“I try to invest in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.” ― Warren Buffett
FAAMG Stocks: Facebook $FB, Amazon $AMZN, Apple $AAPL, Microsoft $MSFT, Alphabet’s Google $GOOGL $GOOG, collectively known as FAAMG (FAANG minus Netflix plus Microsoft), now have a total of more than $7 trillion in market cap as of Aug 28, 2020, almost 25% of the S&P 500, with "index concentration" now the highest in over 20 years.
2022 Jan 21 DJIA -1.30%, S&P 500 -1.89%, Nasdaq Composite -2.72% For the week: DJIA -4.6%, S&P 500 -5.7%, NASDAQ Composite -7.6% |
| NASDAQ Composite |
Jan 18-21 Notable Earnings Webcasts Tuesday: 9:30am EST Goldman Sachs (NYSE: GS); Wednesday: UnitedHealth (NYSE: UNH), Bank of America (NYSE: BAC), Morgan Stanley (NYSE: MS); Thursday: Union Pacific (NYSE: UNP), Netflix (NASDAQ: NFLX); Friday: Honeywell (NASDAQ: HON).
2022 Jan 20 Stocks Fall Again: DJIA -0.89%, S&P 500 -1.10%, Nasdaq Composite -1.30%
Jan 19 Stocks Continue to Fall: DJIA -0.96%, S&P 500 -0.97%, Nasdaq Comp -1.15%.
Jan 18 DJIA -1.51%, S&P 500 -1.84%, Nasdaq Composite -2.60%, $GS -7%:
Jan 14: DJIA -0.56%, S&P 500 +0.08%, Nasdaq Composite +0.59%. For the week: DJIA -0.9%, S&P 500 -0.3%, NASDAQ Composite -0.3%.
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| S&P 500 |
Q4 Earnings Reports Webcasts Jan 14: Citigroup, JPMorgan Chase, Wells Fargo, BlackRock.
Jan 13, 10am EST webcast: The US Senate Committee on Banking, Housing, and Urban Affairs will conduct a hearing (hybrid format) on the following nominations: The Honorable Lael Brainard to be Vice Chair of the Board of Governors of the Federal Reserve System; and Ms. Sandra Thompson to be Director of the Federal Housing Finance Agency.
Jan 12 DJIA +0.11%, S&P 500 +0.28%, Nasdaq Composite +0.23%. Jan 11 DJIA +0.51%, S&P 500 +0.92%, Nasdaq Composite +1.41%. Jan 11 webcast replay: US Senate Committee on Banking, Housing, and Urban Affairs hearing (hybrid format) on the nomination of the Honorable Jerome H. Powell to be Chairman of the Board of Governors of the Federal Reserve System.
Jan 10 stocks mixed DJIA -0.45%, S&P 500 -0.14%, Nasdaq Composite +0.05%
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| NASDAQ Composite Jan 10, 2022 |
2022 Jan 04 Jeffrey Gundlach Interview Video DoubleLine CEO, Jeffrey Gundlach, interviewed by Yahoo Finance's Brian Sozzi during DoubleLine's Round Table Prime.
ARK CEO/CIO, Cathie Wood, on the tech sell off, innovation stocks, autos, China, the tech & telecom bubble, and more.
See also: Israel, Widely Vaccinated, Suffers Another Covid-19 Surge (WSJ.com Aug 12, 2021)
"Central bank digital currencies (CBDCs) offer in digital form the unique advantages of central bank money: settlement finality, liquidity and integrity. They are an advanced representation of money for the digital economy .... It is clear that cryptocurrencies are speculative assets rather than money, and in many cases are used to facilitate money laundering, ransomware attacks and other financial crimes. Bitcoin in particular has few redeeming public interest attributes when also considering its wasteful energy footprint." —The Bank for International Settlements
2022 Jan 07 ARK Invest video: Saint Cathie's counter-narrative on the stock market & more:
ARK CEO/CIO, Cathie Wood, on the tech sell off, innovation stocks, autos, China, the tech & telecom bubble, and more.
