Travel to Financial Success

Can DAX take it? Based on The Market Year , it said that: You buy DAX for more than the China play, but DAX is a big China play, and the recent Yuan implosion is starting to look rather extreme. We agree with BofA's latest hedge logic for Europe, especially as the chemicals sector is very shaky . Divergency between DAX and $CNYUSD

Table 1.  Dogs of the Dow 2023 as of 05/31/2023 (credit: [2]) The Dogs of the Dow is an investment strategy that focuses on stocks that pay dividends. By investing evenly in the top 10 dividend-yielding stocks, the hope is that you'll eventually outperform the Dow Jones Industrial Average over the long term. [2] The Dogs of the Dow strategy is one where investors select the ten stocks that have the highest dividend yield from the stocks in the DoJones Industrial Index after the close of business on the last trading day of the year.   Once the ten stocks are determined, an investor invests an equal dollar amount in each of the ten stocks and holds them for the entire next year. The popularity of the strategy is its singular focus on dividend yield . This income/yield focus tends to lead to the Dow Dog strategy being a more value oriented one and the value style is out of favor in this year-to-date time frame (see Table 1). Similar Investment Strategies Dividend Aristocrats C...

On 11/18/2022, zerohedge.com reported that: The market's recent swings have become so violent so powerful and so unexpected leading to bone-crushing whiplash and a near record loss for trend-following CTA funds during last Thursday's CPI shock...   What's CTA? Even if they have commodity in their name (Commodity Trade Advisors), CTAs use futures strategies to profit from up and downs in price trends of regulated liquid markets. CTAs are often known as " Managed Futures Fund ". [1] Since the strategy is a  trending one , it is fair to say that it is a long gamma strategy. It does better as momentum builds. So volatility is good, but you need markets to trend in a direction for longer periods of time for the strategy to work. You can read [2] for more details. What's SG CTA Index?  The SG CTA Index is designed to track the largest 20 (by AUM) CTAs and be representative of the managed futures space. Managers must meet the following criteria: Must be open to new...

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...