Travel to Financial Success

One style of investment approach for a hedge fund manager is to find and profit from tax-loss losers during November and December and riding them through January . Tax Loss Selling Tax loss selling takes many poorly performing stocks to even more extreme lows nearly every year during the late fall: Mutual funds    must realize such losses by October 31 st   Others  have until December 31 st However, in many cases these stocks represent business under significant duress . Aside from a moderate January bump as selling pressure is alleviated and as stockholders once again buy into these stocks, one would not expect such despised stocks to truly reflect, in short-run, any realization of longer-term or hidden value . Figure 1.  After tax-loss selling in December, S&P500 recovered a bit in January. But, it fell even deeper in March (Source: Yahoo Finance) Caveats During bear markets, sometimes stocks bought amidst the vicious sell-off of mid-December were no ma...

Figure 1.  Percent of 10-Yield Curve Inverted (Courtesy: Real Investment Advice ) The inversion of the yield curve is typically seen to herald a recession , as investors switch money to longer-term bonds due to pessimism over the economic outlook. Those fears are growing as policy makers around the world pledge further monetary tightening to tame rising consumer prices. When the number of  inverted yield curves  exceeds 60%,  as it is today (i.e., Nov 2022),  a recession in the US is coming soon (see  Figure 1 ). History shows us that the Fed  hasn’t been able to conclude its hiking cycle  any time  before inflation-adjusted policy rates reached a full 200 basis points.  For the record, that rate is now (i.e., on 11/25/2022) -90 basis points. [48] Video 1.   Possibility of a Soft Landing (YouTube  link ) Recession Watch Over the weekend of 12/03/2022, Bloomberg commented that: Fed staff have put chances of a recession at...

Figure 1. 3 Parts of a Cash Flow (CF) statement Based on @MnkeDaniel , a Cash Flow (CF) Statement is divided into three parts: [3] CF from Operating Activities CF from Investing Activities CF from Financing Activities Figure 2. Free cashflow to equity vs. free cashflow to the firm Free Cash Flow (FCF) Professor Aswath Damodaran believes that Free Cash Flow (FCF) is one of the most dangerous terms in finance. In [1], he tries to clarify what free cash flows are trying to measure, how they get used in investing and valuation, and the measurement questions that can cause measurement divergences. Professor believes that any measurement of free cash flow has to begin with a definition of to whom those cash flows accrue: [1] Since a business can raise capital from owners (equity) and lenders (debt) , the free cash flows that you compute can be to just the equity investors in the business, in which case it is free cash flow to equity, or to all capital providers in the business, as free...

Metals needed by green technology to replace fossil fuels On Twitter, @BrianGitt had shared the below comments: [1] The world doesn’t have enough mines operating or planned to replace fossil fuels with wind turbines, solar panels, & battery tech. Opening a new mine takes 16 years on average according to  @IEA . Based on a study from S&P Global, it also concludes that: [3] Copper demand will double by 2035 and continue to grow thereafter. On the supply side, it finds how challenging that will be, whether on the basis of current trends or with an unprecedented acceleration of supply from mining and recycling. Finally, according to researcher Benchmark Mineral Intelligence , the world will need: [5] Nearly 60 new lithium mines and plants to feed the growing demand for the shift away from fossil fuels. References Is There Enough Metal to Replace Oil? The problem with lithium is that it’s extremely difficult to recover , American Lithium CEO says The Future of Copper Will the...

Video 1.  What to Expect in 2023 - Stanley Druckenmiller's Market Prediction (YouTube link )  What Stock Market Happened in 2000? During June 2022 interview at Sohn Investment Conference, Stan Druckenmiller describes how after FOMOing into equities near March 2000 peak, he quickly lost ~$2-3 billion and went on multi-month vacation.   Figure 1.  S&P 500 price from 1996 to 2009 (Courtesy: Yahoo Finance) Upon his Sep 2000 return, in Druckenmiller's words: "I open newspaper and can't believe it. NASDAQ has recovered like 70-80% of losses and S&P 500 is almost back to its highs.  But oil, interest rates, & dollar are up ...this has always been terrible for earnings looking forward. " In the interview, Druckenmiller proceeds to describe how he bought Treasuries and made 40% in Q4 2000 betting that the US would go into a recession . After the above history shared by  @MessinaLadder , he had commented that: My bet is that while the periods are ...

Methodology  Moneywise.com combined each state's retirement rankings from WalletHub, MoneyRates and The Motley Fool to create scores out of a possible 150 and make sure you know not to end up in the rotisserie-level heat of Nevada. Factors like cost of living , availability of health care and the local lifestyle can make or break the place where you choose to settle down. Every year, new data is released on which states are best for retirees that take these factors into consideration. The Worst States for Retirement The higher the score ,  the lower the state ranks as a retirement destination . Washington (Score: 136) Alaska (133) Nevada (123) Texas (121) Louisiana (118) New York (115) California (113) Illinois (111) Hawaii (110) New Mexico (110) Tennessee (108) Georgia (108) Maryland (100) New Jersey (99) Oklahoma (96) Oregon (94) Colorado (93) Massachusetts (90) Arizona (80) Arkansas (78) North Carolina (77) Michigan (76) South Dakota (75) Mississippi (69) Minnesota (68) ...

A yield curve inverts when long-term interest rates drop below short-term rates, indicating that investors are moving money away from short-term bonds and into long-term ones. This suggests that the market as a whole is becoming more pessimistic about the economic prospects for the near future . When looking at inverted yield curve, it can be any pair of long-term interest rates and short-term interest rates. In this article, we will look at the inverted yield curve between 10-year and 2-year treasury bond yields . Figure 1.  SPY Monthly Chart (Courtesy: stockcharts.com) Inverted Yield Curve Precedes the Recession The Fed's ongoing rate hiking will eventually trigger the next recession. Historically, an inverted yield curve - the difference between 10-year and 2-year bond yields - has been one of the single-best leading indicators of an impending downturn . Figure 2. Inverted Yield Curve Precedes the Recession The Slope of the Yield Curve Conceptually, the slope of the yield c...

Figure 1.  Danaher ( $DHR ) On Twitter, @QCompounding had shared the below 20 quality stocks for your investment consideration. Company Name Business Description S&P Global S&P Global provides clients with financial information services (credit ratings, benchmarks, ...) in the capital and commodity markets. ASML ASML is a monopolistic player in semiconductor chip machines through lithography. Over the next years, demand for semiconductors will explode.  Novo Nordisk Novo Nordisk is active in diabetes treatment. More and more people will suffer from diabetes due to our aging population and obesity. Mastercard Together with Visa, Mastercard dominates the attractive market of financial transaction processing. Microsoft Everyone knows Microsoft and you will probably use it daily. Microsoft has a very wide moat in software applications and cloud storage. Blackrock Do you own an ETF from iShar...