Carl Icahn has been warning us how dangerous low interest rates are as they create bubbles. The most important bubble is the earnings bubble. Repatriation and inversions are two crucial issues for the U.S. Introduction We are continuing with our series of articles on successful fund managers. You can read more about Ray Dalio here, George… Read More »Carl Icahn Is Right, But When Will The Market Learn?
Investors are very optimistic in bull markets and allocate much of their portfolio to stocks, increasing their risk. Analysts and economists expect more spending which will consequently push GDP and inflation up, but low rates push people to save more for their retirement. If the GDP and earnings don’t grow as expected, we could see… Read More »Are You An Investing Optimist? Check Your Portfolio
The FED’s “protect the market at all costs” attitude minimizes the risk of a severe bear market but increases the risk for an inflationary environment. Trade deficits and low productivity are not good signs for the long-term, no matter the positive data from the labor market. Until the focus shifts from central banks to real… Read More »The Important Insights From The FOMC Minutes No One Is Talking About
The dollar has been positively correlated with stocks for the last 4 years which is unusual. Potential FED interest rate increases don’t make international diversification a great idea right now. Any sign of a U.S. recession should be a good time to think about international diversification with emerging markets. Introduction On big news sites like Bloomberg you… Read More »The U.S. Dollar: Should You Stick To It Or Diversify Now?
Risks are cumulating and getting bigger. U.S. GDP growth is slower than expected, earnings and oil prices continue to decline. Japan is unable to grow while BREXIT risks are still unfolding. Introduction It is difficult to find good news lately. The last really good news was the June jobs report when 287,000 jobs were added.… Read More »Euphoria & Denial Point to the Last Days of the Bull Market
Rates cannot go lower but higher rates would destroy wealth and lead to a recession. The FED is in a difficult position and rhetoric shifts can be expected. Introduction It is every central banker’s target, the elusive 2% rate of inflation. We cannot know when, but should expect that it will be achieved and prepare… Read More »Higher Interest Rates Aren’t A Given, But Investors Should Prepare Anyway. Find Out Why.
Almost 30% of global sovereign debt comes with a negative yield. The situation is much worse in Japan and Europe than it is in the U.S. Investors should enjoy the asset inflation party while it lasts but also be prepared for the worst. Introduction Negative yielding debt seemed impossible and illogical for a long time,… Read More »Negative Yielding Debt: A Party for Investors or Pure Stupidity?
Bonds are becoming riskier as yields are falling. Inflation is at 1.2% and very likely to get higher as full employment is approached. The FOMC predicts stability which could create a great environment for traders. Introduction On July 6 the Federal Open Market Committee (FOMC) June meeting minutes were released. As they give clear insight… Read More »Watch Out: The FOMC’s Current Stance Could Impact Your Portfolio in the Long Term
The risks of a slowdown are higher than the upside. Fundamental trends are negative in advanced economies while emerging markets show higher growth rates and are cheaper. It is important to create a diversified portfolio with uncorrelated assets. Introduction In an environment where it seems maximum potential for the U.S. economy has been reached, the… Read More »How to Prepare Your Portfolio For The Next Recession or Stock Market Crash
A positive outlook seems more political than realistic as the FED is out of maneuvering power. Keeping interest rates unchanged is the best and the only thing the FED can currently do. Low interest rates will weaken the dollar, boost exports and increase corporate earnings in the upcoming earnings season. Introduction In FED’s Chairwoman Yellen… Read More »Will There Be A Long Term Impact To The Fed’s Shift In Rhetoric?