A Diverse Picture

By | 2017-07-17T12:21:18+00:00 June 5th, 2017|Global Market Update|

What’s happening in the world? “Convergence” by Jackson Pollack. Source: Albright-Knox Art Gallery Chaos. At least, what appears to be chaos. England just saw its third terrorist strike in three months. I had to double-check the dateline on the news article I was reading this weekend to be sure it wasn’t from last March. The details of the story seemed so similar. Donald Trump pulled out of the Paris climate agreement, a move supported by conservatives by widely panned by many others, including political, [...]

“With or Without You”?

By | 2017-07-17T12:21:55+00:00 June 28th, 2016|Global Market Update|

Now what? U2 Performing “With or Without You.” Source: Wikipedia The short answer is, volatility will increase. But it doesn’t take the deductive powers of Sherlock or Mycroft Holmes to figure that one out. It’s cold comfort to investors who have lost money to know that most other investors did as well. And comments about this taking us back to the days of the Maastricht Treaty of 1992 aren’t helpful. This isn’t 1992, and Brexit isn’t taking us back there. But the “lookback” commentary [...]

Stock Market Values (Part 4)

By | 2017-07-17T12:21:57+00:00 May 17th, 2016|Global Market Update|

How do you value a company when there are no earnings? Photo: Mary R Vogt. Source: Morguefile Is it just a case of irrational exuberance? Not necessarily. Traditional discounted cash flow analysis is a useful tool when it comes to evaluating financial assets, but it has its limitations. One aspect of investing that DCF analysis ignores is management’s flexibility. They can delay bringing a product to market, or expand its production to meet an unexpected surge in demand, or shift how their facilities are [...]

Time Management?

By | 2017-07-17T12:22:25+00:00 October 9th, 2015|Global Market Update|

Time Management? Time is our most precious resource. Source: Pixabay We can’t make more of it, it’s difficult to manage, and everyone wants some of yours. We can try to stretch time, to enjoy an event or experience for longer, but the clock ticks relentlessly forward: time waits for no one. When we’re investing, the length of time an investment can be held is the single most important factor to consider. Given enough time, risky investments become safe, and safe investments become risky. Over [...]

Boxing the Fed

By | 2017-07-17T12:22:27+00:00 September 11th, 2015|Global Market Update|

Has the Fed run itself into a corner? Source: Morguefile I used to play soccer in high school. I was a backfielder, or sweeper. Whenever the opposing team’s striker had a breakaway, our coach would shout “Box him! Box him” from the sidelines. He wanted me to cut off the other player’s angle to our goal—to “box him” into the corner—to reduce his options. I wonder if the markets have boxed the Fed. Several months ago, Janet Yellen noted that the Fed would be [...]

Of Risk and Return (Part 1)

By | 2017-07-17T12:22:40+00:00 August 18th, 2015|Global Market Update|

What is financial risk? Photo: Vanio Beatriz. Source: Wikipedia Risk is the chance that something bad will happen. When we invest, we don’t want bad things to happen to our money. So we try to avoid risky situations. The problem is, there’s no way to insure against all the risks we face with our money. There seems to be an infinite number of flavors of financial risk: credit risk, liquidity risk, inflation risk, longevity risk, shortfall risk, earnings risk, market risk, fraud risk. The [...]

The Consolation of Markets

By | 2017-07-17T12:22:46+00:00 May 29th, 2015|Global Market Update|

Where do we find financial value? Lady Fortune with the Wheel of Fortune. Source: Wikipedia In sixth century Rome, the philosopher Boethius was awaiting trial—and eventual execution—on a trumped up charge of conspiracy. While in prison, he wrote The Consolation of Philosophy, an immensely influential work that outlines how to be content in a world beset by treachery and evil. The key, he explains, is to look beyond our outward circumstances to the “one true good” we find within. Current conditions are always in [...]

Forever Blowing Bubbles

By | 2017-07-17T12:22:58+00:00 April 27th, 2015|Global Market Update|

Does the economy depend on having bubbles somewhere? Source: Pixabay It seems like the global economy has moved from bubble to bubble to bubble. Over the past twenty years we’ve gone from the Asian Tiger bubble to the tech bubble to the housing bubble to the China bubble to the oil exploration bubble. In all cases we had overly-optimistic growth assumptions which led to overinvestment which led to oversupply and an eventual price collapse. Some have called this, “The Law of the Conservation of [...]