Tag Archives: investors

Investors-Urgent Start Following the Giant Bond Bubble

During the last few weeks we saw the stock market gyrate with wild swings up and down. Investors started thinking “crash” mode. In times of crisis we need a clear head and logical thinking. First, let’s look at who is doing the buying and selling. The US Federal Reserve gave the big banks 4 trillion to play with when they set in motion their bond- buying program. It lasted from 2009 through 2013 and will end this year. (When the Fed buys bonds it credits banks’ balance sheets.) The banks used this money to rally the stock market to new all time highs. So, this was a ‘big boys” rally. Individual investors have been largely absent in this bull- run. The selling and buying that occurred was largely driven banks and hedge funds.Continue Reading

Investors Seek the Fed’s Guidance on the Economy

What do the latest Fed minutes tell us? Since the recession began, the Fed has set two goals for the economy. Perhaps the foremost objective is to maintain inflation at or near the 2% level. The one crisis point would be a drop in inflation below the flat line. This would indicate that the economy is teetering on the brink of recession. The entire quantitative easing program is aimed at keeping the economy growing. We are seeing the effects of stagnation in Europe with the introduction of negative interest rates to stimulate the economy. So far, the US economy has been expanding, albeit very slowly. The latest 2nd quarter GDP numbers came in better than expected at 4.6%. The media has jumped on this number and is prodding the Fed to raise interest rates. However, all is not that great. The 1st quarter GDP actually fell 2.1% after a brutally cold winter in the Northeast. When taken together these numbers indicate a moderate expansion in the economy. According the Fed’s statistics, inflation in August was at 1.7%. However, this number does not include food, energy and shelter.Continue Reading

Ebola Stocks-Should You Invest Now?

The dreaded disease, Ebola, has captured the imagination and attention of traders and speculators. It has erupted in Africa and has spread quickly, causing 1,000 deaths, and 2,000 new infected cases. There is a dire race to find a cure. To date, no cure is available. This has prompted a search for biotech companies that have started to do research on Ebola.Continue Reading

What Does Net Neutrality Mean for Investors?

There is a giant power struggle underway between proponents of the “Open Internet or Net Neutrality” and the large broadband Internet Service Providers (ISPs) over whether or not the Open Internet will survive.Continue Reading

The Fed Plans to End of Asset Purchases by October

For investors, following the US Federal Reserve’s policy changes gives us a heads up on possible market movements. Since 2009, the Fed has embarked on an unprecedented policy of quantitative easing with the latest round of buying $85 billion per month of treasuries and mortgage backed securities. The net effect of these policies has been to swell the Fed’s balance sheet to a massive $4.2 trillion. Now the Fed is in the process of unwinding some of this activity. In December 2013 the Fed started “tapering” or reducing these asset purchases. To get a sense of what the Fed is up to we look at the minutes of their recent meetings. These are made public for the previous month. The latest issue was for June 17-18.Continue Reading

Investors Look to Dow Transports for Growth and Dividends

With the media focused on Dow 17,000, we often overlook some promising investing opportunities in the Dow Transports. The Dow Jones Transportation Average was the first listing in 1884. It had nine railroad stocks in the index. The Dow Jones Industrial Average came later in 1896. Throughout the late 1800s and early 1900s, rail transportation dominated the way goods were shipped throughout the country. At one point in 1916, the US had 254,000 railroad lines. From then on railroads had to compete with trucks and air transportation and saw a loss of revenue and jobs. However, we are in the midst of a new revival of rail transportation with both ton miles shipped and net proceeds setting new records.Continue Reading

Where is the Price of Gold Headed?

The markets have turned in a strange performance over the past several weeks. The numbers on the economy came in weaker than expected with GDP down -.1% in April. Unlike other recoveries, spending growth has decelerated. Each year it takes a step down. This is not the way it should be. In all past recoveries, spending growth increased as the economy grew. Discretionary spending was up but 90% of that was due to inflation, especially in food and energy. Consumers are being forced to spend more. Our US deficit is running at about $17.3 trillion. The US Federal Reserve’s Balance Sheet has grown to $4.9 trillion. Surprisingly, the US stock market made a new all time high in the Dow and S & P. Gold, on the other hand, fell to its lowest level in the past 15 weeks.Continue Reading

How to Protect Your Portfolio

With the stock market averages making new highs every few weeks, investors are becoming increasingly edgy about what will happen next. These are unsettling times. We have a high US national debt running about $17 trillion. Added to this the US Federal Reserve has bought $4 trillion of bonds and mortgage backed securities from the big banks. They are now in the process of reducing their purchases, but they still must sell these securities back to balance their books. In addition they must continually issue new bonds to finance our debt.Continue Reading

Market Update May 15, 2014

So far 2014 has proved to be quite frustrating and confusing. We ended 2013 on and upbeat note with the Dow and S & P making new all time highs. At the time only 16% of investors were bearish on the market. In December 2013, then Chairman, Ben Bernanke, of the US Federal Reserve started to taper bond purchases by $10 billion per month.Continue Reading

High Speed Trading

In the early days of stock trading prices came across a ticker tape. It posted the stock symbol and the volume. The tape ran at one speed and traders would follow the buying and selling by analyzing the tape. The great traders were able to mentally track price action and make instant trading decisions, almost like a card counter does in Blackjack. One popular past time was for investors to gather in a large sitting room and watch the ticker tape during trading hours.Continue Reading