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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...

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 (...
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