Jan 07 DJIA -0.01%, S&P 500 -0.41%, Nasdaq Composite -0.96%. For the week DJIA -0.3%, S&P 500 -1.9%, NASDAQ Composite -4.5%
Jan 06 more of the same DJIA -0.47%, S&P 500 -0.10%, Nasdaq Composite -0.13%, Jan 05 DJIA -1.07%, S&P 500 -1.94%, Nasdaq Composite -3.34%
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| NASDAQ Composite |
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| NASDAQ Composite (Jan 03, 2022) |
2021 Tech Story of the Year: Social Media Censorship, the Decline of Twitter & Facebook, the Rise of Reddit & Substack
Nov 05 video: ARK Invest CEO Cathie Wood on Inflation, Productivity, Oil, China, Commodities, Velocity of Money.
Sep 30 for the quarter (Q3): DJIA -1.9%, S&P 500 +0.2%, Nasdaq Composite +0.4%. S&P 500 UP 15% YTD:
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| S&P 500 |
Sep 19 CDC COVID Data Tracker (data as of Sep 17): 154,513 new cases, 3.21 7-day death rate per 100,000 population
Above chart: the blue bars show daily cases. The red line is the 7-day moving average of cases. The orange line represents deaths in the last 7 days per 100,000, allowing for comparisons between areas with different population sizes.
Sep 03 CDC COVID Data Tracker chart below: the blue bars show daily cases (179,021 on Sep 1, 2021). The red line is the 7-day moving average of cases (155,310 on Sep 1. 2021). The orange line represents the 7-day average of the number of prevalent patients hospitalized with confirmed COVID-19 in the U.S. (92,842 as of Sep 1, 2021):
Aug 27: US Stocks UP on Fed Chair's Speech The Federal Reserve Bank of Kansas City hosted its 2021 Economic Policy Symposium, “Macroeconomic Policy in an Uneven Economy,” virtually on Friday, Aug. 27. Federal Reserve Chairman Jerome Powell’s remarks were livestreamed to the public at 9 a.m. CDT/10 a.m. EDT on Aug. 27 via the Kansas City Fed’s YouTube channel. The program’s full agenda is available via KansasCityFed.org.
Aug 14: Delta Variant & Beyond, Learning to Live with COVID: "... Delta may well not be the worst that Covid has in store for us: Future variants could be even more infectious, more deadly or better at evading our immunity. Within the next month, at current trends, there will be more than 200,000 cases per day in the U.S. More hospitals, particularly in places with low vaccination rates, may find themselves unable to handle the load. Deaths will at least double ..." -- Tom Frieden, Aug 13, 2021
See also: Israel, Widely Vaccinated, Suffers Another Covid-19 Surge (WSJ.com Aug 12, 2021)
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| source: ourworldindata.org/covid-deaths?country=USA~GBR~ISR |
Jeffrey Gundlach on Bitcoin and the U.S. dollar (July 15, 2021): “I think it’s [Bitcoin] only a trading vehicle. I’ve never been long Bitcoin personally. I’ve never been short Bitcoin. It’s just not for me. I don’t have that kind of risk tolerance in my DNA where I have to get worried to pull up the quote every day to see if it’s down 20%. But I would not own Bitcoin presently ... In the near term, the dollar seems firm. In the longer term, the dollar is doomed."
Blank-check companies (SPACs) that have gone public have a two-year limit to find an acquisition target. If investors do not approve of the acquisition target, they can redeem their shares. With so many SPACs flush with money and hunting, there is going to be a rush to complete a merger. “They are very actively shopping,” said Dibble of Baker Botts. “The clock is running out.”-- SPACs aren’t dead, but they don’t look too healthy -- SPACs are still getting and holding billions of investors’ cash for M&A for either very early stage or distressed companies, and the road ahead is unclear | marketwatch.com
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| S&P 500 YTD (Jun 30, 2021) |
Jun 24-25 Fraud Fest 2021: The Fourth Annual Berkeley Forum on Financial Fraud online.
Warren Buffett’s Annual Letter to Berkshire Hathaway (BRK.A and BRK.B) shareholders, Saturday, Feb 27, 2021 via Annual Report posted at BerkshireHathaway.com, excerpt:
"Investing illusions can continue for a surprisingly long time. Wall Street loves the fees that deal-making generates, and the press loves the stories that colorful promoters provide. At a point, also, the soaring price of a promoted stock can itself become the “proof” that an illusion is reality."--Warren Buffett
Editor's note: For 2021 and beyond, I sincerely hope you're positioned to enjoy the ride!
