A question I’ve received frequently the last couple months from many different people is about the potential for inflation given the unprecedented response to the Novel Coronavirus Pandemic. It is an important question because it impacts the best investment approach going forward as well as other personal finance decisions.
I understand the rationale behind the question. After all, trillions of dollars have been pledged between the Federal Reserve and the U.S. Treasury in the last few months in what essentially amounts to a “helicopter drop” of money on the economy. So, it is understandable that people are beginning to have concerns about the potential for inflation.
Ultimately, I believe we will get inflation mainly because the Federal Reserve will stop at almost nothing to make it happen, HOWEVER, we must allow for the possibility of getting deflation first. Continue reading “Deflation or Inflation?”
An old saying is “there is always a bull market somewhere.” This year is no exception.
For the year, through yesterday’s close, we’ve witnessed long-term, “boring” Treasury bonds gain almost 24% and gold make over 9% while the global stock market has lost over 13%! All this in just about two months!
Even when things aren’t going well in stocks, it seems there is usually an asset somewhere at least holding up if not delivering positive returns. Continue reading “There’s Always A Bull Market Somewhere”
If I would have told you a year ago that for the next 12 months long-term Treasuries would be up over 34%, gold would be up almost 27% and the global stock market would be up about 4.5% would you have believed me?
Yet, here we are…
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”
With the market’s momentum from 2019 continuing on into 2020 so far, I wanted to provide a valuation update. Please remember that valuations are not reliable at all for short-term market timing but are very reliable for subsequent 10-12 year return projections.
First, we have a couple price-to-revenue measures. Continue reading “Stock Market Valuation Update”