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Financial Planning

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 ...

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...

Death of the Trump Trade?

 May 17 2017     Matt Woebkenberg
The S&P 500 is on track to close down around 1.5% today and now the finance world has decided that the Trump trade is dead and bad news reigns supreme.  For those that do not know, the "Trump Trade" basically describes the out-performance of cyclical securities after the election.  That is, the market was betting on improved economic growth, potentially as a result of policies like the proposed ta...

More Indexes than Stocks

 May 17 2017     Matt Woebkenberg
In last week's post on active vs. passive investing (here), we mentioned that passive investing still involves choosing which indexes to invest in (asset allocation).  According to a Bloomberg article from that same day, there are now more available market indexes than there are U.S. stocks.  So "passive investing" certainly still requires decision making with a wide variety of options.With the gr...

Top Country Equity Markets

 May 16 2017     Matt Woebkenberg
The top performing country equity markets are often a bit surprising.  Some of the most troubled economies have excellently performing equity markets because investors only care about improvement.  There is a right price for any asset.The below chart shows some of the best performing country equity markets in the Americas and EMEA regions (sorted by US Dollar performance YTD).In the Americas, Arge...

North Korea Tests Missile - Markets Do Not Care

 May 15 2017     Matt Woebkenberg
In a recent post, we mentioned that markets have been oddly impervious to the many international incidents in recent months.  Monday offered another prime example of this.  North Korea tested another missile on Sunday, and it was widely viewed as their most successful test yet (CNN).  The missile landed harmlessly in the Sea of Japan, but the test proved that North Korea could now reach a key U.S....

Normal Stock Market Losses

 May 15 2017     Matt Woebkenberg
The below chart is from JP Morgan's Guide to the Markets (here).The black dot shows the intra-year decline for the S&P 500, and the bar shows the end of year performance.  As the chart shows, it is normal for the market to fall at least 10% in a given year.  Equity investors need to be able to tolerate losing 10-20% of their investment at any given time (all the way up to 49% in 2008).This is incr...

Friday Financial Terms: Active and Passive Investing

 May 12 2017     Matt Woebkenberg
There has been much debate in the past few years about the relative merits of active vs. passive investing.  In fact we recently wrote about it on our other blog (here).  The idea is fairly simple, passive investing involves owning the market and not making any decisions on where to invest, while active investing involves decision making in an attempt to outperform the market.  Unfortunately, it i...

Retail: Investors Not Buying It

 May 11 2017     Matt Woebkenberg
Fierce competition, fickle customers, razor thin profit margins, and a high sensitivity to the health of the economy are just a few attributes that make retail a cut-throat business. Retailers that have stood the test of time have done so by adapting to changing consumer preferences and protecting market share against the perpetual threat of new competitors. Traditional retailers, old and new, are...

Intraday Activity

 May 10 2017     Matt Woebkenberg
The Ira Sohn Investment Conference occurred during the trading day on Monday.  At each conference, famous hedge fund managers present some of their favorite stock picks and give CNBC things to talk about for the subsequent few weeks.  The whole investing world turns in because past years have provided some famous and prescient picks (David Einhorn for example famously introduced his short position...
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