Market Psychology and the Risk of Compacency

With the markets reaching new all-time highs, I thought it would be worthwhile to consider how far the markets have run from the lows after the “Great Recession” of 2008/2009. The S&P 500 bottomed out at 666. As of today (August 27, 2018), the S&P 500 is trading at about 2,890, which represents a 333% gain since March of 2009. We can review multiple metrics to try to determine if…

Tech Weakness Continues to Drive Market Direction

Despite yesterday’s reprieve, stocks are pushing lower today with Technology stocks leading the way. Over the past few weeks, we have seen tech stocks trending lower, lead by the FAANG stocks – Facebook, Amazon, Apple, Netflix and Google (Alphabet). These stocks have been the darlings of the stock market rally over the past 4 years, but have now rolled over, and are dragging the rest of the tech sector, the…

Tech Stocks Continue to Diverge

In the past few weeks we have witnessed a marked change in leadership for the overall stock market, with Technology stocks, which were the previous leaders, weakening significantly. As evidence of this, we have seen the tech-heavy NASDAQ Composite Index trending lower, while the Dow and S&P 500 have maintained their strength. I have written about the FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) – these stocks have been…

Shifting trends show that Millennials are living their lives differently from past generations and there are strong implications for investments

The following link to a very interesting article shows the shifting trends within the millennials generation that we should all pay close attention too when evaluating investments. These trends are likely to continue to develop, and future generations will build upon these trends, driving meaningful shifts in the economy. These shifts will drive many businesses into extinction, while others will grow dramatically, and still others will be born of these…

Amazon Buys Whole Foods for $13.7B in Cash – Is this the end of brick and mortar grocery?

Amazon announced today that it will acquire Whole Foods for $13.7 billion in cash. Following this news Whole Foods was up almost 30%, a great day for shareholders of both Whole Foods and Amazon, but not so great for the rest of the retail grocery segment (Kroger is down about 9% today). The grocery segment is nothing new for Amazon – they have been selling a multitude of typical grocery…

Fed Rate Increase As Expected; Shrinking Balance Sheet Much More Interesting

As expected, The FOMC (Federal Open Market Committee) of the Federal Reserve raised the Fed Funds rate by 1/4-point to a range of 1% to 1.25%. They further projected that one more rate increase will be needed this year. This is all pretty much as was expected (the futures were indicating a 99%+ likelihood on a 1/4-point raise). What was much more interesting is that the Fed now plans to…

Fed leaves rates unchanged; cuts projected hikes to 2 from 4 in 2016

The Federal Reserve held interest rates steady Wednesday (3-16-16) and scaled-back its expectations for further rate hikes for 2016 and 2017. At its December meeting, the Fed projected four rate hikes in 2016, but new estimates released today reduced that number to two. Fed officials also cut their expectations for economic growth and inflation. In addition to the two rate increases this year, the Federal Open Market Committee now projects…

Fed Stays the Course, for Better of for Worse

The Fed did not change rates today, and didn’t change course in terms of their plans for raising rates over the coming quarters and years, at least in terms of the Fed statement released after their meeting today. This outcome, or lack of any change, is a bit of a double-edged sword – since they didn’t raise rates of state directly that they are concerned about financial markets (which we…

China continues to threaten global markets

Last Friday I expected to see a more severe reaction to the removal of the circuit breakers in the Chinese market – a mechanism similar to that in the U.S., which stops stock market trading if the market falls by 7%. The Chinese government continues to intervene, both in the currency market buy selling dollar reserves and buying yuan, and by direct stock purchases to support their stock market, which…

Fourth Quarter 2015 Review/2016 Preview

The fourth quarter ended on a sour note, with a 178-point drop on the final trading day of the year. The first day of trading for 2016 was far worse, with the Dow Jones Industrial Average down almost 500 points during the trading session, before rebounding to close down 267. As we enter 2016 the Federal Reserve will take center stage, as their interest rate raising actions will drive economic…