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French Election Part Deux

 May 9 2017     Matt Woebkenberg
So Emmanuel Macron defeated Marine Le Pen in the French election runoff.  World order is restored.  The EU lives on. etc. etc.  Among the biggest winners from election night, however, is Germany.With Macron's victory, France will likely remain a member of the EU and euro zone  This is important for both groups, because losing a country as important as France shortly after the BREXIT of last June w...

Unreliable News in Investing

 May 8 2017     Matt Woebkenberg
According to a recent article from planadviser, "The survey found more than three in four (77%) Americans feel it's important to act fast to make financial decisions when breaking financial news becomes available, with 40% saying it's very important to act quickly."  This is horribly horribly wrong.  Please do not make large financial decisions quickly, and certainly do not do it based on any brea...

Friday Financial Terms: Call Options

 May 5 2017     Matt Woebkenberg
Last week we discussed derivatives in general, so this week we will look at one specifically: the call option.  Buying a call option gives you the right, but not the obligation, to buy the underlying asset at the strike price. So if stock A is currently trading at $25, and I think that the stock will go up over the next 6 months, I could buy a call option on stock A with a strike price of $30 that...

What's in a Chart?

 May 4 2017     Matt Woebkenberg
If you were to close your eyes and imagine a stock/bond trader, I bet you would picture a bunch of screens with a lot of colorful charts on them (probably a lot like the below picture).The charts always look hyper-complicated, and some of them are, but many are actually fairly simple.  For example, the below chart is a one year chart of Apple.The top of the chart is the actual trade prices for App...

Globalization Continues

 May 3 2017     Matt Woebkenberg
A recent Bloomberg article noted that, "the volume of world trade in February was 4.2 percent higher than it was last July," according to the World Trade Monitor from the Netherlands Bureau of Economic Policy Analysis.  This is an interesting time period for this dramatic increase in global trade considering that the BREXIT vote that truly began the global "protectionist" path took place on June 2...

Best Stocks in 2017

 May 2 2017     Matt Woebkenberg
Here are the best stocks so far this year (Market Cap above $5 billion, traded in the U.S.):Here are the top performers among the S&P 500 constituents:Perhaps unsurprisingly, there are a lot of Health Care and Technology names in this mix.  Companies in each of these sectors can offer a lot of upside, but with a lot of risk. The biggest company in the S&P 500, Apple, is up 24.6% so far this year (...

French Election Update

 May 1 2017     Matt Woebkenberg
We have mentioned before on this blog and in our quarterly investor letters that the French election this year could have important implications for the future of the European Union.  This is especially true now that the final two candidates have been chosen and the victor will be decided in a run-off on May 7.  According to Reuters, "Polls predict that Macron, a former economy minister, will win ...

Friday Financial Terms: Derivatives

 April 28 2017     Matt Woebkenberg
Derivatives are any financial product (security) that derives it's value from another financial product.  Examples of derivatives are options (calls, puts), futures, forwards, and swaps.  Stocks and bonds are not derivatives because they derive their value from an underlying business.  A business doing well makes stocks and bonds worth more.  Derivatives, on the other hand, would do well if the re...

Recovery in Technology

 April 27 2017     Matt Woebkenberg
The technology sector has provided a wonderful example of the need for diversification.  If you bought the technology sector ETF at the peak of the tech bubble in 2000, you would just now be breaking even on that investment (chart below).This is one of many examples of this phenomenon.  Another very famous example is Japan's Nikkei 225 Index.  The Nikkei peaked in December of 1989 and still has no...

Long Term Progress

 April 26 2017     Matt Woebkenberg
We have written before about the importance of gradual improvement, and I recent stumbled across a new post that depicts exactly that.  This article, "A history of global living conditions in 5 charts," takes a 200 year perspective to show just how much things have improved in a few important categories. Child MortalityIn 1920, 32% of children died in first five years of life.  In 2015, that numbe...
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