"the fact that the Fed now explicitly caters to idiots, CNBC talking heads and clueless BTFDers, means that it is completely unclear who the winner of this clash will be. To be sure, judging by the 14x outperformance of retail traders vs hedge funds, one can argue that the Robinhood juggernaut can continue indefinitely until such time as the Fed realizes the catastrophic consequences of what it has unleashed ... which may well be never" -- ZeroHedge.com Dec 30, 2020
“Risk on” is not without risk and the market corrects almost 20% in the first half, but the S&P 500 trades at 4,500 later in the year." -- Byron Wien and Joe Zidle Announce the Ten Surprises of 2021
Year ending Dec 31, 2020 (First Year of the COVID-19 Pandemic): DJIA +7.3%, S&P 500 +16.3%, NASDAQ Composite +43.6% in 2020, its best annual performance since 2009.
BARRON'S Video (Dec 7, 2020): Short Seller Jim Chanos on Navigating the Golden Age of Fraud and Short Sellers: Evil Geniuses or Village Idiots? Chanos discusses current market valuations, the concept of "legal fraud" (everything done legally but with an overall intent to mislead), and increasingly manipulated financial metrics used by corporations in reporting financial results such as 'adjusted EBITDA' and 'Total Addressable Market' or TAM. Money quote: "Tesla ($TSLA) is the biggest debacle since America Online (AOL)."
Oct 5-9: 2020 NVIDIA GPU Technology Conference; CEO Jensen Huang Keynote replay (no registration required), on Nvidia's longer-term vision in "all-pervasive AI/accelerated computing."
Jackson Hole Symposium 2020 Aug 27-28 LIVE Stream: The Federal Reserve Bank of Kansas City announced its 44th annual Economic Policy Symposium, “Navigating the Decade Ahead: Implications for Monetary Policy,” due to the pandemic, as an online and streamed LIVE event this year (the full agenda), beginning Thursday, Aug. 27 at 8 a.m. CDT. View the symposium on the Kansas City Fed’s YouTube channel. Papers and other materials are posted on the Kansas City Fed’s website.
Aug 18: S&P 500 +0.23%, DJIA -0.24%, NASDAQ Composite +0.73% S&P 500 hits All-Time Record High Close, marking the fastest recovery in history.
Aug 18: The V-Shaped Recovery New Housing Starts Data:
A V-Shaped Recovery in the Making:
Jul 31, 2020 video: Ark Invest's Cathie Wood talks about fiscal policy, monetary policy, market signals, economic indicators, and innovation: [at 19:31] "... on the innovation front, analysts have been shocked at how much stronger the consumer has been. If you look at Amazon's sales, the consensus estimate was eight billion dollars too low for this last quarter ..."
Wednesday, July 29, 2020: hearing before the US House of Representatives' Subcommittee on Antitrust, Commercial, and Administrative Law: Online Platforms and Market Power, Part 6: Examining the Dominance of Amazon, Apple, Facebook, and Google. Witnesses: Jeff Bezos, CEO, Amazon; Tim Cook, CEO, Apple; Sundar Pichai, CEO, Google; Mark Zuckerberg, CEO, Facebook.
Jun 26 video: ARK Invest's Cathie Wood gives an update on the V-Shaped Recovery.
For the month of May: S&P 500 +4.5%, DJIA +4.3%, NASDAQ Composite +6.8%. At the Berkshire Hathaway Annual Meeting May 2, 2020, Warren Buffett announced he dumped Berkshire's airline stocks, adding, "the world has changed" but "never, ever, bet against America." See also Wall of Worry update: China & Hong Kong, The Tragedy of HSBC; and COVID-19 archive.
A V-Shaped Recovery: Cathie Wood, ARK Invest video (May 29, 2020) at 9:04: "I've been through a lot of recessions and by definition a v-shaped recovery is caused because inventories are liquidating and not keeping up with consumption. We think that's what's going to be happening during the next few months." CBO forecasts Q3 GDP growth UP +21.5% (annual rate). CBO forecast graphic:
Aug 18: S&P 500 +0.23%, DJIA -0.24%, NASDAQ Composite +0.73% S&P 500 hits All-Time Record High Close, marking the fastest recovery in history.
