US stock markets have bounced back from a series of mini-corrections during the start of the year. It seems like there’s nowhere to go but up. But it might be time to start worrying about valuations. I’ve made the case in previous articles that low interest rates = higher stock prices as a matter of […]
The Tremendous Value In Chinese Banks (If You Can Stomach The Risk)
There are three questions you should ask before buying a stock. Is it cheap? Does it have a future? Is it safe? If you can answer those three questions with a resounding yes, then you’ve found value. But when you ask those questions, you need the broadest and deepest sets of data possible. For example, […]
Man up and pick your stocks
What’s lurking on bank balance sheets?
Yesterday I did a post on “How safe are your bank stocks from tightening monetary conditions?” Today I want to delve further into the four major US banks’ balance sheets to see what surprises we might find. All four banks — Bank of America (BAC), Citigroup (C), JP Morgan Chase (JPM) and Wells Fargo (WFC) […]
How safe are your bank stocks from tighter monetary conditions?
We like to think the Federal Reserve omnipotent over the monetary conditions in the United States. Indeed, if the Federal Reserve wants to inflate, it can do so. But while it strongly influences monetary conditions, sometimes loosening (tightening) can happen all on its own. The Fed can steer the ship, but not control the waves […]
Beware of industries about to be upended
I’m an analyst at heart, so I love metrics and ratios and data visualizations that show how one investment will work and another will not. When I scour Google finance for the next big idea, I look for low price/book ratios, or low P/E ratios, or high dividend yields. But before you get caught up […]
Does the rise of Syriza signal a one-way bet?
Whenever there’s a risk of devaluation, the direction of risk seems to go in one direction only. Soros knew this when he famously bet against the pound in 1992 and “broke the bank of England.” As the German Bundesbank increased interest rates to fight an inflationary valuation of East German marks after unification, the British […]
A visual analysis of car industry stocks
As a value investor, I want to find stocks that trade at good ratios: P/E, price/book, price/cash flow, etc. But I also understand that the market is trading at higher-than-average ratios because of low interest rates. The car industry is one that looks more fairly valued. Just look at the median ratios of the major […]
To invest well, you need the right mental model of the economy
As a value investor, I appreciate good dividends, contrarian arguments and general bad news about my prospective investments. Like many other investors, I also freak out at the prospect of big market drops, especially with analysts screaming about high historical valuations. I get tempted to time the market, even though it’s not recommended. The chance that […]
Does the ECB finally get it? What this means for Deutsche Bank
Today Mario Draghi called on the ECB to inject 1.1 trillion Euros ($1.3 trillion) into government bonds in a bid to stave off deflation. The ECB has been strangely inactive as southern Europe experiences economic crisis and depression, and even northern Europe is starting to stagnate. The one bright spot has been the United Kingdom, […]