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Valuation Models Say Stock Market Losses Ahead

Overpaying for anything is a bad idea. But it’s an especially bad thing when it comes to investing in the stock market. James Montier at GMO correctly observes: “Over the years I’ve witnessed many attempts by the practitioners of this most dark art to justify why tried and tested measures of valuation are no longer …

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Is this the Weakest Bull Market in History?

“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one,” said Charles MacKay in his classic book the Madness of Crowds. A closer examination of the U.S. stock market’s (NasdaqGM:QQQ) action shows how the herd is …

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Are Corporate Earnings Being Gamed?

Are corporate earnings really as great as the executives at the helm and Wall Street want us to believe? Over 70% of S&P 500 (^GSPC) companies that have already reported beat analysts’ earnings estimates during the fourth quarter. Furthermore, 66% reported higher sales revenue, which is above four year averages, according to FactSet.  Equity permabulls …

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China’s Busted Bank Loans Hit 2008 Crisis Levels

Depending on whom you believe, China is either on the verge of economic utopia or a major economic shock. And the data is leaning toward the latter. Non-performing loans made by Chinese banks soared to $97.5 billion in the final three months of last year, according to the China Banking Regulatory Commission. That matches levels …

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Portfolio diversification

Are Covered Call Funds a Smart Income Play?

What’s better? A covered call options strategy executed by the individual investor or a covered call ETF or fund that proposes to do the heavy lifting? Selling covered calls is a popular investment technique used by investors with high income or cash flow as their primary goal. The investor is “covered” because they own the …

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Let the Spending Spree Begin!

Debt ceilings have done little to curb the U.S. government’s escalating debt load and if you thought overspending was a serious problem before, welcome to the next cycle. That’s because U.S. politicians just approved a bill that suspends the government’s borrowing limit until March 16, 2015. That means no more last minute showdowns about a …

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Emerging Markets and Parallels to the pre-2008 Crash

Are there parallels between the pre-2008 U.S. stock market crash and emerging markets today? Emerging market bulls (NYSEARCA:EDC) say that cheap market valuations are a reason to own stocks from countries like China (NYSEARCA:FXI), Brazil (NYSEARCA:EWZ), Russia (NYSEARCA:RSX), and India (NYSEARCA:EPI). Are they right? AUDIO: Listen to Ron DeLegge @ The Index Investing Show A …

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MyRA is Dead on Arrival

During his State of the Union address, President Obama unveiled his new plan to increase retirement savings. The plan is dubbed “MyRA” and is geared for people without a company sponsored retirement plan. Sadly, MyRA is more than a futile attempt at preventing people from retiring without money. It’s another shining example of grandstanding and …

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Who Turned Up the (Trading) Volume?

Price changes in the stock market occur on all-time scales. From a tick in milliseconds all the way to decades and even centuries, prices have a certain pattern. And behind all these constantly influx price changes is trading volume. Why does it matter? Trading volume refers to the number of shares or contracts traded in …

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Wall Street is Still Optimistic, Should You Be Too?

Never mind the S&P 500’s (^GSPC) mild nosedive. Wall Street’s analysts are still cheerleading stocks for 2014 as if nothing has changed. How bullish are they? Among Wall Street’s analysts, 18 out of 21 predict a 3% or greater increase for the S&P 500 (NYSEARCA:SPY) in 2014.(see table below) One of the most bullish 2014 …

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Emerging Market Stocks: Bargain or Value Trap?

I was recently lectured on Twitter by a Wall Street strategist about why emerging market stocks (NYSEARCA:EEM) are a raging buy. Among his top arguments for being and staying long were extremely negative sentiment and chart patterns. He was particularly adamant about “depressed values” in Chinese stocks. Interestingly, the view among other strategists that emerging …

Emerging Market Stocks: Bargain or Value Trap? Read More »

Have Bullish Sentiment Extremes Caught Up with Stocks?

Memo to equity bulls: 2014 is not 2013. And thus far, it’s been a bumpy road for stocks. The  S&P 500 (NYSEARCA:SPY) broke below 1,800 for the first time this year. Have bullish sentiment extremes finally caught up with the stock market? AUDIO: Listen to Ron DeLegge @ The Index Investing Show Via our Technical …

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Is Stock Market Sentiment Too Complacent?

Here’s your “lost decade” update: The S&P 500 (ChicagoOptions:^GSPC) has risen nine out of the past 10 years and in 2013 just posted its best yearly performance in a decade. Have stock market investors become spoiled and overconfident? Measuring the stock market’s mood or “sentiment” through news headlines, surveys, and data give us clues about …

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Gold Miners Are Beating the S&P 500

If you drop a penny from your pocket, it will be a very small bounce. But if you drop the penny from atop the Empire State Building, the magnitude of the bounce will be great. In the case of mining stocks, that bounce from a very long and painful fall has been so great – …

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This Seasonal Trend has been a Slam Dunk

In the winter it snows and in the spring flowers bloom.  It’s one of those things you can always count on. And like nature, the stock market, has its own set of yearly trends. One of the market’s strongest seasonal forces that has been a slam dunk this year is something called the “January Effect.” …

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Will Gold’s Latest Rally Stick?

Sentiment extremes should be on the radar screen of all investors. That’s because they can point to buying opportunities and sharp reversals ahead.  The latest action in the gold market is a perfect example of this. Just a few short weeks ago, year-end tax loss selling was in full force and universal hatred for precious …

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