14 Jan 2019

Is the Market Rigged?

When I was in college, I read Liar’s Poker, by Michael Lewis.  It’s the true story of Lewis’ job out of college on the trading floor at Soloman Brothers, the most powerful bond trading firm in the world at that time. Many of the characters like John Meriwether, Lewis Reneri, and John Thain are still staples of the financial media, but no one became more famous than Lewis himself. He’s… Read More

24 Dec 2018

Ba Humbug!

Let’s talk about the week that was, as the S&P 500 fell -7.03 percent, on top of the losses of 5.71 percent over the previous two weeks.  All told, the loss for the S&P 500 is now -17.54 percent from the all-time high set on September 20th. Although I don’t follow the Dow Jones Industrial Average (DJIA) closely, I know that many of you do, in part because that’s what’s… Read More

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

10 Dec 2018

Yield Curve Inversion: What It Means for Investors

Last week, the phrase ‘inverted yield curve’ exploded from the confines of a trading room to the everyday world. It hit me when I went to a holiday cocktail party after work one night and someone said, ‘oh, I heard that the stock market is down because something else is upside down.  I guess the whole world is upside down!’ Before we get into what happened last week, let’s take… Read More

29 Oct 2018

Stocks Enter Correction

A correction is usually defined as a peak-to-trough decline of 10- percent using closing prices.  Under that definition, we’re not quite at a correction, since the S&P 500 is ‘only’ down -9.28 percent since the recent high on September 20th. I think that such a strict definition is a little bit silly, so I’m calling it a correction since we’re very close using closing prices, and we crossed the 10-percent… Read More

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

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

21 May 2018

Why Aren’t Stocks Higher?

At this point, 93 percent of S&P 500 stocks have announced their first quarter results, which means that earnings season is almost over.  The expectations for earnings were relatively high at the beginning of the season, as Wall Street analysts expected that earning would grow by 11.3 percent. In fact, it was a blow out earnings season, with FactSet reporting that the blended average earnings grown at 24.5 percent –… Read More

7 May 2018

Unemployment at 20-Year Lows; Time to Buy?

Market participants and the news media alike are focused on round numbers, whether it’s the hopefully forthcoming Dow 25,000 or the 10-year Treasury crossing three percent last week. Amidst all of the news last week, one round number caught my eye: the unemployment rate crossing below four percent for the first time in nearly 20 years. The chart above shows the unemployment rate, or, more officially U3, for the past… Read More

16 Apr 2018

$1 Billion Tax Bill

If you’re writing a check to the government tomorrow for tax day, you’re probably not too happy about it.  At least you’re not suffering like John Paulson, the hedge fund manager, who is writing checks to the Fed and state for over $1 billion – on top of the $500 million that he paid in estimates last year. I know, I know: it’s a high class problem that we would… Read More