Travel to Financial Success

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...

The Standard and Poors (S&P) Large Cap 500 Index ($SPX) lists the 500 largest “large-cap” stocks (stocks from major companies in various industries). What Is the Price-to-Earnings (P/E) Ratio? The price-to-earnings ratio is the ratio for valuing a company that measures its current share price relative to its earnings per share (EPS). The price-to-earnings ratio is also sometimes known as the price multiple or the earnings multiple. Figure 1.  SPX P/E Index (Source:  @CyclesFan ; Courtesy: stockcharts.com) SPX P/E Index On Twitter,  CyclesFan  had commented on the current SPX P/E level: The $SPX price earnings ratio is now at 18.64, a bit higher than it was at the June low. When it gets to ~16 where it was at the 2020 low it will start being attractive. If it drops to below 13, where it was at the 2011 low, it will become very attractive. If you look at Figure 2 , SPX P/E Index actually peaked in 03/2021 and SPX peaked only in 12/2021, which it had given u...

Figure 1.  This jet fuel price index provides the latest price data from the leading energy information provider  Platts . [1] Jet fuel can actually be used in cars, but only in diesel engines. Kerosene jet fuel  (including Jet A and Jet A-1, JP-5, and JP-8) and diesel are actually similar enough to allow for cross-functionality and would provide a similar performance. Although, experts wouldn't recommend running a jet on diesel. Why are jet fuel prices so high? Just as the crude supply shrinks, demand for fuels refined from it is growing. The worldwide return to airline travel has driven up demand for jet-A , but the booming freight and shipping markets are clamoring for diesel fuel . Limited supply means both industries are paying more for fuel. What is considered a distillate? Distillate is a term used to refer both to the atmospheric gasoil cut from atmospheric distillation, and to a range of light products ranging from kerosene to diesel. Generally, the distillat...

Warren Buffett on Economic Moats (Source: 2007 Berkshire Hathaway Shareholder Letter ) Figure 1.   ROIC  and Competitive Advantage (Courtesy:  @mjmauboussin ) A  company's moat  refers to its ability to maintain the  competitive advantages  that are expected to  help it fend off competition and maintain profitability into the future . Moat Investing Moat investing  is based on a simple concept:  Invest in companies  with  sustainable competitive advantages trading at attractive valuations . One of the first steps in implementing this approach is finding companies with a moat.   Earnings must be stable in order to determine valuation. Because valuation is about forecasting the future. When earnings fluctuate, especially when there is  no moat , your  valuation will be less reliable.  This means that companies in the early stage are tougher to value. Figure 2.  Moat Investing   What is the ...