Stocks are far from cheap. Based on Buffett’s preferred valuation model and historical data, as depicted in the scatter graph below, return expectations for the next ten years are as likely to be negative as they were for the ten years following the late ’90s.
Stocks are far from cheap. Based on Buffett’s preferred valuation model and historical data, as depicted in the scatter graph below, return expectations for the next ten years are as likely to be negative as they were for the ten years following the late ’90s.
We talk much about the bailouts and stimulus programs related to the economic shutdown and pandemic. However, the bailouts began back in 2008 when the Federal Reserve intervened with the insolvency of Bear Stearns.
As we near the 2020 Presidential election, rhetoric from both sides is ramping up. Depending on your personal “echo chamber” of social media, you are likely confident why your candidate is the best choice, and the opposition is the worst. However, when it comes to economic prosperity and the financial markets, who is the best choice? To answer that question, we will focus on the “policies,” not the “politics.”
It is a given that you should never mention the “R” word. People immediately assume you mean the end of the world: death, disaster, and destruction. Unfortunately, the Federal Reserve (Fed) and the U.S. Government also believe that recessions “are bad.” As such, they have gone to great lengths to avoid them. However, what if “recessions are a good thing,” and we just let them happen?
There is currently much hope for another fiscal stimulus package to be delivered to the economy from Congress. While President Trump recently doused hopes of a quick passage, there a demand for more stimulus by both parties. While most hope more stimulus will cure the economy’s ills, it will likely disappoint due to the “second derivative effect.”
Everything was working according to plan this week, until Friday morning. As news hit that President Trump and the First Lady contracted COVID-19, so did the market at the open with Dow down roughly 450 points.
Given the challenges facing the markets over the intermediate term from a “contested election,” a lack of financial support, a pandemic resurgence, and economic disruption, the risk of a deeper correction remains.
After a challenging July that saw investors sell off high-flying technology stocks, buyers returned to the market in August, bidding up risk assets across the board.
Allocators add new exposures for a variety of reasons; diversification, returns, risk mitigation, etc. Understanding this, what is the most over-owned and expensive sector today?
After a red-hot June built on expectations that the Federal Reserve may succeed at killing inflation without killing the economy, July saw investors begin to question the soft-landing narrative.
It looks like a big margin call started in Japan. The Japanese Yen has become a funding currency in recent years, a source of cheap financing with the proceeds reinvested in better returning assets – such as US$ listed AI stocks.
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