Big Mac Index: Why We Are Hungry for International Assets
https://youtu.be/jzsJE9iPM38 To tell if a currency is undervalued/overvalued you can measure the cost of the same item in each country. One measure we use to do this is the “Big Mac Index”, which measures how much a McDonald’s Big Mac costs in each country. Back in 2008, when pundits were talking about how the BRICS […]
Growth vs. Value: The Great Divide
https://youtu.be/Zu2Dr7mu4fA We are seeing things that we haven’t seen since 2000 – buying on leverage, no earning stocks selling for crazy multiples of sales, and stocks with solid businesses not participating. The difference between growth stocks and value stocks has become as wide (or wider depending on your measurement) than 2000. Over long periods of […]
Bond Duration: Measuring Interest Rate Risk In Your Portfolio
https://youtu.be/FyodXv4xeV4 Bond duration is a good indicator of how much interest rate risk you have in your bond portfolio. In simple terms, “duration” is the mid-point at which an investor receives half the present value of their original investment back from a bond. Ten-year Treasury Bonds issued in 1980 with a yield of 15% had […]
Expanding Money Supply = Inflation
https://youtu.be/fGcCShfRuVE The Federal Reserve’s easy money policy is unprecedented and is causing inflation. Going back to 1980, the money supply has grown steadily and consistently until recently. Over the past few months, the money supply has exploded higher. We are seeing inflation in commodities like lumber and natural gas. This is a time to have […]
Are Corporate Profits Ready to Fall?
https://youtu.be/VsEg9QATsOY U.S. corporations have doubled their debt levels over the past 10 years to buy back shares. Today, profit margins are also nearing their highest levels going back to 1950. The high level of corporate debt along with higher costs of moving operations back to the United States should cause profit margins to normalize 25%-35% […]
Bull Market? Yes, In Gold!
The best bull markets are those that grow steadily and are not originally recognized by most investors. Since September 30, 2018, gold has performed very well while stocks have languished. The 1970’s gold bull market was squashed when the Federal Reserve raised rates dramatically. With the money supply growing faster now than anytime in the […]
Is Your Portfolio Ready for Inflation?
https://youtu.be/YfAhi5xdDKU Forget the short term daily swings of the stock market, now is a time to look at what will be occurring in years to come to your portfolio. The U.S. government is running deficits and increasing the money supply at a rapid pace due to Covid 19. Going back to 1805, real assets have […]
Stock Market Leadership is Changing
https://youtu.be/yvaAsiBgXLY We have seen a shift in market leadership away from the United States to foreign markets. Foreign stocks have under-performed US stocks for 10 years and we believe this shift will last for years to come. We believe emerging markets (EM) can be the best performing area in these markets… Why? There are four […]
The Moral Hazard of Corporate Borrowing
https://youtu.be/Fcof1kf0cyA Two years ago we cautioned about the ballooning corporate debt. Now with the virus, corporations are going on a debt issuance binge. Debt issuance is up 92% year over year. The Federal Reserve is only adding juice to the “juice bowl” by buying corporate debt for the first time ever. Excessive debt levels can […]
Liquidity Problems and Rescue Packages
https://youtu.be/nGldGGp4DI4 Now that the $2 trillion rescue bill has been passed, we believe it will come with unintended consequences. Part of the bill includes the federal government getting ownership in companies and the Federal Reserve buying corporate bonds for the first time ever. 2008 had similar unintended consequences when bank trading desks were eliminated, which […]