Blog Archives

Treasury Note Yield: Could I Be Wrong? A Humbling Week

Treasury Note Yield

Talk about a humbling week. Last week I was making the case that 3.11% on the 10-year Treasury note yield and possibly as high as 3.16% were the key levels that I did not think would be breached. This chart shows how wrong I was.

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Stock Market Volatility – Up Like an Escalator and Down Like an Elevator

stock market

Trite generalizations have been able to have longevity because there is enough truth in them to have proven wise and insightful. One of them is that markets go up like an escalator and drop like an elevator. Last week was a perfect example of this.

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The Case Against The Phillips Curve

Phillips Curve

The unemployment rate is the most important indicator for people who are believers in the Phillips Curve. Phillips Curvers believe that there is a trade-off between unemployment and inflation. The less slack in the labor markets (lower unemployment rate) the more inflation there will be as labor can bargain for higher wages and this,

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Hitting the Wall? Is The Fed About to Make a Mistake?

Fed Interest Rate Hike

With last week being dedicated to a much-enjoyed vacation, I thought I would let pictures do more of the talking this week.

Not surprisingly, the Fed increased its benchmark rate by 0.25%. The market fully priced this in. What is more surprising is the Fed telegraphing two more hikes in 2017 and commencing a slow reduction in its holdings of Treasuries and mortgage-backed securities beginning at the end of the year.

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Has The Performance Of The S&P 500 Always Been So Top Heavy?

S&P 500 Top Heavy

Technology stocks, particularly large capitalization ones, have been on a tear as the following chart shows.

S&P 500 Technology

Since there is overlap between the two indices, I was curious to know how the largest technology companies have impacted the overall S&P 500 return.

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Dynamic Disequilibrium – New Era in Retail REIT’s and Housing

Housing Retail REIT

Key economic data and stock prices almost always change before the narrative does. Although the housing meltdown didn’t really come into force until 2007, new home sales had already peaked in 2005 and this corresponded with the stock price of home builders hitting all-time highs. The first chart shows new home sales topping out in July 2015 and the same for Lennar’s stock price as the second chart depicts.

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Man Up Revisited – Winners Like Apple and Amazon

Apple Amazon.com

In an earlier blog, I discussed a fascinating study that asked whether stocks outperformed T-Bills. Surprisingly, the answer was that most stocks do not and the bulk of stock market returns have come from an incredibly small number of companies that have produced the estimated $32 trillion in wealth (returns in excess of T-Bills) between 1926 and 2015.

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Man Up! Munger On The Benefits Of Diversifying Investments

Diversifying

This is the last in my three-part series excerpting what were the highlights for me from Charlie Munger’s extemporaneous comments and responses to questions at the Daily Journal shareholders’ meeting. Most financial professionals recommend diversifying your investments to avoid being wiped out financially and/or emotionally.

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From Obama to Trump: 180 Degrees or More of the Same?

President Obama to Trump
From Obama

This post is a blatant application of hindsight bias. We all now know that when Barack Obama won the election and subsequently took office, the economy was melting down and the financial markets were in a free fall around the globe. To refresh your memory, there was the bailout of AIG by the Fed,

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Zero Sum Thinking – Winner Take All

It’s pretty clear that Donald Trump views virtually everything from the prism of winning and losing. And every issue is looked at with a very short term horizon. There does not appear to be any satisfaction derived by developing a long-term strategy, methodically implementing it, and seeing the seeds planted blossom into a beautiful garden that is sustainable and beneficial to all.

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