The Federal Reserve is widely expected to begin cutting interest rates this week as moderating inflation allows the central bank to roll back some of its previous rate increases. I expect that some investors will be tempted to chase stocks given the stubborn conventional wisdom that interest rates and stock prices move in opposite directions. They should reconsider.
I have listened to people bellyache about the Federal Reserve my entire adult life: Alan Greenspan lowered interest rates too much after the dot-com crash in 2000. Ben Bernanke printed too much money to bail out banks during the 2008 financial crisis.
One of the most widely followed gauges of the stock market, for decades a reliable indicator of future returns, has led investors astray in recent years. Its misdirection comes down to the freakish earnings growth of big technology companies such as Apple Inc. and Alphabet Inc.
Warren Buffett’s longtime business partner Charlie Munger brought quality to value investing. Now Buffett is bringing value to quality investing.
One of the most widely followed gauges of the stock market, for decades a reliable indicator of future returns, has led investors astray in recent years. Its misdirection comes down to the freakish earnings growth of big technology companies such as Apple Inc. and Alphabet Inc. But there’s a way to revamp this market barometer as worries about elevated expectations and prices grow.
The stock selloff of the past month is forcing investors to think about whether the market remains too high, and if so, how far it might fall.
Younger investors are thinking about their investment portfolios all wrong, and it’s not entirely their fault. Ultimately, it’s up to them to recognize where the best long-term returns lie before too much precious time is wasted.
Hedge funds were once the hottest investment around, but they’ve long ceded the spotlight to better performers, including private assets, real estate, technology startups and even cryptocurrencies.
Every now and then, a company comes along that is so dominant and is growing so quickly that it feels like the only stock anyone cares about. I’m referring, of course, to Nvidia Corp., the chip giant powering artificial intelligence. Its stock has surged 4,000% over the past five years, making it one of the three most valuable businesses in the world alongside heavyweights Microsoft Corp. and Apple Inc.
There’s a lot of bubble talk around US stocks. The market has been on fire in recent years. The S&P 500 Index has more than doubled in value since bottoming in March 2020 on Covid fears. It’s also up 14% a year since 2010, including dividends, nearly 5 percentage points a year better than its long-term annual return.
One of the big surprises of 2023 was the resurgence of US growth stocks. The tech-heavy S&P 500 Growth Index outpaced its counterpart Value Index by 7.82 percentage points last year, including dividends, after trailing it badly in 2022.
The holy grail of stock investing is buying great companies on the cheap. Stock picker Peter Lynch plied a variation of that strategy to fame and fortune in the 1980s using his so-called PEG ratio.
After a strong resurgence from last year’s bear market, the S&P 500 Index looks stretched. By at least one valuation measure, the leading gauge of the US stock market has rarely been more expensive during the past three decades.
Last month, BlackRock Inc., the world’s biggest money manager, asked the Securities and Exchange Commission to approve a spot Bitcoin exchange-traded fund — a fund that would invest in the digital currency directly rather than through futures markets.
Investors have more investment options than ever before, thanks to the number and variety of exchange-traded funds available to everyone. Think of an investment strategy, and it’s probably available in an ETF.
With technology stocks resurgent this year, some investors fear a replay of the tech-led rally that pushed stocks to extreme valuations during the 2010s, setting them up for a sharp correction last year.
Imagine an investment with stock-like returns and cash-like stability, or close to it. Many investors believe they have found such a thing. It’s called direct lending, and like countless investments before it that promised big profits with little risk, it’s probably too good to be true.
It’s well known that investors have a home bias — they prefer investing in companies in their home country — and US investors are no exception.
Long-term bonds usually pay a higher yield than shorter-term ones to encourage investors to lend for longer. But sometimes the so-called yield curve inverts, as it has now, and short-term bonds offer the highest yield.
No investment is risk-free, but the closest thing is probably short-term loans to the US government, also known as Treasury bills. That’s because the US government has vast resources to pay back its loans, and investors get their money back quickly.
The Inflation Reduction Act, Democrats’ tax, climate and health-care bill that Congress passed last week and is now awaiting President Joe Biden’s signature, calls for a 15% minimum tax on big corporations.
Issuers of exchange-traded funds plan to roll out a wave of single-stock ETFs. These funds, a handful of which are already available, will bet against individual stocks or amplify their daily moves or both.
Several important macroeconomic questions are puzzling economists, the Federal Reserve and everyone else. Why is inflation running so hot?
Trading apps such as Robinhood Markets Inc. introduced millions of investors to the stock market during the pandemic, and many of them are experiencing a bear market for the first time.
With the US bear market entering its seventh month, it’s not too soon to think about what other risks might be lurking. Private equity is at the top of the list.
The US stock market is experiencing the worst start to a year in five decades.
Stock pickers are beating the market in unusually large numbers this year, raising the age-old question about whether their success can be attributed more to luck or skill.
Who could have foreseen the selloff in shares of big technology companies? Anyone who bothered to do a little math.
It has been a rough few months for US stocks but even rougher for shares of technology companies. The widely followed and tech-heavy Nasdaq Composite Index is down about 30% since it peaked in November. Investors may be wondering whether tech stocks are a bargain.
Elon Musk, Marc Andreessen and Cathie Wood have spent the past few days on Twitter exchanging ideas about how investing and financial markets work — all in the name of liberating small-fry investors from elite giants that manage and peddle index funds.
People tend to associate environmental, social and governance investing with stock-picking, a way to sort through companies based on their ESG practices. But not every investor can be choosy about the companies they own. Big pension, endowment and sovereign wealth funds oversee tens of billions and even trillions of dollars, which means they have to own practically everything.
Last month, the Federal Reserve kicked off a campaign to increase interest rates to bring down the highest inflation the U.S. has experienced since the 1980s. Critics contend the Fed still isn’t doing enough, and the central bank seems to agree. Several high-ranking Fed officials, including Chair Jerome Powell, have said in recent days that interest rates may need to rise faster, and possibly higher, than initially planned.
The Securities and Exchange Commission proposed rules on Monday that would require publicly traded companies to disclose a variety of climate-related risks and metrics, including greenhouse gas emissions. The reason is plain: Investors want more information about how companies are dealing with climate change, and it’s the SEC’s job to get it for them.
It has been a rough several months for U.S. stocks. While broad market averages are down, they obscure the extent of the wreckage. Not even the technology-heavy Nasdaq Composite Index, which has tumbled more than the better-known S&P 500 Index and Dow Jones Industrial Average, tells the whole story.
Cryptocurrencies may be all the rage, but good luck figuring out how they fit in a portfolio.
U.S. wages are rising after decades of stagnation. And yet, by all indications, income inequality in the U.S. is the highest ever and growing, and tens of millions of full-time workers still fail to earn a living wage.
Wall Street is trying to bottle ESG, but ESG has other ideas.
For financial advisers, cryptocurrencies just might be internet 2.0.
The battle between mutual funds and exchange-traded funds is over. ETFs won.
If financial regulators want to continue protecting investors as new technologies like cryptocurrencies and non-fungible tokens proliferate, they’ll need to give investors the tools to protect themselves.
A debate rages on whether ordinary investors should have equal access to financial markets.
A 60/40 portfolio of global stocks and bonds has returned a respectable 8.4% annually over the past five years, but also a heartbreaking 6.2 percentage points a year less than the S&P 500. And the difference seems to be all investors care about.
A simple mix of stocks and short to medium-term bonds is probably a better bet than investments widely peddled as inflation protection.
Many Americans are wondering whether college is worth the enormous sacrifice, and they just might conclude that there must be a better way.
A look at recent downturns suggests that their fears are overdone.
