Call it patriotic… Call it lazy… But most people stick close to home when it comes to investing. This is called home-country bias, and it’s a phenomenon that’s too big to ignore. It’s pervasive across time and geography. And even though it makes investors feel all warm and fuzzy inside, it generally tricks us into accepting lower returns and higher volatility from domestically-tilted portfolios. In the U.S., this is particularly prevalent. Americans prefer to invest in U.S. stocks because, psychologically, it feels like the right thing to do. But it’s not! Yes, U.S. stocks have trounced foreign stocks for years now. But, j...
When future historians look back at the beginning of the 21st century, they’ll note that we grappled with many big issues. They’ll write about the battle between nationalism and globalism, soaring global debt, a dysfunctional healthcare system, societal concerns around automation and AI, and pushback on immigration. They will also note the growing number of populist leaders in Western democracies, ranging from Marine Le Pen to Donald Trump. However, these historians will not view these ideas and events in isolation. Instead, they will link them all, at least partially, to an overarching trend that is intimately connected to today’s bigg...
The first signs of financial distress often surface when CFO’s start to play games with their balance sheet. First, comes the ballooning of current liabilities as payable balances are stretched out to the max to preserve cash. Next, the most astute vendors catch on fairly quickly to the gamesmanship and move to COD terms for new purchases. Once that happens, the gaming CFO typically faces a ‘run on the bank’ which prompts a full revolver draw and generally, soon thereafter, a bankruptcy filing. As Bloomberg points out, this exact scenario played out last year in the oil industry when crude prices tanked and E&P comp...
My bearish watch list for the week: How many people were anticipating a UK Snap Election prior to today? Yeah, nobody. It is quite amazing how many things, of late, the market can find to freak out about. Brexit was last year, it is happening! Apparently the algos have yet to get over it. They still have those settings in place to flip out about anything coming across the news wire related to Brexit, and that is where we find ourselves at right now. Dip buying doesn’t seem to be a relic of the past, but it sure does seem to be having a hard time waking up in the afternoon these days. But as you saw yesterday, it takes one day to wipe ...
There is no change to the risk budget this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. The performance of markets in the first quarter of the year was a bit schizophrenic. Stocks performed well which one might interpret as a reflection of improving economic growth prospects. Certainly President Trump and his proxies were quick to take credit but unfortunately for the new administration if they are responsible then they seem to be making foreign markets and gold miners great again sooner than America. Gold outperformed stocks by a pretty wide margin over the first three months of...
Esther George, president and chief executive officer of the Kansas City Fed says Continuing With Rate Rises Is ‘Necessary’. She also claims weak economic data is “transient”. Meanwhile, the market increasingly believes the economy is weakening and rate hikes are less likely. Meanwhile, the market increasingly believes the economy is weakening and rate hikes are less likely. Federal Reserve Bank of Kansas City President Esther George said on Tuesday the U.S. central bank needs to press forward with rate rises, adding it should also begin reducing its massive balance sheet later in the year. She said both inflation and unemployment ...
The Peru Ministry of Energy and Mining just released their silver production data for February, and it was a whopper to the downside. Actually, I was quite surprised to see how much Peru’s silver production declined versus the same month last year. Also, Peru’s gold February production took a similar big hit. According to the Peru Ministry of Energy and Mining data, the country’s silver production fell 12% to 323.1 metric tons (mt) this February versus 367.4 mt the same month last year: This is a 44 mt decline in one month, nearly 1.5 million oz lost. Here is the table from the Peru Ministry of Energy and Mining showing various metals p...
A few important things I’ve learned over the years: 1) The prevailing narrative always follows price. 2) Prices can be very wrong at times (the market is NOT always right). 3) When prices are wrong, narratives become nonsense. 4) Chasing nonsense (false narrative) is not an effective investing strategy. Just before midnight on election night last November, the narrative was decidedly bearish. The odds of a Trump win had surged higher, and doomsday prophesies piled in. What were they based on? This, and this alone… S&P 500 futures traded limit down, the Mexican Peso suffered its worst decline since the Tequila crisis in 1994, and sa...
The long awaited breakout in the 3D printing space is there. Today, Stratasys is leading the sector higher, with a rally of more than 10 percent intraday on higher than average trading volume. Interestingly, investment bank Piper Jaffray upgraded 3D printing stocks Stratasys from neutral to overweight. That is quite drastic. Their first upside target is $28, which, coincidentally, is close to our first target. Investors.com summarized the research note from Jensen which forecasts that 3D printing stock Stratasys will outperform competitors like 3D Systems (DDD). Based on a Piper survey of 3D printer resellers, Stratasys experienced “...
Written by BNN.ca U.S. cereal company Post Holdings Inc. (NYSE: POST) has agreed to buy Weetabix Ltd. from Bright Food Group Co. of China for 1.4 billion pounds (US$1.8 billion), adding the British breakfast staple to a portfolio that includes Grape Nuts and Honey Bunches of Oats. The deal for the maker of oval-shaped cereal bricks gives Post a stronger presence in the U.K., which accounted for four-fifths of Weetabix’s 346 million pounds of revenue in the year ended Jan. 2, 2016, according to financial statements. Post Chief Executive Officer Rob Vitale said in a statement Tuesday “The purchase continues our strategy of strengthe...