Monthly Archives: March 2016

Equity Markets Are ‘Yellen’ From the Roof Tops!!!

Janet Yellen’s commentary yesterday reasserted that the FED would continue their cautious stance towards further rate raises:


Global equity markets took off, bond yields fell, gold strengthened and the dollar sold off. Basically, unless you have US dollars stuffed in your mattress, you had a good day. The rally has yet to abate.

Here’s a two day chart of the NASDAQ 100 futures:
Nasdaq 100

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Chinese Pension Funds to Begin Buying Chinese Stocks

Last week I wrote a post that discussed the Chinese government’s signaling to local investors (LINK) through lower margin rates.

Yesterday, China announced that their pension funds would begin purchasing Chinese equities this year:


Typically, pension funds and other large institutional investors don’t signal what they intend to buy so as to avoid front running (buying before a large buyer enters a position, and selling after the price has been driven higher), but it seems as if this is just what the Chinese government would like to encourage.

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Contrarian Thoughts – Biotech Edition

When mutual fund sales people come to visit, they come with a bag full of presentations on their ‘hottest funds’. These include whatever funds have nice charts that go from the bottom left to the upper right, or whatever happens to be the hot topic of the day (unconstrained, short duration bond funds were quite popular over the past 6 months). This makes sense. Their job is to sell their funds, and they focus on whatever funds they think will capture our interest. As such, they are invariably thrown for a loop when I ask them to tell me about their worst fund.

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The Unicorns of Silicon Valley

Tech ‘unicorns’ are private companies with valuations in excess of $1 billion. To many observers, the perceived value of these companies is very much the stuff of fairy tales, hence the designation ‘unicorns’.

According to CB Insights (LINK), the current combined valuation of the 155 companies that are classified as unicorns is $550 billion. To put that into perspective, Silicon Valley’s unicorn paddock would top Poland’s GDP and come in just below Sweden’s GDP for a #23 ranking on the world charts. Pretty impressive.

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A Brave New World in… Tires

At the Citywire roundtable in London last Friday one of the panelists mentioned that one automotive analysts had made the point that many of today’s automobile features will be made redundant and supplanted by others. For instance, why would rear view windows be necessary for a self-driving car?

Here’s a link to an article our the Goodyear Eagle 360 – a round tire that could be featured on the cars of the future:


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A Not So Invisible Hand: The Chinese Government & Margin Trading

One of my takeaways from listening to the panel on investing in China at the JP Morgan conference earlier this month is the role the Chinese government plays in ‘signaling’.

For example, one of the panelists pointed out that when the government deemed that last year’s stock rally was overdone, they began to restrict margin lending. Around the same time, restrictions on buying property were lowered. Savvy investors would have prospered by a timely move out of stocks back into real estate.

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O’ man river,
Dat ol’ man river,
He mus’know sumpin’
But don’t say nuthin’
He jes’ keeps rollin’
He keeps on rollin’ along.

– Oscar Hammerstein II. “Show Boat” was founded in 1994 as an online book seller.

Ten years ago it started its Amazon Web Services business, which has become a cloud computing colossus.

To this day, it continues to grow and innovate at an impressive pace.



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London Callin’

Please excuse the lack of posts over the next couple of days as I will be heading off to London, England tomorrow to participate in Citywire’s ‘Global Equities Roundtable’. Citywire provides news, information and insight for professional advisers and investors around the world, and I am honored to be invited to participate in this event.


(My favorite London landmark!!!)

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Beware of ‘Growth Traps’

In yesterday’s post I explained how companies that look expensive from one valuation metric can actually represent relative value when factoring in their rate of growth.

Here’s a study that points out how investors can fall prey to ‘growth traps’ as well:


When we look at individual stocks, we consider a very wide range of metrics and have to have a very strong thesis as to how they will continue to build their business and maintain their margins. This is not an easy task and there are many factors that can affect future performance.

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