The Santa Rally Approaches A Halftime Break

Stocks continue to behave unintuitively for most investors as a bubble inflates. We’ve shown various valuation metrics in the past few write-ups here. Fundamentals have not changed as valuations remain stretched and not sustainable. Nonetheless, we made a case to buy equities short-term. The environment remains probably constructive for equities until year-end. However, the risk/reward relationship …

Ride That Wave

Investors feared adverse effects on the global recovery after the coronavirus situation escalated in Europe once again. Consequently, European equities posted their worst performance in three months and dragged the US market lower. Nonetheless, the situation led to an opportunity to buy the dip just as positive seasonality arrives. The Upside Trend Is Intact The …

The Policy Fiasco

Policymakers in most industrialized economies have been on a spending spree during the last few decades. It seems as if governments and central banks want to smooth the business cycle entirely in order to avoid recessions. Despite benevolent intentions, their track record speaks against their actions. Business cycles are a typical characteristic of capitalist economies. …

Tulips & Tech

The famous economist John Maynard Keynes recognized long ago that markets can deviate from their fundamental value for an extended period. His insight applies to U.S. equities today. As measured by the S&P 500, the broad-based market trades well above the historical average according to the 10-year cyclically adjusted P/E ratio. Stocks have been only …

Gold Rush

Gold probably has a final spike to the upside before the bull trend ends. The most recent weakness counts best as a fourth wave of minute degree. The upside trend remains intact as long no sustained break below 1,860 occurs. Nonetheless, the trend is mature and probably ends after one more push up. Minor wave …

Party Like It’s 1999

Run, Bull, Run, was the cover story of Barron’s magazine in January 2000. The story presented arguments for “another record-breaking year for stocks”. Today, we know that it didn’t happen. Instead, the bull was a bubble and burst a few months later.  Tech(no) There are striking similarities between investors’ behavior around the millennium change and today. …