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| Aug 18: The V-Shaped Recovery New Housing Starts Data |
A V-Shaped Recovery in the Making:
Google searches for “buy a house” are at an all-time high back to 2004. The #COVID19 Crisis has pulled forward housing demand. This is a classic early cycle setup to kickstart the economy. Read our full analysis here: https://t.co/jKJynF5jlC $SPY $IVV $QQQ pic.twitter.com/j6LMSnq3ec— DataTrek Research (@DataTrekMB) August 14, 2020
Wednesday, July 29, 2020: hearing before the US House of Representatives' Subcommittee on Antitrust, Commercial, and Administrative Law: Online Platforms and Market Power, Part 6: Examining the Dominance of Amazon, Apple, Facebook, and Google. Witnesses: Jeff Bezos, CEO, Amazon; Tim Cook, CEO, Apple; Sundar Pichai, CEO, Google; Mark Zuckerberg, CEO, Facebook.
Markets are trading on economic fundamentals, says Goldman Sachs's Mossavar-Rahmani (video) 2020 July 10: Sharmin Mossavar-Rahmani, Goldman Sachs Wealth Management CIO, makes the case for staying invested in equities. She contends that while the Fed's low interest rates support equity markets, they are not overvalued. She joins David Westin with her insight on "Bloomberg Wall Street Week."
2020 June: S&P 500 has its best quarter since Q4 1998, S&P 500 UP +18%, the DJIA UP +15.6%, NASDAQ Composite UP +29.4%.
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| S&P 500 Index (INDEXSP: .INX) |
A V-Shaped Recovery: Cathie Wood, ARK Invest video (May 29, 2020) at 9:04: "I've been through a lot of recessions and by definition a v-shaped recovery is caused because inventories are liquidating and not keeping up with consumption. We think that's what's going to be happening during the next few months." CBO forecasts Q3 GDP growth UP +21.5% (annual rate). CBO forecast graphic:
2020 Mar 15 FOMC lowers fed funds target interest rate: "... the Committee decided to lower the target range for the federal funds rate to 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals ..."--FOMC statement.
Feb 20-28: COVID-19 Coronavirus Spooks Stocks. CDC Risk Assessment & WHO Updates, S&P 500 Index DOWN 13%:
2019 Best Year for US Stocks Since 2013, S&P 500 UP 28.9%, Dow (DJIA) UP 22.3%, NASDAQ UP 35.2%. The S&P 500 Index tends to produce an annual return of 11.2% after a year in which it climbs at least 20%. Why the S&P 500 Has Beaten Other Indices over the Past Decade:
US 2020: ‘Bond King’ Jeffrey Gundlach says a recession is ‘very unlikely’ in 2020.
Brexit 2020: This Time is Different, Global Elite Show No Signs Of Wanting To Stop Brexit.
EU 2020: 'The Bottom Is Not In' For Europe's Struggling Economy says El-Erian.
Survivorship Bias: "Most businesses fail. Most people do not become rich or famous. Most leaps of faith go wrong. It does not mean we should not try, just that we should be realistic with our understanding of reality." "A powerful algorithm for happiness is to be wealthy but anonymous"--Scott Galloway.
Feb 20-28: COVID-19 Coronavirus Spooks Stocks. CDC Risk Assessment & WHO Updates, S&P 500 Index DOWN 13%:
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| S&P 500 Index DOWN 13% Feb 20-28 |
2020 Feb 28: Federal Reserve Chair says coronavirus is an "evolving risk to economic activity" and Fed ready to take action if necessary.
Year 2019's 13 Worst #FAILs in Tech: 13. Samsung Galaxy Fold;12. Facebook privacy & Libra; 11. Apple FaceTime bug & butterfly keyboard; 10. Amazon Ring & local police; 9. Huawei in US; 8. Uber IPO; 7. Amazon HQ2;6. Airbnb bedbugs; 5. Vaping; 4. Jeff Bezos, Amazon CEO & Washington Post owner's mid-life crisis: divorce tweet, dick pics, sexts to skanky girlfriend(s); 3. ICANN, Internet Society & Ethos Capital re: .ORG; 2. WeWork, need we say more? #1. The Worst of the Worst: Boeing 737 MAX. Congrats to Google, Microsoft, and Elon Musk, for missing this year's list of "13 Worst #FAILs in Tech." See also Boeing CEO Finally Fired.
