Valuation

Signs of Leadership Change: Growth vs. Value Stocks

This is an excerpt from Growth vs. Value Stocks: Signs of Leadership Change on ETFguide TV with Lance McGray at Advisors Asset Management. This episode examines: Signs that could trigger a leadership change between growth and value stocks Capturing growth and value without sacrificing quality  Understanding how diversification within strategies works Positioning your portfolio for …

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Stock Market Pit

Are Equal Weight Indexes Bias-Free?

Over the past several years there’s been a lot of derogatory talk against traditional market cap weighted indexes. And one of the oft-repeated arguments against traditional indexing that you’re guaranteed to read about or see is something like, “Market cap weighted indexes overweight overvalued large-cap stocks and underweight undervalued smaller-cap stocks.” As a result of these arguments, there’s been a relentless …

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Financial Geek

Stock Prices Are Cheap! Valuation Geeks Get it Wrong Again

“Stocks are cheap by historical standards” is the latest fiction being promoted by valuation geeks. Is it true? Meb Faber, proprietor of the Cambria Global Value ETF (NYSEARCA:GVAL), and a valuation guru tweeted the 5-year CAPE ratio for the usually frothy technology sector (NYSEARCA:XLK) is just 22 today compared to an elevated 96 at the height …

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Has Momentum Investing Lost its Mojo?

Former high flying industry sectors like biotech (NASDAQGIDS:IBB) and social media stocks (NYSEARCA:SOCL) have crashed between 14-16% over the past month. Have hot momentum stocks lost their mojo? One proxy of momentum stocks is the iShares MSCI USA Momentum Index ETF (NYSEARCA:MTUM). The fund owns 100-150 large and mid-cap U.S. stocks that are screened for …

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Fireworks 1

Ready for the Next Surge in Volatility?

Is another surge in stock market fear and volatility ahead? Will you be ready when it happens? “Public psychology is the most important single factor in shaping security markets,” said Gerald Loeb. Loeb was right and that’s why we make it a regular habit at ETFguide to track movements and trading opportunities in the CBOE …

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Frontier Markets: Investors Double Up on Risk

Money is flowing out of risky emerging market stocks (NYSEARCA:VWO), and guess where it’s going? Into even riskier frontier market debt and stocks (NasdaqGIDS:PMNA). The Economist reports: “Investors in America and Europe were hungry to buy dollar-denominated debt offering juicy yields. Zambia drew $12 billion of orders for a ten-year bond paying only 5.4%. Pension-fund …

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Smart Beta Investing: New Paradigm or Word Trick

Is so-called smart beta investing a new and improved way to invest or just another one of Wall Street’s fancy sales pitches? Smart beta strategies (formerly known as “fundamental indexing”) in the investment world generally fall into two camps: 1) Indexes that use a one-dimensional or simple formulas, like equal weighting all the stocks within a benchmark like the …

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Will Dividend Yields Test ’99 Lows?

The past six years have been brutal for dividend and income investors. Zero percent interest rates have depressed bond yields (NYSEARCA:BOND) and with major stock indexes (^DJI) now trading at all-time highs, dividend yields relative to prices have fallen too. Last year, the number of S&P 500 (NYSEARCA:SPY) stocks paying a dividend touched a 17-year …

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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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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 …

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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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