Info

INVESTOR IN THE FAMILY Radio

The average DIY investor has annual returns of 2.9%. Don't be that guy. Learn to invest with Investor in the Family through our community, training, and education. This podcast exists to help you learn to invest. Whether you've been in the market for years or are just beginning to dip your toes in the water. Our show features interviews with seasoned, professional veterans with the goal of providing an enjoyable and tangible learning opportunity for all of our listeners. Seeking Alpha Certified
RSS Feed Subscribe in Apple Podcasts
INVESTOR IN THE FAMILY Radio
2017
August
June
May
April
March
February
January


2016
December
November
October
September
August
July
June
May
April
March
February
January


2015
December
November
October
September
August
July
June
May


Categories

All Episodes
Archives
Categories
Now displaying: December, 2016
Dec 29, 2016

Overview

  • Even people who warned of big corrections if Trump were elected are now calling for bigger gains to come
  • The volatility index (VIX) fell to it’s lowest level in 2.5 years last week
  • The crude oil volatility (OVX) fell to two year lows
  • Treasury yields (10-year) have jumped above 2.5% (up from 1.36%)
  • The S&P 500 recently traded at 22.3 times what it’s companies earned in previous 4 quarters
  • Higher than 92% of readings since 1929
  • The previous 9 times when trailing price/earnings valuations topped 22 times, the index saw pullbacks avg 2.6% 3 months later and 6.2% after 6 months
  • Sentiment has improved, but data says household spending has not
  • The US economy may be “humming along” but it needs a new catalyst to show investors we aren’t at the peak of the current cycle - Nicholas Colas, Convergex
    • For now sentiment is enough, but in 2017 the new administration will need to deliver
  • The IPO market was down big in 2016 and could be poised to rebound in 2017
    • Says Kathleen Smith of Renaissance Capital
    • She estimates the pipeline to be 250 companies strong (were 275 in 2014)
    • Spigot could open in mid-Feb
    • Of note, Snapchat has filed to go public
  • Thanks to a new accounting rule, many companies will report better looking profits
    • The rule lets companies use stock based compensation benefits ot reduce their income tax and boost earnings

Have questions? Let me know: brian @investorinthefamily.com

Visit http://investorinthefamily.com/ to become a better investor today.

Never miss any more great content: http://investorinthefamily.com/get-great-content/


Disclaimer: All readers must be fully responsible for and make their own investing decisions. Nothing on this article or website is to be considered formal advice or recommendation.

Dec 20, 2016

Overview

  • Bank for International Settlements (central bank for central banks) posed the question, “A paradigm shift in the markets?”
  • US elections have produced big changes in the markets based on expectations of strong growth in economy and corporate profits, and higher inflation
  • Problem, expectations are so strong they border on certainty
    • Assuming Trump platforms will be enacted as he presented them and promptly
  • Most expect:
    • GDP growth of 2% after inflation
    • Interest rates (10-yr Treasury note) to 3% from 2.59%
    • US stocks should return single digit %
  • This tight range in consensus expectations has led two sage market observers (David Rosenberg and Doug Kass) to invoke Rule #9 of Bob Farrell (Merrill Lynch’s legendary former market guru)
    • “When all forecasters and experts agree, something else is going to happen”
  • Especially striking?
    • VIX (measures risk) and hovers near year’s lows
    • This serene confidence is also evident in high-yield bond market where investors are not asking for much for the risk they bear (half that of last February)
  • Consensus assumptions:
    • Trump will follow through on some of his plans on day one (ex: declare China a currency manipulator)
      • Note: China does not meet the four criteria of the US to be declared a currency manipulator
      • China has actually been liquidating foreign assets in an attempt to stabilize the yuan
      • China has been experiencing what is akin to a bank run as individuals are trying to move money overseas
      • Concerns of confrontation in South China Sea to test Trump administration
      • Chinese warship seized an underwater survey drone used by US Navy last week
    • Assume Trump’s fiscal plans will sail through Congress, especially his tax cuts
    • Assume oil prices will continue recovery as opposed to another drop in prices
  • Bottom line, there is strong assumption that the positives from November’s elections will come to pass and quickly, but the history of 2016 is that what was expected didn’t happen and what couldn’t happen did
  • This suggests risks ahead
  • My thoughts:
    • I continue to believe caution is very wise at this stage
    • Caution, not fear
    • Fundamentals clearly say there is higher probability of something bad happening than something good
    • Be extra strict with what you’re willing to buy
    • Save cash so you can be nimble to when opportunities arise (fall in markets)
    • REALLY hard to sell when things are “good”
    • REALLY hard to be patient
    • I am wrestling with this with my portfolio, I have positions I’m still waiting to develop, I have hopes for them, I want to keep my activity low, but the markets and good judgment say “caution”