2019 Best Year for US Stocks Since 2013, S&P 500 UP 28.9%, Dow (DJIA) UP 22.3%, NASDAQ UP 35.2%. The S&P 500 Index tends to produce an annual return of 11.2% after a year in which it climbs at least 20%. Why the S&P 500 Has Beaten Other Indices over the Past Decade:
Three 'experts' who got the 2019 Stock Market Totally Wrong.3/3 ...The lesson: innovative disruption at scale in conjunction with profitability drives equity returns. The S&P 500 has beaten the Russell, EAFE & EM equities handily over the last decade because it houses more global disruptors than those other indices. $SPY $XLK $EEM $EFA— DataTrek Research (@DataTrekMB) December 30, 2019
Predictions for 2020: Oil and gas prices will remain range-bound in 2020. See also 5 Biggest Threats To Oil & Gas In 2020 and IEA: An Oil Glut Is Inevitable In 2020.Remember how everyone was worried about an inverted yield curve forecasting a global economic contraction over the summer? Fun fact: the US has NEVER seen a recession (back to 1970) w/out oil prices 1st rising by +90% over a year. Full analysis here: https://t.co/V2MKAhpB8b $SPY— DataTrek Research (@DataTrekMB) December 23, 2019
US 2020: ‘Bond King’ Jeffrey Gundlach says a recession is ‘very unlikely’ in 2020.
Brexit 2020: This Time is Different, Global Elite Show No Signs Of Wanting To Stop Brexit.
EU 2020: 'The Bottom Is Not In' For Europe's Struggling Economy says El-Erian.
Inverted Yield Curve T10yr/2yr: Aug 14, 2019: Former Federal Reserve Chair Janet Yellen said the markets may be wrong this time in trusting the yield curve inversion as a recession indicator. "Historically, it has been a pretty good signal of recession, and I think that's why markets pay attention to it, but I would really urge that on this occasion it may be a less good signal," Yellen said, adding, "The reason for that is there are a number of factors other than market expectations about the future path of interest rates that are pushing down long-term yields." Aug 15: Mohamed El-Erian agreed with Yellen (CNBC video). See also Goldman Sachs Oct 7, 2019: 'US Is Not Close To Recession' - Economic Run 'Not Over.'
Economic & Earnings Links:
Markets | cnbc.com | Stock Exchange Trading Hours (24 hour format / local time):
Profits explained | Finance Decoded FT.com video: Jonathan Guthrie explains how companies calculate their profit, what investors should be wary of and the different measures used to gauge how a company is really performing (video published Feb 17, 2016).
Peter Lynch on investing:
Common Terms: Infographic: Here's 40 Stock Market Terms That Every Beginner Should Know | visualcapitalist.com
Operating Profits
Revenue is the income (before deducting expenses) that a business has from its normal business activities, usually from the sale of goods and services to customers. Revenue is also referred to as sales or turnover. Profits or net income generally imply total revenue minus total expenses in a given period. Source: Wikipedia
Risk Assets generally refer to assets that have a significant degree of price volatility, such as equities, commodities, high-yield bonds, real estate and currencies.
Market liquidity | Wikipedia.org: "In business, economics or investment, market liquidity is a market's ability to purchase or sell an asset without causing drastic change in the asset's price. Equivalently, an asset's market liquidity (or simply "an asset's liquidity") describes the asset's ability to sell quickly without having to reduce its price to a significant degree. Liquidity is about how big the trade-off is between the speed of the sale and the price it can be sold for. In a liquid market, the trade-off is mild: selling quickly will not reduce the price much. In a relatively illiquid market, selling it quickly will require cutting its price by some amount. Money, or cash, is the most liquid asset, because it can be "sold" for goods and services instantly with no loss of value. There is no wait for a suitable buyer of the cash. There is no trade-off between speed and value. It can be used immediately to perform economic actions like buying, selling, or paying debt, meeting immediate wants and needs."
Fungibility | Wikipedia.org: "Fungibility is different from liquidity. A good is liquid if it can be easily exchanged for money or another different good. A good is fungible if one unit of the good is substantially equivalent to another unit of the same good of the same quality at the same time and place."
Market commentary and opinions expressed herein are personal views, not investment advice nor solicitations for business. See DISCLAIMER - TSE (Tokyo Stock Exchange) 09:00-11:30 | 12:30-15:00
- HKE (Hong Kong Stock Exchange) 09:30-16:00
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How to Read Financial News Redux: Process Determines Priorities & Understanding Consensus & Separate the Narrative from the Noise.
- The stock market is designed to transfer money from the active to the patient -- Warren Buffett.
- 40 Stock Market Terms That Every Beginner Should Know--visualcapitalist.com.
