Last week, we wrote about how the damp Boston-area weather matched the soggy stock market. Pressing our literary luck today, the market is following another New England weather meme: “if you don’t like the weather, wait a few minutes.”
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In the Boston area, we’ve had nearly 8 inches of rain so far this month. This 0.7 inches-per-day average compares to the 0.6 inches-per-day average for a monsoon rainforest, the type found in the tropics along the equator. Sounds a lot like the mood...
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In our continuing series on deciding how many positions to hold in a stock portfolio, let’s borrow a page from Major League Baseball (MLB). The methods that these teams use managing their players can be applied to investment portfolios.
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Last week, we started our multi-part discussion on position sizes, and looked at the benefits and weaknesses of an equal-weighted approach. Let’s look at perhaps the most common weighting used by fund managers: relative weighting.
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In most professional and personal endeavors, there are dozens if not hundreds of decisions to make. Manage a tech company? You need to decide who to hire/promote/fire, what responsibilities to give them, how much to pay them (base and bonus), resolve conflicting agendas, what...
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The market seems to have settled into complacency. We’re in a period after first-quarter earnings reports and government statistics indicate a surging economy, yet investors rightfully wonder if or when the Fed will raise interest rates and are starting to consider what happens the...
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We’ve written about inflation in the past two letters and promise that we’ll stop with this letter, unless some major news on this front emerges. Yet, what keeps us on the topic is commentary from brokerage firms and media outlets saying that the is...
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Investors have started to see a cloud or two in an otherwise sunny stock market sky. We don’t focus much on short-term market moves, but we have noticed that the weather is shifting, at least slightly.
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We’ve seen signs of it everywhere. Retail prices for homes, apartments, food, gasoline, cars and everyday services are higher than they were a year or two ago and are going higher. Upstream from these consumer-facing prices, input prices for raw materials, semiconductors, crops, energy...
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When looking at an investment idea, investors may want to replicate this intake process, tweaked of course for a clearly different (and less urgent) task. By using a consistent process, regardless of whether the idea comes from a friend, that off-beat relative, an broker...
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Proxy season is moving into full gear. As a shareholder, you are one of the owners of your companies, so you get to vote on major decisions. Shareholder votes are, of course, much like public government elections, but in most cases your vote a..
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EBITDA, or earnings before interest, taxes, depreciation and amortization, is a straight-forward measure (not a perfect measure, though) of a company’s cash operating profits. But, like seemingly all metrics published by company managements, it is usually adjusted for unusual items that may be non-recurring.
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Stop-losses, or more fully, stop-loss orders, are trading orders that are placed to execute a sale automatically if a stock falls below a specified trigger price. The idea is that these orders can prevent a small loss from becoming a large loss. It also...
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There’s no doubting the dominance achieved by mega-tech companies like Facebook, Amazon, Netflix, Google and the other members of the “FANGMAN” club (Microsoft, Apple and Nvidia). Over the past decade or two, these have created entirely new industries, grown to unprecedented size and shareholders...
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Being a contrarian investor often means buying stocks that are outside of the current zeitgeist. Many investors would look at a list of new buys in a contrarian’s portfolio and wonder just what, exactly, the contrarian was thinking. “Why don’t you just buy stocks...
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Each day brings something new. Some days every stock falls, other days they all surge, and some days, like Monday, undervalued stocks in the industrial, consumer and financial sectors jump (the Dow Jones Industrial Average gained 1%) while the Nasdaq slipped 2.4% - enormous...
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The stock market is clearly accelerating the “reopening” trade. Small cap and cyclical stocks as well as commodity prices are surging, interest rates continue to tick up (the 10-year Treasury yield is now 1.38%, up from 0.92% at year-end), and novel financial vehicles SPACs,...
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With the stock market regularly surging to record highs, it may seem like an unusual time to focus on valuation. After all, many stocks are remarkably expensive on traditional measures, and even somewhat lofty on non-traditional measures. But valuation still matters, especially if market...
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Last week, we outlined four ingredients of a market bubble that were usefully outlined in a recently published book1”and briefly described how it clearly appears that our stock market is in a bubble. These ingredients include easy trading of assets, cheap and easy rising...
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Intel’s recently publicized struggles with its own chip production highlight the trajectory of this story. The company has been unable to successfully transition to leading-edge manufacturing technologies, and is seriously considering outsourcing to companies like Taiwan Semiconductor. Intel has long been the industry’s in...
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