Other news

  • The Economist wrote about the fall of Aleppo
    • Main point: as America has stepped back, the vacuum has been filed not by “responsible” countries for the greater good, but the likes of Russia and Iran which are both very anti-US and the West as a whole
    • By failing to stand up for what is supposedly believes in, America and the West just showed the world that it’s values are just words and can be ignored without consequence
  • My thoughts:
    • The world is fracturing
    • As the West looks inward to “heal” economies (unsuccessfully) the “bad guys” are filling the void
    • Increases concerns over increasing global conflict
    • More reasons for caution

Have questions? Let me know: brian @investorinthefamily.com

Visit http://investorinthefamily.com/ to become a better investor today.

Never miss any more great content: http://investorinthefamily.com/get-great-content/


Disclaimer: All readers must be fully responsible for and make their own investing decisions. Nothing on this article or website is to be considered formal advice or recommendation.

Dec 13, 2016

Overview

  • Shareholders owe a debt of gratitude to Trump as Dow approaches 20K (in reality a number with little meaning)
  • US equities have grown in value by almost 7% since the election
  • This all reflects perceptions and expectations, not yet realities
  • This is a “hope and faith based rally”
  • The outlook for growth and inflation shouldn’t change anytime soon since fiscal policy won’t change until next year at the earliest
  • Regulatory changes that can be implemented by executive order would be the most immediate and potentially most powerful changes
  • For the markets, this means more mediocre global growth, subdued inflation, tamped down volatility, more accommodative monetary policy from central banks
  • Even so, the “animal spirits” of investors have been aroused
  • The boost from a Trump presidency may be bigger for main st than wall st
  • Berezin from BCA Research things that rising protectionism my hurt global economy, the effect on US will likely be modest since we’re a relatively closed economy. Exports are only 12% of GDP.
  • Doesn’t makes sense for China or Mexico to put up barriers w US since it would hurt their jobs
  • According to Berezin, Trump’s tax cuts would offset any new tariffs and/or new tariffs would shift sales to domestic producers which would boost employment. In this way, tariffs would not hurt capital investment, domestic producers may have to boost spending to bring production back to US
  • BUT trade agreements are also about politics and protectionism may benefit US at expense of other nations. This could lead to international breakdown.
  • Of note: China, South Korea, Vietnam
  • S&P 500 profits may not benefit from tax cuts as much as many think since effective tax rate is already 25%, much lower than statutory rate of 35%.
  • As for infrastructure spending, likely not that many projects that are “shovel ready”
  • Doug Ramsey from Leuthold Group thinks the current market momentum and sentiment could carry things for 4 to 6 more months
  • As for interest rates, Fed-funds futures are pricing in two .25% increases for 2017. Probability of being at .75-1% by June is 50+% and 1-1.25% by Dec at 50+%.
  • Continues to be heavy liquidation in US Treasuries by foreign monetary authorities
  • In the last 12 months, total Treasuries held at NY Fed is down $186B to $2.8T.
  • That is consistent with ongoing decline in China’s foreign currency reserves which have declined by $1T from their 2014 peak of $3T as Beijing attempts to slow/stop the decline in the value of their currency the Yuan.
  • The surge in Treasury yields has not impacted the stock market negatively at this point, but some still have doubts in the ability of heavily indebted economies to absorb higher interest costs
  • I’ve had two friends reach out to me for stock picks in the last three days.

