The Capital Growth Channel

Short Interest on NYSE Fell by 20% in 2016

As of the end of December, short interest–the number of shares investors have sold short on the NYSE–dropped to its lowest level since early 2014, even as stock market indices hovered at new highs.

Trump and Asia: Now the Good News

With Donald Trump about to be sworn in as US president, markets in Asia are nervous about some of his policies, especially on trade. Investors who are alert to these policies’ likely limitations could find attractive opportunities.

The Great Rotation

By now, you have likely heard something, either directly or indirectly, about “The Great Rotation” from bonds into stocks.

Asset Allocation is Not for the Faint of Heart (Long Live Diversification)

I’m starting to feel like a rancorous curmudgeon, but I am frustrated by some of the misguided commentary on asset allocation and how diversification is a myth.

Media Headlines Will Lead You To Ruin

Since investors are mostly individuals that have a “day job,” the majority of their “research” comes from a daily dose of media headlines. Therefore, since the media tends to “focus” their attention on “market moving headlines,” either bullish or bearish, investors tend to “react” accordingly.

Don’t Drink the Cool Aid that Bonds will Under-perform

Don’t get too far ahead of yourself and drink the cool aid that bonds will underperform. Investor fears of higher interest rates have caused volatility, which we believe presents opportunities in the fixed income markets. Global central banks continue to intervene in the markets in such a way that natural market mechanisms cannot function properly.

Will Q4 Earnings Confirm Recent Economic Strength?

My scorecard for earnings season will look for the following company characteristics: Confidence. I expect most to have a murky outlook, with no reason to set the future bar very high. Important trade relationships – imports or exports. Comments on these fears may create some buying opportunities. Concern about a stronger dollar. Everyone is teed up to watch for this, and we should as well.

Are Investors in Denial?

You’re in denial if you believe that U.S. stocks are fairly valued, the Eurozone does not face a crisis or a strong dollar will support stability in the global economy. Those themes were presented by Albert Edwards and his fellow speakers at annual investment conference sponsored by Societe Generale.

New Tools to Prove You Acted as a Fiduciary

This article, the first of two parts, is a review of some of the more prominent new tools that advisors can lean on as they prepare for the full DOL rule implementation on April 10. Each of them addresses a different aspect of the rule, and they all approach it from different angles.

New Research on Forecasting Returns with the CAPE Ratio

I developed a methodology that uses valuations based on a 35-year moving-average of the CAPE ratio instead of its long-term mean. It predicts a 10-year annualized real return of 5.8%, similar to the long-term market trend value of 5.4%.

Lifting Your Clients above the Fray

Periods of fear and confusion are when your clients need you the most. On that note, here are several areas advisors should focus on to better serve their clients in times of need.

What I Learned from Value Investor Guy Spier

Guy Spier published a book, The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment. It is not a traditional investing book. In fact, I’ll say that differently: This is the most untraditional book on investing you’re likely to encounter.

Forecasting with Friends

I gave you my own thoughts last week (see “Skeptically Optimistic”). Today we’ll review several other forecasts from people who deserve your attention. Of necessity, I must leave out some good ones, but I think the ones I cover will give you plenty of useful information.

Cassandra's Song

One of the attempted barbs tossed my way at various points in the past 20 years is “Cassandra.” Frankly, I kind of like it.

A Perfect Mix?

U.S. stocks have been consolidating gains seen in the aftermath of the November presidential election, a healthy process following such strong gains. Further appreciation should be supported by improving U.S. and global economic and earnings growth. Disappointments are likely on the U.S. policy front but we would view those as buying opportunities for now.