The S&P 500 has already gained back much of its Brexit-related selloff, down just 0.7% from its June 23 close, but that doesn’t mean investors are out of the woods yet.  The market still has to deal with a myriad of problems from a slowing China to a seven-year bull market that has stretched valuations. Earnings for S&P 500 companies are expected to drop 5.2% when second quarter results start coming out next week, the fifth consecutive quarter of lower earnings and the worst run since 2009. #-ad_banner-#Even as the UK negotiates its exit from the European Union over the… Read More

The S&P 500 has already gained back much of its Brexit-related selloff, down just 0.7% from its June 23 close, but that doesn’t mean investors are out of the woods yet.  The market still has to deal with a myriad of problems from a slowing China to a seven-year bull market that has stretched valuations. Earnings for S&P 500 companies are expected to drop 5.2% when second quarter results start coming out next week, the fifth consecutive quarter of lower earnings and the worst run since 2009. #-ad_banner-#Even as the UK negotiates its exit from the European Union over the next two years, it will have to deal with an immediate recession in the second half of this year according to most economists. The effect on the global economy should be muted, but the uncertainty around trade could weigh on already sluggish growth.  There is one sector that stands to benefit from the Brexit vote and inevitable aftermath. Prices were hit hard after the vote, and it could be the next target for yield-hungry global investors.  Don’t Fight The Global Fed The S&P 500 is up just 2.6% since January 2015, months after the U.S. Federal Reserve ended its… Read More

It’s been an exciting couple of weeks.  As recently discussed, the resources world turned topsy-turvy in the wake of the “leave” vote in the U.K. Brexit referendum. Gold soared (and gold stocks too), and almost everything else tanked.  #-ad_banner-# And since then, the situation has grown all the more interesting.  All indications are that the initial panic over the Brexit vote was largely overdone. The Dow Jones Industrial Average has recovered about 80% of the losses it suffered in the two-day panic following the Brexit news.  That rebound has extended to most of the commodities sector. This is a development… Read More

It’s been an exciting couple of weeks.  As recently discussed, the resources world turned topsy-turvy in the wake of the “leave” vote in the U.K. Brexit referendum. Gold soared (and gold stocks too), and almost everything else tanked.  #-ad_banner-# And since then, the situation has grown all the more interesting.  All indications are that the initial panic over the Brexit vote was largely overdone. The Dow Jones Industrial Average has recovered about 80% of the losses it suffered in the two-day panic following the Brexit news.  That rebound has extended to most of the commodities sector. This is a development I thought we’d see. Investments like oil and copper have overcome investor fears and are staging a strong bounce off post-Brexit lows.  Copper, for example, had plunged as low as $2.07 per pound on the morning of June 24. But the metal has stormed back more than 7% since then, currently trading at $2.22 per pound as I write.  Copper is now trading at its highest level in nearly two months That’s a strong sign that fears about lost demand in the face of the Brexit vote were overdone. And it makes sense, given that the actual process of the… Read More

The banking sector is down so much it almost seems risky to sell it further. However, to paraphrase the song, that’s what trends are for. #-ad_banner-# While the S&P 500 has nearly recovered all of its losses from the Brexit panic, Capital One Financial (NYSE: COF) is down over 6% from its pre-Brexit close. Looked at another way, while the broader market index is not far off its 52-week highs, COF is much closer to its 52-week lows. The question is, how long can banks stay low as the broader… Read More

The banking sector is down so much it almost seems risky to sell it further. However, to paraphrase the song, that’s what trends are for. #-ad_banner-# While the S&P 500 has nearly recovered all of its losses from the Brexit panic, Capital One Financial (NYSE: COF) is down over 6% from its pre-Brexit close. Looked at another way, while the broader market index is not far off its 52-week highs, COF is much closer to its 52-week lows. The question is, how long can banks stay low as the broader market holds firm? If you believe in trends — as you should — then that is a question for the market to answer. The trend in Capital One is down since its April rally high and down from its July 2015 all-time high. In the absence of strong evidence to the contrary, there is no reason to suspect COF’s bear market is over. And that means selling bounces can be a lucrative strategy. Let’s start with the big picture. As we can see in the chart, the bull market from 2009 ended in 2015 with a trendline breakdown and test… Read More

U.S. stocks have shaken off a lot of bad headlines over the past year. Just consider the gloomy news we’ve endured: •    China’s economy growing at a slower pace •    Energy producers shutting down production, facing bankruptcy •    Terrorist attacks hit several cities in Europe, Middle East •    Europe faces intractable economic problems •    Donald Trump captures GOP nomination •    Employment growth much slower than expected in May •    UK voters opt to leave EU And that’s only a few of the biggest stories. Yet the S&P 500 is up slightly from its year-ago… Read More

