Let’s say that as far back as you can remember, an eight-pack of a beer you like has cost around $17. But in the last few years, the price has soared, and now the same beer costs $31, even after adjusting for inflation. Questions come to mind: If the eight-pack has historically cost an average of $17, what makes it worth $31 today? Has the product changed? Are there more buyers? Fewer sellers? What’s going on here? I am, of…
I’m Richard E. Evans, investment author and analyst. My mission is to show you what hard evidence says is the most effective way to invest. In fact, it’s a way that typically outperforms Wall Street. By “outperform Wall Street,” I mean doing better than the fund jockeys who run actively managed funds, and the private wealth managers who select individual stocks and bonds. My focus is on long-term investors, not fast-buck traders. Along the way, I’ll comment on developing investment news. The Smartest Way to Invest…
Major media have been warning about a possible break in the bull market. The most pointed of these appears in the September, 2017, issue of Money magazine in an article entitled, “‘It’s Going to Collapse’ and Other Dire Warnings About Stocks.” The article consists mainly of interviews with five investment pundits and money managers. Headlines to the interviews tell the story: “It’s Going To Be Agonizing.” “It’s Going To Collapse.” “Asset Holders Will Lose 50%.” “All Markets Are Increasingly At…
To paraphrase a famous quotation, “The markets always do the right thing. Eventually.” We just don’t know when that will be, and therein lies a dilemma: Should investors keep riding the current bull market? Or should they put new invested money into something more conservative? In previous posts I offered some technical reasons for caution. Those reasons are still there. On August 4, the S&P 500 price/earnings ratio (P/E) stood at 24, a hefty 31 percent higher than its long-term average…
On one hand, unemployment has fallen to 4.3 percent, the lowest level in 16 years. That’s good. On the other hand, year-over-year wage growth has slackened to 2.5 percent, barely ahead of inflation. That’s bad. And despite full employment, people who lack in-demand skills find it hard to get a job. Government jobs have shrunk, and so have jobs in retail stores. On the other, other hand, stock prices have soared to record highs. The S&P 500 has reached 2,439, a gain of 8.9 percent for the year,…
In general, the stock markets are driven far more by earnings and the economy than by politics. But yesterday an event occurred in Washington that may be a sign of things to come: The Senate voted to uphold an Obama climate change regulation that limits the release of methane gas from oil and gas wells on public land. The vote was close: 51 to 49. But the regulation stands. What does this have to do with the stock markets? Not much…
Is the U.S. stock market too high? I’ve been concerned about this issue for several months. We had a small sell-off earlier in April, but that was offset by upward spikes later in the month. So I’m still concerned, partly because I tend to focus on “investing with comfort,” the title of my latest book. There are now at least three data-sets suggesting that the U.S. stock market has climbed to an unsustainable level: 1. The CAPE ratio: The initials stand for Cyclically Adjusted Price-Earnings ratio…