23
Oct
2014
You Can Be a Stock Market Genius
Years ago, before the crisis, I read a terrific book by investor Joel Greenblatt titled, ‘You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits.’ Usually a title like that is a turn off for me because it implies that investing is easy and that someone’s behind the curtain who knows the secrets to making money that no one else knows. Despite the title,… Read More
22
Oct
2014
Choosing a Trustee
There are many reasons to establish trusts including the efficient transfer of wealth, avoiding probate, philanthropic commitments, tax reduction, or protecting assets, among other things. Ten years ago, the tax reduction benefits were applicable to more people because the estate tax exemption (the threshold where estate taxes kick in) was $1.5 million. Today, the exemption is $5.34 million and, therefore, affects far fewer people. That doesn’t mean that you don’t… Read More
21
Oct
2014
Lower for Longer
One of the interesting implications of the recent selloff in stocks and rally in bonds is that investors have quickly shifted gears regarding when they think that the Federal Reserve will begin to raise interest rates. Right now, the market expects the Fed to announce that they will end their bond-buying program, known as quantitative easing, at their meeting on October 29th. There has been some scuttlebutt that the Fed… Read More
20
Oct
2014
Finding Higher Yield
In any investment, the total return is comprised of the income earned and capital appreciation. The yield on the bond market is relatively low, so it’s been good news for bond investors that interest rates have fallen because that means that prices are higher, providing some capital appreciation in a low yield environment. But that’s also the bad news: we’re in a low yield environment. Last year, when interest rates… Read More
17
Oct
2014
Are Micro Caps Signaling a Bottom?
There are many interesting things going on right now and one of them, in my view, is the sharp rally in micro cap stocks in the past four trading sessions. I’ve noted in earlier missives that small cap stocks are having a very tough year so far, especially at the end of the third quarter (just in time for your quarterly reports, I’m afraid). The following chart shows the relative performance… Read More
16
Oct
2014
Why Are Stocks Faltering?
On Wednesday, I wrote that I was ‘double shocked’ to see that the yield on the 10-year US Treasury note had fallen to 2.175 percent, so imagine my surprise yesterday when the yield fell to 1.86 percent – triple shocked! What was to blame for the steep initial losses and sudden (though not complete) recovery? No one really knows, actually, but here are some of the more credible theories across… Read More
15
Oct
2014
Treasury Bond Yield Tumbles
Although there are still a good solid two and half months left this year, the big stories in my mind are set: the horrible performance of US small cap stocks (overseas small stocks are mildly worse than overseas large) and the meaningful drop in US Treasury bond yields. Back in May, I wrote that the Treasury bond market was a bit of a mystery because yields were falling, which is… Read More
14
Oct
2014
Crude Oil Falls: A Tax Cut for Everyone
At this point, the S&P 500 is still positive for the year, unlike all of the other (smaller) US asset classes or developed markets overseas, which are all down. Emerging markets and REITs are also up this year, but emerging markets are recovering from a loss of -3.86 percent last year and REITs are benefitting from the surprise drop in interest rates. When we think about asset class results, like… Read More
13
Oct
2014
Dirty Words of Finance
A little before my time, comedian George Carlin did a bit called ‘seven dirty words’ that were unsuitable for television. Although the words are fairly commonplace now, I’m glad that the networks and basic cable keep them off of the air until my kids are in bed. Finance has a few dirty words as well, but unlike Carlin’s list, I can use them here to describe how we mostly, but… Read More
10
Oct
2014
CNBC Reports Markets in Treacherous Territory
When I drove out for lunch yesterday, the selloff caused me to switch from my regular setting on the dial, St. Louis Public Radio, in favor of CNBC via satellite radio. What a mistake! I wish that I had stayed with the calm, reassuring (though non-market) related discussion on public radio because by the time I got back from lunch, the CNBC anchors has scared the dickens out of me…. Read More