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Momentum Strategy Needs A Breather

 May 28 2017     David Templeton
One aspect of the S&P 500 Index return in 2017 is the fact a handful of stocks have generated a large portion of the return. Historical evidence suggests narrow market leadership is not an uncommon occurrence in bull markets. Interesting this year, however, is the fact this leadership has been centered in technology stocks. I discussed this in a post a few weeks ago when I looked at detail surroun...

Friday Financial Terms: Efficient Markets

 May 26 2017     Matt Woebkenberg
There is an ongoing and immensely popular (in finance circles) academic debate about the efficiency of markets.  It is an important question because it essentially answers the question about whether or not active investors can outperform the market over time.There are 3 forms of efficiency in markets: weak-form, semi-strong form, and strong form. Weak-form efficiency states that all past stock per...

Investors Skeptical Of Stocks

 May 25 2017     David Templeton
Much of the sentiment data seems to indicate investors are a bit nervous about stock ownership. This morning's sentiment survey report by the American Association of Individual Investors did show a nine percentage point improvement in the weekly bullish sentiment reading, increasing to 32.9% from last week's 23.9% reading. However, the less volatile 8-period moving average of the bullishness readi...

Financial Advice on an Index Card

 May 25 2017     Matt Woebkenberg
In 2013, a professor at the University of Chicago made the claim that "the correct basic financial advice for most people would fit on an index card."  He proceeded to make that index card and it quickly became popular because of its simplicity and accuracy.  Today's post is simply to direct you to that index card (here).

Millennial Saving Habits

 May 24 2017     Matt Woebkenberg
A recent article from PlanSponsor notes that despite only 8% of people believing that Millennials are doing a good job at saving, Millennials are actually saving 36% more of their annual salary than previous generations.  The perception does not quite match the reality.  The article goes on to say that Millennials are not necessarily saving for retirement however, they are saving for "financial fr...

Luck is Important

 May 23 2017     Matt Woebkenberg
Today's post is being outsourced to Of Dollars and Data simply because I do not have much to add to the post.  The above linked post shows the performance of a few portfolios over 20 and 40 year time horizons to demonstrate that when you begin investing makes a huge difference.  In the investment industry, we have a tendency to talk about historical averages, but this post makes it very clear that...

Expect a Market Crash

 May 22 2017     Matt Woebkenberg
The stock market is going to crash.  You will watch your investment portfolio fall by 50% or more.  What will you do?  The best answer: nothing.I guess I should clarify that this is not a prediction that a crash is imminent, but rather a realization that you will likely experience another crash in your lifetime.A recent article in the Financial Times titled "How to plan for a future stock market c...

Friday Financial Quotes: Buffett and Munger

 May 19 2017     Matt Woebkenberg
In lieu of financial terms this week, I thought we would try a few famous financial quotes.  Quotes today will come from the best investors of all time: Berkshire Hathaway's Warren Buffett and Charlie Munger.Warren Buffett - "Rule #1: Never lose money.  Rule #2: Never forget rule #1.We have spoken a few times about the importance of compound interest (here, here, here, here, here, etc.), and that ...

Results of the "Trump Trade"

 May 18 2017     David Templeton
Now that the Wall Street Journal and others have declared it dead, it is interesting to consider what exactly the Trump trade was.  As Josh Brown put it, the election provided finality, but the “Trump Trade” never really existed.  A decisive victory either way could have been bullish for the markets.  In our Q4 2016 investor letter, we said that the election conclusion was simply a catalyst for a ...

Earnings Season

 May 18 2017     Matt Woebkenberg
Earnings season, or the time when publicly traded companies announce their quarterly earnings results, is a closely watched period in the stock market. Many different types of market participants become more engaged during this period as the financial results of companies and their forward expectations are ultimately what drives the direction of markets over the long-term. Simply put, stocks follo...
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