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
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
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
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
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
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
I like to think that longtime readers have picked up on my love for all things markets. I also love the movies and in honor of the Oscars last night, I thought that it would be fun to list the best (and worst) Wall Street movies of all time. To make this list even more fun, I’ve included links to trailers and clips, but I have to warn you about… Read More
When I graduated from college in 1995 and started in this industry, I was told that the current saying for the Dow Jones Industrial Average (DJIA) was ‘10,000 by 2000,’ referring to the turn of the century. It seemed impossible to me because, at that point, the DJIA was trading below 4,500. Just a few months before, one of my finance professors said the market was overvalued. Less than six months… Read More
The employment situation in the US improved on Friday as the Bureau of Labor Statistics (BLS) announced that the economy added 287,000 new jobs in June, well ahead of the consensus estimates of 180,000 and surpassing the high estimate of 235.000. Keep in mind that this was a first estimate and that these numbers are routinely revised. The revisions to recent estimates were mixed with the April numbers raised to… Read More
While markets were obviously down, one piece of good news is that they weren’t chaotic. You may think I’m grasping at straws here for a silver lining, but wild macro events can cause markets to get sloppy and that didn’t happen Friday. Last August, when markets were selling off, the heavy trading volume caused a number of stocks and ETFs to behave erratically in what some people described as a… Read More