http://investorinthefamily.com/

http://investorinthefamily.com/amazon

Dec 6, 2016

Overview

  • What will happen to the White House press briefing room in Trump Administration?
  • Trump’s last press conference was in July
  • Favors addressing public directly, through Twitter and YouTube
  • Not obligated to hold press conferences
    • FDR preferred radio
    • JFK preferred television
  • No recent President has been as openly derisive of press as Trump
    • Has called press: scum, lowlifes, the lowest form of life
  • Will corporate America co-opt the press tactics of Trump?
  • Wouldn’t most CEOs rather avoid “facing the press” in the wake of a bad quarter?
  • Why not just Tweet an explanation directly
  • 2016 word of the year: “post-truth”
    • World where objective facts matter less in shaping public opinion than appeals to emotion and personal belief
  • Apparently, those in corporate PR are fielding questions from clients about how to adapt their communication style for the “age of Trump.”
  • Change is in the air and big corporations know it
  • Pew survey in October:
    • 5% of people have “great deal of trust” in media
    • 33% in military
    • 24% in medical scientists
    • 4% in business leaders
    • 3% in elected officials
  • Trump did not invent this scenario, the internet did
    • Push for 24 hours news
    • Growing illiteracy
    • Shortening attention spans
    • Ease of social media
    • Click bait headlines
    • Customizable newsfeeds
    • What you want to know trumps what you ought to know
    • Shrinking civil discourse
    • Shrinking common ground among Americans
  • Trump knew the media could not afford to NOT cover him
  • Welcome to a post-truth era where facts matter less
  • Think for a moment what the world can do with that
  • Stocks took a breather last week but rotation toward domestic growth is intact
  • Brent crude has surged in price
  • Expectation of rising inflation lifted 10-yr treasuries to 17 month high
  • Rising inflation must be accompanied by rising growth
  • All eyes are on 2017 to see whether that growth comes
  • Meanwhile, China has been outperforming the US markets
  • An inward looking US is good for China looking for an opportunity for a power grab

For more: http://investorinthefamily.com/

Dec 1, 2016

Podcast Overview:

  • S&P, Dow, Nasdaq, Russell all at record highs last week
  • BofA Merrill Lynch survey of global fund managers:
    • Expect global real economy to strengthen over next 12 months: In october 19% agreed with this, after election 35% do
    • Global inflation expectations vaulted to the highest level since 2004
  • Is all this optimism as sign the bull market will continue or that we’ve reached peak?
  • Are current stock market gains stealing from 2017?
  • Goldman Sachs strategist expects Trump tax reforms to lead to the repatriation of $200B
    • Could be used to pay down raising company debt levels
    • Nonfinancial companies are sitting on $1.6T in cash (12% of assets as opposed to avg of 7%)
  • Goldman expects companies to spend $2.6T of cash in 2017
    • 52% on capital exp, R&D, and mergers
    • 48% on buybacks and dividends
  • Small cap stocks that could benefit from infrastructure spending are stealing attention from multinationals that could be hit by strong dollar
  • Market is behaving like Trump will fulfill promises they like and break the ones they don’t like
  • AAII survey showed bullishness jump from 23.7% to 50% in just three weeks
  • Demand for put relative to calls on SPY shrank to July 2016 levels
  • Too early for bulls or bears to draw conclusions
  • The S&P traded at 28 times earnings in 1999 but “only” 17 times today
  • Stock market cap is 200% of GDP (very high) and interest rates are at record lows and rising fast
    • Can things get more favorable?
  • Concerns over what Trump will do with trade partnerships continues
    • “Protectionist” policies could harm US economy
    • Retaliation from trade partners could be a problem

Find more at Investor in the Family.

1