Stocks

30 Apr 2020

Economy Contracts, Stocks Surge. Surprised?

Yesterday, the Commerce Department announced that the economy contracted by -4.8 percent in the first three months of 2020, the worst reading since the last quarter of 2008. Analysts expect that next quarter, GDP will drop by more than 30 percent, the worst in our lifetimes. Stocks surged. Surprised? One of the phrases that you see me write all the time is ‘better than expectations,’ or ‘worse than consensus.’ Investors… Read More

By David Ott Tags: Economy, Forecasting, Markets, Stocks, Wall Street

11 Feb 2019

Why Bother with International Stocks?

According to data from Dimensional Fund Advisors (DFA), the value of the US stock market at year-end was worth $28.1 trillion – about 55 percent of the market value for all of the world’s stocks, which totals $51.2 trillion. Developed international stocks are worth $17.4 trillion in aggregate (34.0 percent), and emerging markets stocks are worth $5.7 trillion (11.0 percent). In theory, passive investors should allocate their portfolio accordingly. In… Read More

By David Ott Tags: Diversification, International Investing, Markets, Portfolio Strategy, Portfolio Theory, Stocks

17 Dec 2018

What’s Driving the Market Lower?

Stocks are suffering for two basic reasons: slowing global growth and tightening central bank policy. While both of these rationales are true, they’re also very generic. Therefore, I thought it would be interesting to look at the big sectors driving the market performance and try to describe what’s happening in each one for a little more granularity. There are 11 sectors, and I won’t be discussing all of them, because… Read More

By David Ott Tags: Diversification, Economy, Markets, Stocks, Volatility, Wall Street

23 Jul 2018

Whither Value? Ask Warren Buffett

I feel as though I’ve written this article a few too many times: value investing is struggling. Pioneered by Warren Buffett’s mentor Benjamin Graham, value investing is the method of buying stocks inexpensively, with the hope that the current problems that’s causing the cheapness pass, and the stock will rebound sharply. Decades into Buffett’s illustrious career, finance academics found that the process of buying cheap stocks led to higher than… Read More

By David Ott Tags: Factor Investing, Investing, Stocks, Value Effect, Wall Street

4 Jun 2018

Changes are Coming to the S&P 500

In the old active-versus-passive debate, the S&P 500 serves as the champion fighter in the passive corner. That’s funny, because the S&P 500 is hardly passive. For example, it’s not a list of the largest 500 companies, but a curated list of stocks chosen by the index committee at Standards & Poor’s. Most of the differences between the index and the actual list of the largest 500 companies are relatively… Read More

By David Ott Tags: Index, Investing, S&P 500, stock market, Stocks, Wall Street

12 Mar 2018

Busting Another Wall Street Myth

Over the last few months, I’ve read multiple articles making the claim that the correlation between stocks and bonds is shifting and that the new relationship will negatively impact portfolios. One recent Bloomberg article, titled ‘Easy Allocation Models ‘Doomed’ as Diversification Breaks Down’ really set me off and caused me to take a closer look at some of these claims. The thrust of the claim is that the recent negative… Read More

By David Ott Tags: Bonds, Correlation, Diversification, Efficient Market Hypothesis, Portfolio Theory, stock market, Stocks

4 Dec 2017

The Crazy Thing? Stocks Could Go Much Higher

Long time readers know that I’ve been cautious on US stocks for some time, calling them overvalued in 2014. Last year, I referred to a quote from Sir John Templeton, who famously said that ‘Bull markets are born on pessimism, grow on skepticism, mature on optimism and die in euphoria.’ I said then that I could see the rally continuing on for years but that we were probably moving from… Read More

By David Ott Tags: Investing, S&P 500, Shiller PE Ratio, stock market, Stocks

22 Nov 2017

The Curve is Falling… The Curve is Falling!

The yield curve has been a very hot topic lately in the financial news media. Multiple times a day, there are commentators pointing to the yield curve as a sign that markets are on the verge of imploding. Is it time to panic? The Federal Reserve has continued to push short term rates higher throughout 2017. Long term rates have responded by falling 10 bps. This has led to a… Read More

By Ryan Craft Tags: Asset Liability Management, Bonds, Economy, Interest Rates, Investing, Portfolio Strategy, Stocks

5 Sep 2017

New and Improved: The Shiller PE Ratio

Longtime Daily Insights readers are no strangers to the Shiller PE-ratio, a valuation metric that uses ten years of inflation-adjusted earnings to evaluate the cheapness or richness of the stock market – a search of the term on our website yields more than a dozen results. I’m very proud to say that our understanding of the Shiller PE is now greatly expanded, thanks to our own Ryan Craft. In the past,… Read More

By David Ott Tags: Forecasting, Inflation, Investing, Shiller PE Ratio, Stocks

29 Aug 2017

Forecasting Expected Returns

“Price is what you pay. Value is what you get.” -Warren Buffet How can investors know the value of an investment? Bond yields remain very low and stocks continue to climb higher across the globe. Using typical valuation measures, markets everywhere look very expensive. However, investors continue to pour money into them, so they must see value. The value of an investment is subject to an uncertain future, so how… Read More

By Ryan Craft Tags: Asset Liability Management, Bonds, Economy, Financial Planning, Institutional Investors, Markets, Portfolio Strategy, Stocks

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