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Archive for the ‘Value Investing’ Category


How Do You Choose an Investment to Hold for Five Years?

The stock market goes up and down and the business news reports every daily gain and loss as though it were a prediction for permanent success, or long term dismal failure. Pundits have likened the reporting of the stock market to an old-fashioned melodrama. Nellie is tied to the railway tracks. Will the hero get there on time? But, he is delayed. But, maybe she will get loose. Maybe the train will stop. However, agonizing over the daily fluctuations of the market is not really the best way to pick a longer term investment. Many successful investors only invest for […]

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What Investments Will Prosper When the Trade War is Resolved?

As the G-20 summit approaches, many are hopeful that a scheduled meeting between the leaders of the USA and China will result in at least a temporary truce in the evolving trade war. Our take on this is that there are long-term, core issues that the USA needs to have addressed and which China does not want to talk about. So, the question for investors is, what investments will prosper when the trade war is resolved for good or for ill? But, first here is a bit of background on the trade war.
Possible Truce in Trade War?
The New York Times […]

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How the Reverse Wealth Effect Will Change Your Investing and Your Investments

The US stock market is entering a correction mode. There is a lot of speculation about whether this is a short-term buying opportunity or a longer term meltdown that will wipe out years of gains. Ideally, investors should use fundamental analysis of intrinsic stock value and technical analysis trading signals as guides, to buying and selling stocks, bonds, real estate and other investment vehicles. But, human nature being what it is, we invest more aggressively when the market goes up and pull back faster when the market goes down. A part of what is going on today is a reverse […]

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How Should You Invest Your Retirement Accounts?

According to a recent article in Market Watch the folks who have buying up stocks faster than anyone else in the last thirty years are those making family incomes of $42,000 a year. Why is that?
What’s changed since 1989? Access did.
Specifically, access to workplace retirement savings plans, like 401(k)s, and personal investment accounts, like IRAs.
Individual retirement plans in the USA hold about $9 Trillion and 401(k)’s hold about $5 Trillion. The entire US stock market has a capitalization of about $30 Trillion. And, since so many of us now have these tax-deferred vehicles, how should you invest your retirement accounts?
Long […]

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Why Is There a Flight to Quality Investments?

The US stock market is down a bit as investors are flocking to quality stocks, as reported by CNBC. What is going on? Why is there a flight to quality investments?
Both before the market’s October sell-off and in the two-week bounce, investors have shown a clear preference for “quality” stocks.
Not the same as cheap “value” stocks, these are companies with less debt, stable businesses and some defensive characteristics in a tougher market or economy.
A grouping of such companies by Citi surfaced the likes of Walmart, McDonald’s, Pfizer, Procter & Gamble, Amgen and Quest Diagnostics.
While not predictive in itself, this pattern […]

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Is IBM a Good Long Term Investment?

IBM just used part of its cash hoard plus a lot of debt to buy Red Hat which is a Linux software and cloud computing company. The purchase comes on the heels of a weak quarterly report due to soft software and server sales. And, news of the purchase drove the stock a bit lower. We have ask, is IBM a good long term investment?
International Business Machines
IBM has been around since 1911 and took the name International Business Machines in 1924. The company has been a dominant presence in the world of computing and basic research for decades. Over that […]

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Should You Invest in the FANG on the Correction?

The long-running bull market is starting to correct. We, and many others, have suggested that investors may want to get out of growth stocks and switch to value stocks in preparation for a market crash or at least a painful correction. The rationale is that value stocks are companies with low debt, cash in the bank, and property unencumbered by excessive debt. However, the basis of intrinsic stock value is forward looking earnings. And, the best earnings in recent years have come from tech stocks like the FANG (Facebook, Amazon, Netflix, and Google-Alphabet).
Protected from a Trade War with China
One of […]

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How Long into the Selloff Should You Wait to Pick Up Bargains?

The S&P 500 is down 7% within the last month and was down 9% before recovering slightly. Many bears are now convinced that the end of the bull market is upon us and that the market is due for a more significant downturn. Our question is how long into the selloff should you wait to pick up bargains? CNBC writes that the selloff is not over.
“This is the second decline of this year of 5 percent or more and two out of every time we had more than one decline in a year, the second decline was sharper than the […]

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How to Minimize Your Investment Losses in the Next Recession

The current volatility in the US stock market is reminiscent of the days preceding both the dot com crash and the 2008 market crash that ushered in the Great Recession. It may well be time to consider how to minimize your investment losses in the next recession. The 2008 crash destroyed about $7 trillion in equity value. A crash today might destroy as much as $20 trillion in equity value according to Investopedia.
The recent stock market retreat, which has sent the S&P 500 Index (SPX) down by 5.9% from its intraday high on Oct. 3, has intensified the debate between […]

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Is a Volatile Investment a Risky Investment?

There are times when the short term outlook of an investment or a whole class of investments, like a stock market sector, becomes uncertain. At that time the investment becomes volatile with its price fluctuating rapidly up and down. Many conservative investors choose to avoid such investments because they (the investments) seem risky. But, is a volatile investment a risky investment? Part of the answer depends on the time frame of you investing. If you try to time the market, jumping in and out, you may realize huge profits in a volatile market and you may simply lose all of […]

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