Investor Education / Blog

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Fed Enacts Emergency Rate Cut. New Record Lows on Treasuries

This morning at about 9 AM central, in response to the Coronavirus, the Federal Reserve announced an emergency 0.50% rate cut.

The initial response by the market was to send stocks and gold soaring. As the day wore on U.S. stocks crumbled losing about 3.5% at one point and ending the day down 2.8% while gold hung on for a 3%+ gain.

The 10-year Treasury yield continued to slide throughout the day (sending bond prices up) and even got below 1% for the first time ever! Think about that…in the almost-250 years of this great Republic we’ve just set a record low on bond yields. Continue reading “Fed Enacts Emergency Rate Cut. New Record Lows on Treasuries”

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Fastest Correction In History…And The Importance of Financial Projections

Last Friday I wrote a market commentary to reiterate my concerns about market valuations but primarily focused on the fact that some technical (short-term) indicators were hitting historical extremes implying the potential for short-term problems in the market.

Last Thursday the S&P 500 closed at $3,386…an all-time high. Today the S&P 500 closed at $2,978 for over a 12% loss in a week. That’s a truly historic move. It’s the fastest correction in history for the S&P 500 and the fastest for the Dow since 1928 just a few months before the Great Depression. The Dow and the S&P 500 are on track for their worst weekly performance since the Great Financial Crisis in 2008. Continue reading “Fastest Correction In History…And The Importance of Financial Projections”

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Even Some Technicals Are Now At Historical Extremes

I’ve written extensively about how valuations of the U.S. stock market are at historical extremes exceeding even 1929 and 2000. I’ve discussed how valuations are not at all reliable for predicting short-term movements but quite reliable for predicting returns over the next 10-12 years and, so, can be valuable for financial planning and investment strategy.

The implication of extreme valuations today being that annualized returns for U.S. stocks will likely be much closer to 0% than their 10% historical average over the next 10-12 years and with a lot of volatility in the interim.

However, now, we’re starting to see technicals hit historical extremes as well. Technicals are often-used for predicting short-term movements and identify key trading signals although they are still far from reliable.

They are interesting to at least monitor in order to get a feel for the market, investors attitudes towards risk, key trading signals others may be using, etc… Continue reading “Even Some Technicals Are Now At Historical Extremes”

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Tesla…To The Moon!

Today, I’m going to do something I’ve never done before. I’m going to comment on an individual stock.

Since I generally don’t make recommendations on individual stocks for clients, I don’t focus my commentaries on them. However, I’ve been following this company closely for a couple years now, and the situation has become so ludicrous that I feel the need to highlight it. This could be one of those rare examples that go down in history as a great learning lesson. Continue reading “Tesla…To The Moon!”