Is Passive Investing a Mortal Threat to Markets?
Sep 18, 2019 | Investing Strategies
Is passive investing the greatest thing ever for investors? Or is the passive investing “bubble,” as some would dub it, a looming disaster that threatens to bring down markets and trigger a new financial crisis? This is a real debate, and it’s been going strong for years. Those in favor of passive investing make a strong case. We explained the…
Big Tech is Square in the Antitrust Crosshairs
Sep 13, 2019 | Investing Strategies
The states are coming hard for “big tech,” the nickname for Facebook, Amazon, Apple, and Google. On Friday, Sept. 6, the attorneys general (AGs) for multiple states and Washington, D.C., announced an antitrust investigation of Facebook. On Monday, Sept. 9, more states did the same for Google. The effort is impressively bipartisan. A Democrat AG is leading the Facebook investigation,…
What Wall Street Analysts Can Teach Investors About Trading
Sep 11, 2019 | Investing Strategies
Wall Street analysts are known more for being cheerleaders than having real trading skills. This is demonstrated in the cynical investor saying: “Analysts — don’t need ’em in a bull market, can’t use ’em in a bear market.” But a July 2019 research paper from Ohio State University’s Fisher College of Business could change that view. The paper, titled “Are…
August 2019 was one of the most fear-driven months in stock market history
Sep 06, 2019 | Investing Strategies
August 2019 was one of the most fear-driven months in stock market history. Not in terms of post-crash panic, like what happened after the financial crisis, but rather “early anxiety” type of fear — the sense of foreboding before the storm, when the barometric pressure is dropping and emergency supply kits are being prepped. One might assume this is a…
This Bedrock Assumption of Modern Portfolio Theory is Wrong
Sep 04, 2019 | Investing Strategies
One of the strongest pillars of modern finance, and modern portfolio theory as taught to MBA students everywhere, is the belief that “return is directly correlated to risk.” The argument is that, in order to get higher investment returns, you must always take on higher levels of risk. To put it another way: For an investor to earn better returns…
Is The Dow Jones Transportation Average Becoming Obsolete?
Aug 30, 2019 | Investing Strategies
The Dow Jones Transportation Average, often referred to as the Dow Transports or just “the Transports,” is the oldest known stock index, conceived by Dow Jones & Co. co-founder Charles Dow in 1884. The Transports are also a critical piece of Dow Theory, a longstanding price observation methodology for gauging the health of the U.S. economy and stock market. But…
Identifying Bubbles and Anti-Bubbles in Your Retirement Portfolio
Aug 28, 2019 | Investing Strategies
The two main jobs of a retirement portfolio are protecting wealth and growing wealth. While both jobs are important, the first is more important than the second. A sudden bout of wealth destruction is a real danger for retirement portfolios. To that end, it makes sense to think about bubble assets and anti-bubble assets in a portfolio. Most investors have…
The WeWork IPO Sums Up Everything Bad About the Silicon Valley Unicorn Bubble
Aug 23, 2019 | Investing Strategies
As a general rule, you want to avoid cash-burning companies when they go public. The initial public offerings (IPOs) for Lyft and Uber were an example of this. We pointed out the danger in early April, writing that “The Profitless IPO Boom Has Parallels to 1999.” Since then, both Lyft and Uber (symbols LYFT and UBER respectively) have fallen well…
Forget Black Swans — Gray Rhinos are the Real Danger
Aug 21, 2019 | Investing Strategies
Over the past decade, the term “black swan” has gotten heavy play in the financial press. The term comes from a book called “The Black Swan: The Impact of the Highly Improbable” by Nassim Taleb. As Taleb defines it in his book, a black swan is a rare and extreme event that can’t be predicted in advance. Because the book…
Safety Deposit Boxes Aren’t Safe — and Neither are Treasury Bonds
Aug 16, 2019 | Investing Strategies
What is the safest place you can think of to store precious valuables? Many would suggest a safety deposit box at the bank. There is usually a double-key entry system and a foot-thick steel door, not to mention the reputation of the bank itself. The “safety” aspect seems ironclad. And yet, imagine this scenario: You have $10 million worth of…
