Biz Wax/Investing/Economy (BIE)
Feel free to add anything that has to do with the markets, business and investing. Show me the Money.
Part of the Computing fundamentals glossary:
Disruptive technology is a term coined by Harvard Business School professor Clayton M. Christensen to describe a new technology that unexpectedly displaces an established technology.
In his 1997 best-selling book, "The Innovator's Dilemma," Christensen separates new technology into two categories: sustaining and disruptive. Sustaining technology relies on incremental improvements to an already established technology. Disruptive technology lacks refinement, often has performance problems because it is new, appeals to a limited audience, and may not yet have a proven practical application. (Such was the case with Alexander Graham Bell's "electrical speech machine," which we now call the telephone.)
In his book, Christensen points out that large corporations are designed to work with sustaining technologies. They excel at knowing their market, staying close to their customers, and having a mechanism in place to develop existing technology. Conversely, they have trouble capitalizing on the potential efficiencies, cost-savings, or new marketing opportunities created by low-margin disruptive technologies. Using real-world examples to illustrate his point, Christensen demonstrates how it is not unusual for a big corporation to dismiss the value of a disruptive technology because it does not reinforce current company goals, only to be blindsided as the technology matures, gains a larger audience and marketshare and threatens the status quo.
got something for you...
VantageWire - is a website that was on Dragons Den and Keven O'Leary bought it,
it is interesting that they are the only website I have heard of that gives you live stock market quotes for free. No monthly fee, nothing, just free live quotes that are not delayed for 20 minutes like everyone else.
There are only 10 kinds of people in this world,
those that understand binary and those that don't.
sometimes I like to check stock quotes, getting live quotes for free is pretty nice.
There are only 10 kinds of people in this world,
those that understand binary and those that don't.
Why (regular) stocks could drop nearly 50% this year
2013 was an exceptionally strong year for stock investors. This year it's a different story. But we can almost guarantee that one group of 204 "irregular" stocks won't be part of the nail-biting volatility.
We don't normally pay much attention to the gloom-and-doomers of the market.
After 25 years in stocks and achieving a 1,477% return for our long-standing clients, we are usually upbeat when it comes to what's ahead. We focus on the fundamentals of the market and the health of the business we're buying into, not the newest hype or fad. Which is precisely why we can't ignore the current news.
Financial markets, still inflated on cheap money from central bankers, are trying to deny the reality on the ground.
On the earnings front, we are seeing a sea of nega*tive revenue surprises and weak guidance looking forward. Earnings expectations have been overwhelmingly negative for the past few quarters. For the first quarter of 2014, 88% of companies have issued negative guidance.
If there's been a traceable pattern to the U.S. stock market's biggest dips in recent years, including the latest swoon driven by turbulence in emerging markets, it is this: Sell-offs have coincided with periods when the Federal Reserve was ending or pulling back on its market-friendly stimulus programs.
Ever since the Fed began its unprecedented bond-buying program in late 2008, stocks have tended to go up when the central bank has been in the market supporting asset prices. In contrast, stocks have declined whenever the Fed has been out of the market or cutting back on its asset purchases.
The Markit U.S. Manufacturing Index is falling to lows seen during the 2012 growth scare that prompted the rollout of QE3 in the first place.
Almost 80% of the jobs created in the last five years are part-time jobs that won't pay the bills of an average middle class lifestyle.
Food stamp rolls are growing seventy-five times as fast as employment.
Without real growth to support the rising stock market, it's becoming significantly overvalued.
According to the Shiller P/E ratio, stocks are close to 50% overvalued. This market-measuring tool was popularized by Yale's Robert Shiller, who shared the Nobel Prize in Economics in October 2013 for showing that stock prices display some predictability over long periods of time.
The metric uses inflation-adjusted earnings per share over a trailing 10-year period. Right now it is suggesting that stocks are way too high by historical standards.
The Shiller P/E is at its highest levels since the dot-com era, even higher than Black Monday in 1987.
And the current market cap of the stock market is bigger than the gross national product of the U.S. for just the third time in history. The last time that happened was in 2007, just before the financial crisis.