- Bloomberg TV US LIVE / Asia LIVE / Europe LIVE; Bloomberg Radio.
- SHCOMP - Shanghai Composite Index (Bloomberg) / SHANGHAI Composite (Google)
- SZSE Component Index (Google)
- NYSE: BRK.B Berkshire Hathaway Inc. Class B
SEC.gov | Company Search Page; see also Full Text Search (advanced)
SEC.gov | How Investigations Work - The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. Here the SEC is concerned primarily with promoting the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud. Crucial to the SEC's effectiveness in each of these areas is its enforcement authority. Each year the SEC brings hundreds of civil enforcement actions against individuals and companies for violation of the securities laws. Typical infractions include insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them. One of the major sources of information on which the SEC relies to bring enforcement action is investors themselves — another reason that educated and careful investors are so critical to the functioning of efficient markets. To help support investor education, the SEC offers the public a wealth of educational information on this Internet website, which also includes the EDGAR database of disclosure documents that public companies are required to file with the Commission.
SEC.gov | How Investigations Work - The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. Here the SEC is concerned primarily with promoting the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud. Crucial to the SEC's effectiveness in each of these areas is its enforcement authority. Each year the SEC brings hundreds of civil enforcement actions against individuals and companies for violation of the securities laws. Typical infractions include insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them. One of the major sources of information on which the SEC relies to bring enforcement action is investors themselves — another reason that educated and careful investors are so critical to the functioning of efficient markets. To help support investor education, the SEC offers the public a wealth of educational information on this Internet website, which also includes the EDGAR database of disclosure documents that public companies are required to file with the Commission.
Profits explained | Finance Decoded FT.com video: Jonathan Guthrie explains how companies calculate their profit, what investors should be wary of and the different measures used to gauge how a company is really performing (video published Feb 17, 2016).
Peter Lynch on investing:
Still following the market at age 71--(he has no plans to abandon the stock market for other leisure pursuits, “It’s a fun exercise, beats the hell out of golf" ... Lynch spends time calling companies, listening to earnings calls and reading transcripts)--investor Peter Lynch explains his philosophy this way: Use your specialized knowledge to home in on stocks you can analyze, study them and then decide if they’re worth owning. The best way to invest is to look at companies competing in the field where you work ... "If you’re in the steel industry and it ever turns around, you’ll see it before I do.” The popular-wisdom version of his ideology is mistakenly often cited as “invest in what you know,” which leaves out the role of serious fundamental stock research. “People buy a stock and they know nothing about it,” he says. “That’s gambling and it’s not good.” Lynch’s advice for small investors: Picking individual stocks is hard even for the professionals--"if you can’t understand the balance sheet, you probably shouldn’t own it.” Source: Peter Lynch, 25 Years Later: It’s Not Just ‘Invest in What You Know’ - WSJ Dec. 6, 2015
Where Markets Fail: Visible Hands | CFA Institute Enterprising Investor
Memos from Howard Marks
Shortcuts to Factor Investing 101 | blogs.cfainstitute.org: "Smart beta and factor investing are just fashionable marketing labels for a wide range of risk-based approaches that sit somewhere beyond active and passive investment management but possess attributes of both. In essence, smart beta and factor investing combine the disciplined rules-based approach of market-cap weighted passive funds with the discretionary selection of whichever chosen factors or index series those who use them hope to replicate."
See also on Domain Mondo: Investing, Jack Bogle, Warren Buffett, S&P 500 Index, US, China
Where Markets Fail: Visible Hands | CFA Institute Enterprising Investor
Memos from Howard Marks
Shortcuts to Factor Investing 101 | blogs.cfainstitute.org: "Smart beta and factor investing are just fashionable marketing labels for a wide range of risk-based approaches that sit somewhere beyond active and passive investment management but possess attributes of both. In essence, smart beta and factor investing combine the disciplined rules-based approach of market-cap weighted passive funds with the discretionary selection of whichever chosen factors or index series those who use them hope to replicate."
Common Terms: Infographic: Here's 40 Stock Market Terms That Every Beginner Should Know | visualcapitalist.com
Operating Profits
"The basis for all sustainable shareholder returns is operating profits, not, repeat NOT revenue. Profit is the source of all future dividends, it is the basis for increased book value via retained earnings. The art of investing involves buying future levels of profitability at a significantly low price to make the whole venture worthwhile. Thus, one of the first things we look at when considering an investment is the level of operating profits the firm manages to generate relative to the capital provided by owners and creditors ..."--Web.com And The Problem With Growth Investing | Seeking Alpha, Nov 8, 2015.
