Put these charts on your wall for reference the next time you think… Stocks can’t go up during a recession… It’s “oversold” or “at support” and has to bounce… It’s “overbought” or “at resistance” and can‘t possibly go higher… Investors are rational and would never pay $239.50 for something worth $22.83… It can’t go below $0… Interest rates can’t go […]
Would you pay someone $205 for an asset worth only $21.87? Of course not; what a ridiculous question. And yet, investors in the Ethereum Trust ($ETHE) are doing just that, paying a stunning 837% premium above the net asset value (NAV) of the underlying holdings (Ethereum, a cryptocurrency). Why would anyone do such an irrational […]
The yield on investment grade corporate bonds has moved all the way down to 2.35%. If the month ended today, that would be the lowest monthly close in history. Why is this important? Because the single best predictor of future returns for bonds are its starting yield. On average, the higher the starting yield, the […]
High Yield credit spreads are lower today than they were during market corrections in 2011 and 2016. The same is true for Investment Grade credit spreads. Why is this notable? There were no recessions in 2011 or 2016 and today were are faced with what could be the largest economic contraction since the Great Depression. […]
If the dichotomy between markets and the economy has left you dazed and confused, you’re not alone. For on one side of the ledger, you have… 16.5% of the US labor force on unemployment, the highest on record (data back to 1967). US Employment to Population Ratio down to 51.3%, a new low. The prior […]
The Volatility Index (VIX), also known as the “fear index,” ended today at 82.69. Since its inception in 1990 it has never had a higher close. When was the previous record? November 20, 2008. In the midst of the Global Financial Crisis, after the Lehman Bankruptcy, and 11 months into the worst recession since the […]
This is a story many of you will be familiar with. You have money to invest that’s been sitting in cash. This is money you don’t expect to need or access for more than 20 years, if ever. You know that cash is likely to significantly underperform a diversified investment portfolio over the next 20+ […]
When investors think about risk, 2008 is usually the first thing that comes to mind. And for good reason. It was the worst year that most investors alive today have ever experienced. With dividends included, the S&P 500 lost 37% in 2008, its largest decline since 1931 (during the Great Depression). Since the end of […]
What returns are you expecting from bonds over the next five years? If you’re like most investors, your answer is probably too high. Why? Because of something called recency bias, the human tendency to give more weight to the recent past in making projections about the future. And why is that a problem today? Because […]
Here are the charts and themes that tell the story of 2019… I. From Humble Beginnings “Bear Market. Inverted Yield Curve. Trade War. Government Shutdown. Recession.” These were just a few of the ominous buzzwords heard at the start of 2019. The S&P 500 had just suffered its worst December since the Great Depression (-9%) […]