What Happens When the Fed Finally Tapers Off Its Bond Buying?
Only one developed economy has tried this before.
That was Japan between 2001 and 2006. After Japan's stimulus program ended, Japanese stocks fell by 50% over the next two years.
Some analysts are already sounding the alarm on what a taper will mean to the stock market.
As reported by Business Insider, a new report from the global head of Société Générale's asset allocation team explained that the unwinding of easy money policies and broken politics in Washington will prompt today's market to unravel.
Others are predicting far worse:
Nomura Securities strategist Bob Janjuah is warning that over the final three quarters of this year and into 2015, there "could be a 25% to 50% sell-off in global stock markets."
Peter Schiff, known as "Dr. Doom" for his accurate predictions of the 2008 housing market collapse, warns that the United States' current fiscal policy could push the country over a "financial cliff."
Schiff, the president and CEO of Euro Pacific Capital, believes that U.S. fiscal policy is fundamentally weak due to the federal government's inability to limit spending, leading to massive debt and a lack of growth.
The question now is: How much longer can investors and the market ignore the signs that something is seriously wrong with the economy, and that it's starting to drag on corporate profits as well?
Seth Klarman, an American billionaire who founded the Baupost Group, a Boston-based private investment partnership, and the author of a book on value investing titled Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor, says the U.S. finan*cial system could collapse at any time: "If the economy is so fragile that the govern*ment cannot allow failure, then we are indeed close to collapse."
Most people understand that growing our national debt over the past 12 years from $6 trillion to $17 trillion is a prob*lem. They have an inkling that we're not on a healthy trajectory. They know that a society's wealth is not unlimited, and that if the economy is so fragile that the government cannot allow a bank or a corporation to fail, then we are indeed close to collapse.
We've all seen how easy it is for a mighty powerhouse like Lehman Brothers to evaporate in a matter of days.
If weak data continues to come in, Wall Street analysts will have no choice but to start issuing warnings to clients—creating a self-feeding cycle of selling and fear.
Even die-hard bull Warren Buffett recently sold more than a third of his stake in Johnson and Johnson, more than half of his stake in global snack maker Mondelez and his entire stake in Kraft foods. Buffett is on record as being very concerned about what the end of the Fed's QE program means for stocks.
Are these the warning signs before the fall? Are small investors about to see their invest*ment and retirement accounts crushed for the second time in five years?
The Real Economy Is in Trouble
Despite the stock market's new highs, clues to the real state of the economy are all around us.
The U.S. government has lost its triple-A credit rating... and the debt ceiling is becoming a constant problem.
50 million Americans get food aid, nearly 1/3 of the U.S. population.
According to the U.S. Census Bureau, 49% of all Americans live in a home that receives direct monetary benefits from the federal government. Back in 1983, less than a third did.
More than 146 million Americans are either "poor" or "low income." The poverty rate is the highest since the 1960s.
The labor participation rate is the lowest since 1979, at 63.3%.
There are nearly 11 million people on disability—more than the population of Greece.
How much more punishment can our economy take? The fiscal cliff scare and the government shutdown have already caused businesses to cut back on investment and hiring.
And they have prompted consumers to spend less, making a slow economic recovery even slower. Consumer spending has been flat since March.
Budget battles still dominate Congress, preventing Washington from doing anything constructive to actually help the economy.
And We're Not the Only Country in Trouble
The International Monetary Fund has cut its forecast for 2014 despite the continuation of massive fiscal and monetary stimulus by sovereign nations and central banks throughout the world.
According to the IMF, a slowdown in economic growth in major emerging markets—namely China, Russia, India and Mexico—is creating a drag on overall global economic expansion.
What the IMF does not elaborate on (but should) is this point: How much longer can major economies like the U.S. engage in unprecedented levels of monetary and fiscal stimulus that provides, at best, marginal levels of economic growth?
If all that public debt and money printing can accelerate our economy above stall speed, the next major financial crisis to hit will likely be beyond the powers of even the most creative Treasury Secretary or central banker to contain.