"Accounting games are also making the profits reported by companies much less trustworthy which, in turn, means P/E ratios are even more out of whack. Ciesielski, who writes The Analyst’s Accounting Observer ... [says] accounting manipulation has become very widespread and companies are using gimmicks to make profits look better. Company executives ...“all have a huge incentive to puff their numbers”... much of their compensation [is] tied to their stock’s performance. ... companies used to report profits according to Generally Accepted Accounting Principles — called GAAP for short. That meant all companies had to follow certain rules so that investors were able to compare apples to apples ... companies are now using creative accounting. GAAP has fallen between the cracks. The use of so-called “extraordinary items” and “non-cash charges” has made corporate earnings reports incomprehensible. “Non-GAAP earnings are more akin to anarchy,” says Ciesielski. ... How many companies are pulling these accounting tricks? Ciesielski says that, in 2009, 232 of the 500 companies in the S&P index were using tricks — thus straying from GAAP. Last year, 334 companies were doing so. Hundreds of billions in extra corporate profits were being reported simply by razzle-dazzle. It’s not that profits were actually higher — they were just made to look so." source: The secret stock market accounting trick | New York Post
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization - essentially net income with interest, taxes, depreciation, and amortization added. Often used to analyze and compare profitability between companies and industries, minimizing effects of financing and accounting decisions.
"Accounting games are also making the profits reported by companies much less trustworthy which, in turn, means P/E ratios are even more out of whack. Ciesielski, who writes The Analyst’s Accounting Observer ... [says] accounting manipulation has become very widespread and companies are using gimmicks to make profits look better. Company executives ...“all have a huge incentive to puff their numbers”... much of their compensation [is] tied to their stock’s performance. ... companies used to report profits according to Generally Accepted Accounting Principles — called GAAP for short. That meant all companies had to follow certain rules so that investors were able to compare apples to apples ... companies are now using creative accounting. GAAP has fallen between the cracks. The use of so-called “extraordinary items” and “non-cash charges” has made corporate earnings reports incomprehensible. “Non-GAAP earnings are more akin to anarchy,” says Ciesielski. ... How many companies are pulling these accounting tricks? Ciesielski says that, in 2009, 232 of the 500 companies in the S&P index were using tricks — thus straying from GAAP. Last year, 334 companies were doing so. Hundreds of billions in extra corporate profits were being reported simply by razzle-dazzle. It’s not that profits were actually higher — they were just made to look so." source: The secret stock market accounting trick | New York Post
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization - essentially net income with interest, taxes, depreciation, and amortization added. Often used to analyze and compare profitability between companies and industries, minimizing effects of financing and accounting decisions.
Revenue is the income (before deducting expenses) that a business has from its normal business activities, usually from the sale of goods and services to customers. Revenue is also referred to as sales or turnover. Profits or net income generally imply total revenue minus total expenses in a given period. Source: Wikipedia
Risk Assets generally refer to assets that have a significant degree of price volatility, such as equities, commodities, high-yield bonds, real estate and currencies.
Market liquidity | Wikipedia.org: "In business, economics or investment, market liquidity is a market's ability to purchase or sell an asset without causing drastic change in the asset's price. Equivalently, an asset's market liquidity (or simply "an asset's liquidity") describes the asset's ability to sell quickly without having to reduce its price to a significant degree. Liquidity is about how big the trade-off is between the speed of the sale and the price it can be sold for. In a liquid market, the trade-off is mild: selling quickly will not reduce the price much. In a relatively illiquid market, selling it quickly will require cutting its price by some amount. Money, or cash, is the most liquid asset, because it can be "sold" for goods and services instantly with no loss of value. There is no wait for a suitable buyer of the cash. There is no trade-off between speed and value. It can be used immediately to perform economic actions like buying, selling, or paying debt, meeting immediate wants and needs."
Fungibility | Wikipedia.org: "Fungibility is different from liquidity. A good is liquid if it can be easily exchanged for money or another different good. A good is fungible if one unit of the good is substantially equivalent to another unit of the same good of the same quality at the same time and place."
- Prior entries in archive: Markets & Stocks Archive (pdf).
