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Delayed Gratification

 June 8 2017     Matt Woebkenberg
Apologies to our regular readers for missing a few days of posts.  But have no fear...I'm going to make it look like I did that on purpose!  Today we are going to talk about delayed gratification.  Our regular readers who waited out the painful days with no posts exhibited a great tolerance for delayed gratification.  These readers will have better lives than those who couldn't handle the wait and...

NIPA Earnings Weakness Leads IBES S&P 500 Earnings Weakness

 June 7 2017     David Templeton
The equity market seems to know only one direction and that is up. The result of this type of pattern has been a downward trend in volatility with the VIX trading at a near single digit level. One characteristic of a low VIX reading and a higher trending market has been the absence of any significant equity market pullback. As Urban Carmel, author of The Fat Pitch blog notes,"SPX [S&P 500 Index] h...

Changes to Asset Allocation

 June 6 2017     Matt Woebkenberg
Diversification is great.  Everyone knows that.  Diversification acts as a stabilizer in your investment portfolio.  When some asset classes are suffering, others outperform.  This prevents dramatic declines in the value of your portfolio.  One of the first steps to investing is to set up a diversified strategic asset allocation that you believe will help you achieve your goals over the long run. ...

Business Succession Planning or Lack Thereof

 June 5 2017     Anna Pfaehler
I spent nearly a decade working in a sleepy suburb of New York City. The local diner was a go-to for many a work lunch outing. In standard diner fashion, the menu was huge. It had over 40 salads, we counted once. Often there was decision paralysis when ordering lunch – do I want the one with brie and grapes or should I go for the classic Greek? Luckily, the stakes were low and if you had lun...

Equity Market Climbing The Proverbial Wall Of Worry

 June 2 2017     David Templeton
The individual investor continues to express concerns for stocks when looking at their sentiment response. Yesterday's Sentiment Survey report from the American Association of Individual Investors showed a nearly six percentage point decline in the bullish sentiment reading to 26.92%. This pushes the bullishness reading one standard deviation below the average bullishness reading.Confounding inves...

Friday Financial Terms: Behavioral Finance

 June 2 2017     Matt Woebkenberg
Much of traditional finance is built on the assumption that people are rational.  For simple academic finance to be correct, all financial market participants must act rationally in their transactions.  This does not happen.  Investors routinely act irrationally, and when that happens, that presents an opportunity for savvy investors to profit.  This extra profit opportunity in excess of the marke...

Know What You Are Buying

 June 1 2017     Matt Woebkenberg
I've got a deal for you.  You give me $290, and in exchange, I will give you $200.  In fact, I will let you take this deal as often as you want.  We can trade over one hundred thousand times a day if you so choose.  Shockingly, I have not yet had any takers on my offer.  But, this is an actual deal that exists in the marketplace.  It is the Bitcoin Investment Trust (Ticker: GBTC).The Bitcoin Inves...

Tulipomania

 May 31 2017     Matt Woebkenberg
If you were asked to name famous market "bubbles", you might quickly identify the Tech Bubble of 2000 and the Housing Market Bubble of 2008-2009. Did you know about the tulip bubble that took place during the 17th century in the Netherlands? I bet not.But if you did, good for you. Tulip Mania, or Tulipomania as it has been dubbed by some, is a fascinating case of investor/trader psychology amidst ...

Teenagers Don't Get It

 May 30 2017     Matt Woebkenberg
Recently the Programme for International Student Assessment (PISA) elected to study the financial literacy of 15-year-old students across several countries.  To (presumably) no one's surprise, the results were unimpressive.  According to a Bloomberg article on the study "56 percent of students have a bank account but two out of three don't have the skills to manage it and can't interpret a bank st...

The Unfortunate Rise Of The Misleading 'Scary Chart' Comparisons Again

 May 29 2017     David Templeton
In early 2014 charts were circulating around the internet comparing the 2014 market to 1928-1929. One such chart is shown below. The below chart was taken from an article that highlighted the fallacy of these comparisons. In fact, this type of scare tactic infiltrated the main stream media where a MarketWatch.com article warned about the similarity of the '28/'29 market to that of 2014 and that “t...
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