U.S. stocks have shaken off a lot of bad headlines over the past year. Just consider the gloomy news we’ve endured: •    China’s economy growing at a slower pace •    Energy producers shutting down production, facing bankruptcy •    Terrorist attacks hit several cities in Europe, Middle East •    Europe faces intractable economic problems •    Donald Trump captures GOP nomination •    Employment growth much slower than expected in May •    UK voters opt to leave EU And that’s only a few of the biggest stories. Yet the S&P 500 is up slightly from its year-ago level. #-ad_banner-#What accounts for the stock market’s resilience? The main reason is the continued strength of the U.S. economy, especially relative to other major economies around the world. Job growth has been fairly strong (May notwithstanding), corporate earnings are chugging along just fine and wages are starting to rise. Interest rates also remain historically low, with the Fed reluctant to hike rates because of all the uncertainty arising from the bad news I listed in the bullet points above. That’s not to say the bad news is illusory or irrelevant. Risks abound in today’s climate. Economic instability abroad could still… Read More

Do you follow the 80/20 rule? During the past century this simple ratio has developed into one of the most useful concepts and tools of modern-day routine. In a moment, I’ll show you how you can use a version of the 80/20 rule to help take your portfolio to a whole other level. #-ad_banner-#First, some background… The 80/20 rule assumes that most of the results in any situation — sales, finance and even personal relationships — are determined by a small number of events. The… Read More

Do you follow the 80/20 rule? During the past century this simple ratio has developed into one of the most useful concepts and tools of modern-day routine. In a moment, I’ll show you how you can use a version of the 80/20 rule to help take your portfolio to a whole other level. #-ad_banner-#First, some background… The 80/20 rule assumes that most of the results in any situation — sales, finance and even personal relationships — are determined by a small number of events. The notion of the “vital few” has its origins in 1906 in Italy, where economist Vilfredo Pareto observed that 80% of the wealth was controlled by 20% of the population. Pareto reportedly developed the principle after observing similar scenarios in everyday life, including the fact that 80% of the peas in his garden came from only 20% of the pea pods. Then came Joseph Juran, a quality management pioneer in the United States in the 1930s and ’40s. In citing the “Pareto Principle,” Juran postulated that 20% of product defects caused 80% of product problems. Read More

Southwest Airlines (NYSE: LUV) has always flown against the crowd with pick your own seats and free checked bags. The company was even forward thinking enough to buy oil futures when oil prices were still in the $50s back before the 2008 financial crisis and the subsequent spike of oil prices above $100 a barrel. #-ad_banner-#But there is one key area where the airline isn’t as progressive as its competitors: technology. From Bloomberg: “For most of its 45 years, Southwest Airlines Co. has operated with a kludgy hodgepodge of technology systems, mainly built in-house. It was generally a cheaper approach… Read More

Southwest Airlines (NYSE: LUV) has always flown against the crowd with pick your own seats and free checked bags. The company was even forward thinking enough to buy oil futures when oil prices were still in the $50s back before the 2008 financial crisis and the subsequent spike of oil prices above $100 a barrel. #-ad_banner-#But there is one key area where the airline isn’t as progressive as its competitors: technology. From Bloomberg: “For most of its 45 years, Southwest Airlines Co. has operated with a kludgy hodgepodge of technology systems, mainly built in-house. It was generally a cheaper approach that better fit the needs of its network, radically different from those of hub-and-spoke airlines.” Kludgy… That’s one way of putting it. Falling behind its competition is another. Because there’s a line between cost efficiencies and being cheap enough that you sacrifice other efficiencies. And Southwest crossed that line quite a bit ago, according to the company’s CEO Gary Kelly. Apparently, the company hasn’t updated its reservation system in 30 years… an unheard-of amount of time for a technology. One has to ask if they’re still using dot-matrix printers, too. The main reason for this update is the need for… Read More

I started working in financial services full time when I was 23. Since then, I’ve seen plenty of volatility in the market. For example, there was the time the Nasdaq stock bubble deflated more than 60% from March 2000 to September 2002, the September 11 terrorist attack that closed the U.S. stock markets for a week (when the S&P 500 opened a week later it fell 11.9% in 11 days), and the housing bubble of 2006 that led to the financial crisis of 2008 (when the S&P 500 fell more than 50% in six months). Read More

I started working in financial services full time when I was 23. Since then, I’ve seen plenty of volatility in the market. For example, there was the time the Nasdaq stock bubble deflated more than 60% from March 2000 to September 2002, the September 11 terrorist attack that closed the U.S. stock markets for a week (when the S&P 500 opened a week later it fell 11.9% in 11 days), and the housing bubble of 2006 that led to the financial crisis of 2008 (when the S&P 500 fell more than 50% in six months). #-ad_banner-#In the short run, all of those events made investors, including me, nervous. It’s scary to think about the global economy falling apart, accompanied by big losses in stocks and bonds. However, in the long run, history has proven that corrections are a normal part of a healthy market and are usually short lived. According to a study from mutual fund company American Funds, from 1900 to December of 2014, a pullback of 10% or more happened about once every year. Bear markets (more than a 20% decline) are rare,… Read More