• 18 Aug
    The Bear Case To Investing In China

    The Bear Case To Investing In China

    • The first risk is a possible contraction in the Chinese credit cycle.
    • However, any kind of interest rate spike leads to immediate PBOC intervention.

    Introduction

    I have been pretty bullish in my previous articles about investing in China as I think it’s a positive risk reward situation. Nevertheless, a positive bull case wouldn’t be fair without looking at the risks China carries. So in today’s article we’ll discuss the main risks plaguing the Chinese economy and stock market. Understanding the specific risks will also help in better positioning your portfolio to the ugly things that might happen and carefully selecting the stocks that will be less affected. More →

  • 17 Aug
    Worried About The Current Environment? Here’s Why You Should Be.

    Worried About The Current Environment? Here’s Why You Should Be.

    • We’ll discuss the most obvious risks to the current financial environment.
    • For example, higher interest rates are already negatively affecting the U.S. economy and inflation.
    • However, the most dangerous risks are the hidden ones.

    Introduction

    Yesterday we discussed the main factor behind the current bull market, i.e. central bank asset purchases, and I described three potential scenarios, one where things continue as expected, one where central banks increase stimulus, and one where inflation messes things up for everyone.

    Nevertheless, nothing that was discussed in yesterday’s article was a new finding. Such fears have been circulating the financial environment since 2009, and as we have witnessed, nothing much has changed since then while the global financial system seems stable as a rock. Even Japan’s economic activity has surprised on the upside with growth of 4% for Q2 2017. More →

  • 16 Aug
    Why You Need To Prepare For All Hell To Break Loose

    Why You Need To Prepare For All Hell To Break Loose

    • The last stock bull market was influenced by central bank activity, that’s clear. What’s next is the question.
    • I’ll describe three potential scenarios that could impact our financial system.
    • One is good, the second is interesting, while the third is ugly.

    Introduction

    The general expectation is that the FED will start selling securities in order to tighten monetary policy, that the ECB will slowly stop buying, and that nothing will change in Japan. Nevertheless, such a situation would lead to an environment where the additional liquidity created by central banks finally dries up. As the liquidity provided by central banks is the main reason behind this bull market, should investors begin to cut their positions?

    In order to elaborate on this question, we’ll first analyze the situation, the expected situation, and then possible scenarios in order to give you the best answer on how to prepare yourself for what might happen. It’s extremely important to do so and, as you will see, it isn’t that difficult. More →

  • 15 Aug
    Is It Possible To Find A Wonderful Business At a Fair Price In Today’s Environment?

    Is It Possible To Find A Wonderful Business At a Fair Price In Today’s Environment?

    • We’ll first define what a wonderful business should be and what a fair price would be in relation to general stock market risk.
    • We’ll look at price earnings differences among sectors and countries to find places to look for great investments.
    • A list of S&P 500 companies with low P/E ratios shows that it isn’t easy to find wonderful businesses at a fair price.

    Introduction

    Warren Buffett’s main advice to investors is to find a wonderful business at a fair price. Now with the S&P 500 price to earnings (P/E) ratio of 24.34, that implies an earnings yield of just 4.1% which makes me ask myself, is it possible to find a wonderful business at a fair price today?

    I’ll first describe what a wonderful business is, look at what would be a fair price for it, and then look to see if there are any such businesses around. More →

  • 14 Aug
    Curious About Cryptocurrencies? Read This.

    Curious About Cryptocurrencies? Read This.

    • Be aware that every investment is gray. There is no black and white out there. The same applies to cryptocurrencies.
    • I’ll analyze whether Bitcoins can be valued, if are they a currency, how to price them, what influences the price, and what the fundamentals are.
    • From one perspective, it even looks like a positive risk reward situation.

    Introduction

    I get lots of questions about bitcoins and other cryptocurrencies.

    The questions usually come from younger people who blindly invested based on some interesting narrative heard somewhere that convinced them to renounce a few beers. However, those who invested have done very well and now it isn’t just a few beers anymore but a significant amount in the form of a few codes on an account and things are getting serious.

    All the questions and excitement surrounding Bitcoin led me to really analyze the environment out of curiosity, and provide my opinion on what can happen and what kind of an investment Bitcoin actually is. More →

  • 13 Aug
    Sunday Edition: Wearing A Polo? You’ll Like This Buying Opportunity

    Sunday Edition: Wearing A Polo? You’ll Like This Buying Opportunity

    When reading about the fraught retail sector, I usually find myself wondering about how iconic American brands are doing. Those longstanding brands that really embody and define American style.

    This week had me thinking about Ralph Lauren (NYSE: RL).

    For several years, it has seemed that Ralph Lauren has been in the same boat with Michael Kors and Coach, with their products being found mostly at outlet malls and on discount racks at departments stores. More →

  • 11 Aug
    Is Value Investing Dead?

    Is Value Investing Dead?

    • The last 10 years have been terrible for value investors as it has seemed like fundamentals don’t matter at all anymore.
    • There are limited options to be a value investor as the Russell 1000 value index has a price to book ratio above 2.
    • I’ll discuss three options for what a value investor can do and the historical results of such approaches.

    Introduction

    If you’re a value investor or have been invested in a value fund, you probably aren’t the happiest investor in the world right now. More →

  • 10 Aug
    The Hardest Part Of Investing & How To Do It Right

    The Hardest Part Of Investing & How To Do It Right

    • Deciding when to sell a stock is the most difficult decision in investing. It’s much more difficult than deciding when to buy.
    • I’ll discuss 5 strategies that can go a long way toward helping you in making the difficult decision.

    Introduction

    The vast majority of the discussion around stocks is about what and when to buy. However, what’s even more important than buying is when to sell.

    Knowing when to sell allows you to lock your gains in when you are right, limit your losses when you are wrong, and, most importantly, avoid selling for a small gain when the stock has the potential to double or more. More →

  • 09 Aug
    Germany Is Solid As A Rock – Sven Has Some Investment Ideas For How To Take Advantage

    Germany Is Solid As A Rock – Sven Has Some Investment Ideas For How To Take Advantage

    • In terms of fundamentals, the German stock index is overvalued compared to the S&P 500.
    • However, there are a few stocks that could offer interesting diversification possibilities as revenues aren’t that dependent on Europe.
    • Some companies also give inflationary protection which is one of the greatest European risks for investors in the long term.

    Introduction

    I’ve described the investment environment in Europe as very risky due to the many black swans that could hit it, from political to financial issues. Nevertheless, this doesn’t mean that there aren’t any good investments in Europe, especially for those who want to take advantage of the liquidity provided by the ECB and from the possibility that the ECB follows the Bank of Japan, i.e. starts buying stocks when it becomes clear that buying corporate bonds isn’t enough to keep the economy growing and to spur inflation. More →

  • 08 Aug
    Are Stocks & Bonds In A Bubble? Sven Thinks So…

    Are Stocks & Bonds In A Bubble? Sven Thinks So…

    • Earnings have been growing in the last 12 months, but haven’t grown that much over the last 20 years.
    • Even the Swiss central bank owns almost $3 billion worth of Apple’s stock.
    • After the dot-com and the housing bubbles, school books will talk about the central bank bubble in the future.

    Introduction

    All we see right now is the stock market continuing to go up. The S&P 500 is already up 9.7% year to date, and there is no sign that the trend might weaken or reverse. Over the last 8 and a half years, the index is up 242%. More →

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