The Price of Opportunity
As investors, we’re constantly looking for ways to maximize our returns while minimizing risk. This often means we’re making an allocation decision between a safe investment, like bonds, and a riskier investment, like stocks. To understand why one would choose...
Element of Surprise
OVERVIEW Overall, it was a mixed week for financial markets to close the year. In the U.S., the S&P 500 saw a decline of 0.14%, the Dow Jones Industrial Average dropped 0.17%, and the Nasdaq Composite registered a loss of 0.30%. The VIX Index, which...
Consumer to the Rescue
Our chart of the week above shows that the US economy faced a contraction in the first half of 2022 as GDP (green bars) declined in the first and second quarters, leading to concerns about a potential recession. However, as the gold bars reveal, consumer...
The Past and the Future
There are many ways to measure the valuation of something like the stock market. Some people like to look at past earnings; others look at future expected earnings. There is no “right” answer here. As they say, valuation is in the eye of the beholder. But we’ve...
The Drawdown Dance
OVERVIEW Last week, the U.S. stock market experienced a mix of movements. The VIX Index, which measures volatility, decreased by approximately 7.7% to a level of 22. The S&P 500 Index decreased by 0.2%, the Nasdaq Composite fell by 1.94%, but the Dow Jones...
Loosening the Reins
Japan’s central bank, the Bank of Japan, made quite a stir in the financial world this week when it announced that it is relaxing the allowed trading band for 10-year Japanese government bonds (known as JGBs) by 25 basis points. This means that, after keeping...
Countercurrents
Usually, when people think about money flowing into the stock market, they associate it with positive returns. However, as this week’s featured indicator shows, that isn’t always the case for exchange-traded products (ETFs). Specifically, asset flows into...
A Hawk on Every Branch
OVERVIEW Last week, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all saw negative returns, with the Nasdaq experiencing the largest drop at -2.72%. The Dow fell -1.66%, and the S&P 500 decreased -2.08%. The VIX Index, which measures...
Fighting the Fed
This week’s chart features two extremely important interest rates for the U.S. economy: the 10-year Treasury rate and the fed funds rate. The 10-year Treasury rate is a longer-term rate that the U.S. government charges on the money it borrows for ten years. By...
Beta is the New Alpha
Relative strength is a powerful tool used to model stock market risk. It measures the performance of a security or group of securities to another group of securities to determine outperformance. For example, we like to look at the relative strength of low and...
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