The late John Bogle formulated a long-term market return forecast based on “Occam’s Razor.” Although Bogle had mixed results, the approach is interesting, instructive and provides a glimpse into what we might expect for the U.S. market over the coming 10 years. The model suggests Base Case, Pessimistic and Optimistic annual returns ranging from 1.0% […]
My December 2019 Seeking Alpha article, “Mean Reversion + Valuation = Opportunity” identified underperforming asset classes that were attractively valued and poised to generate above average returns in the future. Here we revisit how those assets have performed since the beginning of 2020. There is strong evidence of a sector rotation underway. Nine of 13 […]
So-called “experts” are telling us about the coming uber-bear or why the bull market will continue. Yet the data show that trying to predict the market’s direction to time buys and sells is the wrong approach to investing. Data from the last seven bear markets show that a large percentage of losses and gains happen […]
China is a world economic superpower and is overtaking the U.S. Chinese equities are attractive but have recently pulled back due to regulatory actions and profit taking. Recent weakness appears overdone while underlying fundamentals should prevail in the long term. Double-digit annual return potential and portfolio diversification outweigh reasonable risks. Read the full article at […]
There are at least ten reasons Tesla should be headed for a crash. Valuation, growth expectations, lack of profitability, competition, and lawsuits head the list. Charlie Munger can’t decide between a flea or a louse. The stock is trading on sentiment, not fundamentals. Investing in Tesla is like betting on the direction of a flock […]
Studies indicate that news about companies has an immediate effect on their stock price. Here, we consider 18 news events related to Tesla over a nearly three month period to determine what this might tell us about their explanatory powers relative to price movements. Resultant price action indicates that movements are often independent of the […]
In “International Small-Cap Equities: Poised to Outperform” I described the upside opportunity due to mean reversion, favorable valuations, the prospects for a declining dollar, and a worldwide economic recovery. The small cap sector is the cheapest since 2000. Historically, this has resulted in an annual return size premium of seven percentage points over subsequent three-year […]
Although they’ve performed well for decades, international small caps have been out of favor for at least 10 years. Mean reversion and valuations present opportunity for long-term outperformance. The prospects for a worldwide economic recovery and declining dollar act as potential catalysts. Price action since the selloff in March and in recent months might signal […]
In “Why Investors Are Underweight China Equities, But Should Reconsider,” I described why China is the rising power vying to overtake the U.S. on the world stage. The article made the case for investors to consider allocating 10-15% of their equities to China. After reviewing the leading ETFs in this space, the Wisdom Tree China […]
Investors are underinvested in China equities relative to its economic and overall global stature. China carries unfavorable attributes and risks that have suppressed its equity market. There are seven key reasons to boost allocations to China equities, including the potential to outperform the U.S. by five percentage points per year for the next ten years. […]