Another Perfect Storm?
Of course, no one knows for sure what will happen in the next few months, but conditions certainly seem to be right for a "perfect storm" to develop.
For example, credit default swaps are soaring, just as we saw during the last financial crisis. Insurance on the debt of major European banks has hit historic levels... even higher than when Lehman Brothers collapsed five years ago.
Gold has been trending lower for two years now, and some are pointing to the move as a possible flashpoint for a broader economic and market shock, comparable to the collapse of hedge fund Long-Term Capital Management in 1998… and even the global financial crisis a decade later. Both events were preceded by sharp drops in gold.
According to PIMCO's Bill Gross, who oversees $2 trillion in assets, the weakness in gold and commodities is "signaling concerns about global growth. Commodities have been sending the signal on growth for a while, and now even louder."
Robert Wiedemer, one of the few economists to alert investors before the crash of 2008, is warning that something even worse is coming next. He is predicting 50% unemployment, a 90% drop in stocks and 100% inflation.
David Dittman, Chief Investment Strategist
It seems everyone is waiting for a CORRECTION. It will happen one day. I believe there is a LOT of money on the sideline waiting to buy. There is a lot of money out there period. I believe a correction will be short lived. Gold is going down and is a sign that the world is not falling apart. The usual ebb and flow (turmoil).
Some of the predictions will come true. Many will not but the ones that do come true often make gurus of those that did predict correctly...ie the Joe Granvilles of the world. Where is Joe today? Also...we easily forget.
What Will Happen When the Dollar Collapses?
Note...When not if. Only for readers with a strong stomach.
Read This Before You Buy Any More Stocks!
Iain Butler | June 28, 2014--The Motley Fool
Dear Fellow Investor,
It’s no secret that stock markets around the world have had a tremendous run over the past five years. This is common knowledge. However, we’re concerned that this bull market has now become more of a rodeo ride. As investors continue to pile into this potentially dangerous “Bull Trap,” we think that the smart money is going in a completely different direction. In our mind, there are only a handful of companies that are going to make really big gains this year, and if you read on through this special weekend edition of Take Stock, we’ll let you in on who we think they might be.
Calm waters, for now
Believe it or not, all is well in Canada:
House prices are rising, unemployment is steady, interest rates are near a generational low, and the Canadian dollar is holding its own.
News like this is common around the world. It's what has driven global markets to new heights over the last 12 months … the NASDAQ is up 29.5%… the S&P 500 is up almost 22%... while here in Canada, the S&P/TSX Composite has jumped 25.7% in the last year.
Hungry for some of the action, investors have been returning to the markets en masse, looking for juicy dividends and solid capital returns. With interest rates so low, who can blame them?
And there's good reason, too. Though there was a bit of slippage at the beginning of 2014, the Canadian market has recently eclipsed its all-time high. The bull market that we’ve been in since 2009 lives.
A lot of money has been made, and I'm certain there's more to come… if you know where to look.
In a moment I'll show you THREE companies that I believe could profit substantially from a rejuvenated bull market … and handsomely reward those who invest now.
Put simply, I think these 3 companies could be some of the best investments you make in the next decade.
But first I want to issue a warning.
Sorry if this makes you uncomfortable, or goes against what you expect us to say at The Motley Fool. After all, we're stock market investors. We believe investing in the stock market really is the very best way to grow your wealth. But the truth is…
You must beware of this unpredictable bull.
Soaring at these heights, the falls can really hurt. In early 2014, bad news from China’s slowing manufacturing sector and tapering of the U.S. stimulus hit us hard… the S&P/TSX Composite fell by close to 4% in just two weeks.
…and there might be more shocks to come.
There are deep fears the global economic recovery is built on a house of cards. Talk of debt and default are never far from the front pages… The end of quantitative easing in the U.S.… A horror budget… More bad news from China… And then there’s the escalating political situation in the Ukraine… and now, conflict in Iraq.
All of these threats could wreak havoc.
Make no mistake, we could be in for a bumpy ride ahead.
