Distressed-bond veteran Marty Fridson shares that you can reduce the risk of winding up on the wrong side of a trade by stepping back from the financial minutiae and the technical charts. Start by making certain the company is in a reasonably stable competitive environment.
Today we look at the key vulnerability facing the U.S. economy: the end of the wealth effect created from the greatest bull market of the last 50 years, and how it removes a key pillar of strength holding up the U.S. economy.
At current valuations, it is virtually certain that investors buying the S&P 500 – especially the largest and most overvalued stocks – will be severely disappointed since future returns for at least the next decade will be paltry.
Equity prices are at multi-decade highs. As such, Porter predicts, it will take at least a decade for many of today’s S&P 500 members to “grow” into their current valuations.
Fifty-five years ago, Warren Buffett announced his retirement. In 1969, the legendary investor felt he could no longer generate the 30% returns he had been generating. Then things changed…
In today’s Daily Journal, Porter writes that Americans now have more capital allocated to the stock market than ever before. And thus, stocks are now trading at record-high valuations. This has led to one outcome when this has happened in the past… And it’s not a good one.
What the arrest of my friend, an extravagant, big-spending real estate broker, has to do with the next big financial crisis.
Warren Buffett is famous for saying that it is wise for investors to be fearful when others are greedy and to be greedy only when others are fearful. Porter shares an example of one trader whose actions make it easy to recognize where we are now in regards to those extremes.
While the overall market continues to ride higher, there are signs beneath the surface that suggest things could begin to turn. Taking lessons from a legendary investor, we look at how to avoid getting caught up in the exuberance.
An investment fad is a short-term financial trend that quickly gains popularity and interest among investors – but typically lacks long-term viability or strong underlying fundamentals. Let’s look at several prominent fads of the last decade and see what they reveal about today’s investment fads.