Executive Summary In this eye-opening look at the current stock market cycle, I compare the cycle to 1929 and 1999 as well as uncover one of the significant underlying factors fueling the bubble. In 1929 the S&P 500 P/E ratio peaked at 20, and in 1999 the [...]
Executive Summary The current housing market appears to be booming with continually escalating prices. Substantially aided by the Fed’s low interest rates, rising home prices are disconnected from the Consumer Price Index, a proxy for inflation (see second graph below). The fifth graph in The Details demonstrates [...]
Executive Summary The quote below is from Warren Buffet’s long-time business partner, Charlie Munger, and speaks to the recent irrationality in the stock market. One valuation metric used to evaluate the price of a stock is the price to earnings ratio. Historically, the average P/E ratio for [...]
Executive Summary Many are looking at the recent surge in long-term Treasury yields as a sign that inflation is on the horizon. The yield has bounced back and forth in a channel for some time. Looking at the graph below, the recent bounce does not yet appear [...]
Executive Summary Policymakers in the government and the Federal Reserve put an emphasis on the message to the public that they have everything under control – even before the pandemic. By lowering interest rates and providing unprecedented government stimulus, they are flying blind in hopes of supporting [...]
Executive Summary Many Americans hope the COVID 19 vaccine will help return life to normal. And as the title asks, what will be the economic normal? The decade prior to 2006 produced average real economic growth of three percent or more; however, the past decade has averaged [...]
Executive Summary Last week the news reported David took on Goliath on Wall Street via GameStop stock. The company GameStop has seen earnings fall for several years. Recently those earnings have turned into net losses. Large hedge funds (Goliath) recognizing the downtrend in their earnings have been [...]
Executive Summary Last week I described what causes stock prices to rise and fall. In this week’s issue, I share comments and data from three investment gurus. Howard Marks states that: “Fear of missing out has taken over from the fear of losing money.” (see below for [...]
Executive Summary The movement of stock prices is governed by the law of supply and demand. If the urge to “buy” is greater than the desire to “sell,” then prices move upwards and vice-versa. Although stock prices should represent the present value of a long-term stream of [...]
Executive Summary Rather than focusing on the published unemployment rate, looking at the actual employment data can be more telling. Last week’s Bureau of Labor Statistics employment reported a loss of 140,000 jobs in December. Since December of 2019, the number of employed individuals has fallen by [...]