Going forward, there is no doubt there is money to be made, but it’s likely to be hard. In recent years it seems you could throw a dart and land on a stock that was set to rise (aside from the Materials space, of course!). Those days could be over.
I just don't think you can saddle up on any old company and ride this bull. In my mind, the months and years to come are more likely to resemble a rodeo, with inexperienced investors hurled from the saddle like rag dolls.
You see, what many people returning to the markets don't realize is…
The smart money is ALREADY ahead of you
As indicated, a lot of stocks have already jumped higher over the past year – aided by low interest rates. After all, who wants to be invested in term deposits?
Take Canada’s biggest airline as a perfect example. Air Canada’s (TSX: AC.B) shares are up a mouth-watering 256% over the past 12 months….
Or auto dealership consolidator AutoCanada (TSX: ACQ), which has shot up an astonishing 196% in the same period!
Then there are resource-oriented companies (yes, there have been some big returns even in this space) Parex Resources (TSX: PXT) and OceanaGold (TSX: OGC)… Shares in each have skyrocketed by 189% and 168%, respectively, in the past 12 months.
But here's the rub. Simply chasing after "big movers" like these in the hope of enjoying a repeat performance could result in some painful lessons — losing you a lot of money... very quickly.
Because after their recent run-ups, many of these companies could also be potentially overvalued.
Let’s drill down on those examples we just looked at:
Air Canada isn’t even profitable and carries a book value per share of -$7.03.
AutoCanada trades at a trailing P/E multiple of 45.
And Parex and OceanaGold trade at trailing P/E multiples of 108.6 and 265.4, respectively!
These figures are well in excess of the average trailing P/E of the S&P/TSX Composite index – which in itself is a rather lofty 31.6.
And when a company has a higher-than-average valuation, it usually means that the market is already expecting great things from the business... in fact a lot of the future growth expectations could already have been priced in to the stock.
Which means the mere sniff of a problem is likely to panic investors and send the lofty share price tumbling back... and if you bought in near the top, that could be one heck of a loss you're shouldering.
That's because the smart money is not going to flow into these puffed-up investments -- it's looking instead for the next big movers.... and they're not where ordinary investors might expect.
So the question is, where is that smart money heading next?
Even though the masses have run up, we believe there are still a number of tantalisingly undervalued shares in the marketplace right now. You just need to know where, and how to look.
These are companies that we consider to be strong, durable, and able to withstand much buffeting if the recovery falters.
But these are not the sort of investments anyone can pick out at random. There are special criteria that investors need to understand -- factors deep in the company's balance sheet, statement of cash flows, management, growth prospects, and revenues. These intricacies could make the difference between you riding this bull market -- or tumbling from the saddle spectacularly.
To make money in the next few years (and beyond), we believe careful stock selection is absolutely crucial.
Timing the market is a mug's game
Right now there are a lot of tipsters, pundits, and 'experts' claiming that financial Armageddon is around the corner. You've probably come across some of their terrifying sales pitches yourself.
Often they talk of time-bombs, economic shocks, and market meltdowns. They ask you to follow them into a particular 'safe haven' or abandon shares altogether for gold, bitcoin, or whatever the latest 'hot' trend is.
I don't blame you if you're tempted. Heck, I am too sometimes…
But be wary of anyone who claims to predict exactly what's going to happen to the economy... and when. They might as well be reading tea leaves.
It won't win me any friends to say this, but even the smartest pundits mostly get it wrong. There were very few people calling the market top in 2007 and even fewer calling the bottom in 2009.
Truth is, nobody really knows what's going to happen next.
Maybe the U.S. market will fail and the Canadian market will follow. Maybe the unemployment rate will rise. Maybe interest rates will lurch higher. Maybe our economy will take a nosedive. Maybe there WILL be a "financial apocalypse."
...Or something else awful could occur that nobody has foreseen.
Maybe, maybe, maybe...
Week ending July 25, 2014
Week ending July 25, 2014
Feels like nosebleed territory for TSX. I might take a little off the table before labour day. I feel a correction coming in Oct. Then again, what do I know. Feelings are neither right nor wrong.
How does that make you feel?