at the time. Of course, at the time I had no idea what he was even talking about, let alone an opinion about whether he was right or not. Using my trusty Bloomberg terminal, I can see that the price-earnings (PE) ratio for the S&P… Read More
The Bureau of Labor Statistics (BLS) offered some good news regarding the employment situation on Friday. The economy added 295,000 new jobs in February, far better than the consensus expectations of 240,000 and the unemployment rate fell from 5.7 to 5.5 percent, a new low since the 2008 financial crisis and the peak unemployment rate since then of 10 percent in 2009. Part of the reason for the decline in… Read More
A few weeks ago, I wrote about negative interest yields on bonds as long as ten years in Europe. (Click here for a refresher) The main point that I was trying to deliver (other than that it’s a crazy mixed up world) was that we really can’t say where yields in the US are going with much confidence. While that’s not a new argument coming from me, the idea that… Read More
I’m a big fan of Jack Bogle and Vanguard, so I was interested to see that Vanguard has made some fairly substantial changes to their Target Date Funds (TDFs). A TDF is a mutual fund that is designed for working people who know roughly when they will retire. For example, if I want to retire at 67 when my Social Security payments begin, I would buy a 2040 TDF. As… Read More
A correction is defined as a 10 percent peak-to-trough decline and a bear market is defined as a 20 percent peak-to-trough decline. With those definitions in mind, it’s worth noting that the utilities sector entered correction territory yesterday after falling 10 percent from their highs at the end of January. Energy stocks are down more than 20 percent since their high last summer, and have been in bear market territory… Read More
If you were watching CNBC or Bloomberg television yesterday, you saw that the ‘big news’ of the day was that the NASDAQ market crossed 5,000 for the first time since the peak of the tech bubble. Although the financial news media loves to celebrate when indexes cross round numbers (think 2,000 for the S&P 500 or 18,000 for the Dow Jones Industrial Average), they don’t do a whole lot for… Read More
Warren Buffett released his 50th annual letter to shareholders over the weekend and, as usual, it was an enjoyable read. In case you missed it, here’s a link. The report on 2014 activities was fine, but the really interesting part is a look back at the past, present and future of Berkshire Hathaway that begins on page 24. Buffett spends the first five pages discussing the early days, most notably… Read More
A little less than a year ago, author Michael Lewis created a firestorm with his book, ‘Flash Boys: A Wall Street Revolt,’ that chronicled the world of high-frequency trading (HFT). At the time of the launch, he went on 60 Minutes and announced that ‘the market is rigged’ and that everyone who had money in the stock market was a victim of predatory traders. Michael Lewis is one of my… Read More
For a second day in a row stocks were mixed but lacked any major movement, as traders took a bit of a breather after Wednesday’s release of the Federal Reserve’s meeting minutes. Oil sold off for the second day in a row but that market seems to have calmed down from the major volatility of the last few months to settle right around the $50 per barrel area. The major… Read More
One of my most vivid memories from the 2008 financial crisis was when the yield on the US three-month Treasury bill turned negative. Investors were so scared about what might happen that they were willing to pay so much for short-term bills that they would accept negative yields. Investors knew with certainty that they would get back less than their investment. I printed the screen because I thought it was… Read More
