There’s a general playbook for investing when it comes to the macro-economic business cycle. The cycle includes four stages: Reflation, Recovery, Overheat and Stagflation. You might also hear other terms used to describe each stage but we’ll run with these because Merrill Lynch made this nice chart for us. Within each stage, investment assets tend…
When Correlations go to 1, Short Volatility and Negative Convexity
2017 has been the year to sell volatility. Volatility on nearly all asset classes has been compressed to historically low levels, which is a function of the world’s major Central Banks going into asset purchase overdrive for the past 18 months. When you flood the global financial system with free money, people tend to leverage…
Highlighting Some New Investments
Here’s a brief overview of some recent investments made over the past few weeks. TripAdvisor (TRIP) We purchased stock in TripAdvisor as a growth investment. This is a unique stock that has tremendous long-term growth potential if management can execute. I’m sure almost everyone is familiar with TripAdvisor. They run a site where users can…
Why Boring is Usually Best
I bought stock in Kimberly Clark (KMB) this week as a new Income investment at a 3.2% dividend yield. Kimberly Clark is a global consumer products company with many recognizable brands used by a quarter of the world’s population in the paper products space. Some of their top brands include Huggies, Klenex, Cottonelle, Kotex, Depend…
Chart of the Week: Changing Auto Market, EV’s and Demand for Metals
There was an interesting article yesterday on Bloomberg about the changing demand for various metals as more cars shift to hybrids or fully electric vehicles (EV’s). Every major car maker is now starting to come out with their own EV’s and Volvo just announced last month that by 2019 all of their cars will be…
An Intro to Technical Analysis: Seeing Some Structural Weakness
Technical Analysis is the study of charts, chart patterns and indicators. Purely fundamental investors who study balance sheets and cash flow statements think it’s a complete waste of time whereas chart technicians think it’s all that matters. I say, why not be well versed in both? I’ve found it to be extremely valuable in helping…
Potential Sea Change
Last week’s FOMC meeting may have signaled a coming change in the investment markets. During the press conference, Janet Yellen began to lay out how the Fed will start to reduce its balance sheet (i.e. all of the bonds that they have purchased through QE). She said it could begin in the very near future. …
A Simple Way to Measure Market Overreactions and Turn them into Opportunities
In this post I’m going to show another way you can look at a stock chart to see where a particular stock is trading in relation to its longer term trend by using linear regression channels. These measure a stock’s trend over a certain period of time, as determined by its best fit linear regression…