Bill Gross Warns Investors to Preserve Capital

Under current conditions, warns bond guru Bill Gross, investors would be well served to focus more on preserving capital than earning high returns, according to a recent CNBC article. Given the huge amount of debt on our country’s books (upwards of $65 trillion), Gross says, “Our highly levered financial system is like a truckload of nitroglycerin on a bumpy road.” Manager of the $1.9 billion Janus Unconstrained Bond Fund, Gross feels that the Fed has held things steady so far, but has to be careful not to raise rates so much that the cost of capital becomes prohibitive but enough […]

Veteran Economist Suggests Trump Rally Caution

Contrarian economist David Rosenberg, chief economist and strategist at Toronto-based Gluskin Sheff & Associates, offers market insights in a recent interview with Barron’s. Here are some highlights: View on U.S. economy: “We’re going to average close to 2% real GDP growth this year, well below consensus.” Rosenberg doesn’t think the economy will “break out to the upside,” saying that there will be offsets to proposed tax relief, deregulation and capital repatriation including potential trade tariffs and protectionism. Aging baby boomers: “It doesn’t get a lot of press” says Rosenberg, “but it is extremely important.” He says there will be 1.5 […]

The Trump Rally, Market Timing and Picks

The post-election surge in stocks underscores the risk inherent in trying to time the market. In a recent article for TheStreet, Validea CEO John Reese discusses how investors, by “falling victim to elections, emotions or headlines” can miss out on returns. The goal, he argues, should be to invest in fundamentally sound businesses and avoid “jumping in and out of the market due to knee-jerk, emotional reactions.” Using his guru-based stock screening models, Reese identifies the following five picks: Fujifilm Holdings (FUJIY) develops, produces, sells and services document, imaging and information solutions. The company’s robust top line and strong liquidity […]

Does the Market Trust Trump?

“Reading market movements—such as the steep rise in stock prices in the early post-election days as well as the subsequent ups and downs—requires a Rosetta stone,” writes Harvard economics professor Sendhil Mullainathan in a recent New York Times article. An increase in stock prices, he writes, “signals an expected increase in future profits” for investors, but even those who do not own stocks can become more optimistic since in a well-functioning market the interests of companies and consumers track each other. On the other hand, the professor writes, “the stock market can be a poor scoreboard for the economy. Sometimes […]

The Trump Victory and the Small-Cap Reversal

While over the past ten years large-cap stocks have outperformed small-caps, the recent election upset caused a rally in the latter and added complexity to the relationship between the two. In a recent Forbes article, Validea CEO John Reese addresses implications related to this shift and offers the following small-cap picks: Sanderson Farms (SAFM) is a producer, processor, marketer and distributor of fresh and frozen chicken (market cap $1.94 billion) that earns high marks for its debt-free balance sheet, growth in earnings-per-share and liquidity. Smith & Wesson Holding (SWHC) manufactures firearms and accessories for the outdoor enthusiast (market cap $1.32 […]