Category: Charts/Essays/Reports

The flow of money tells us investor’s risk appetite. When more money flows into safe, large caps that have long track records, it’s a sign investors are looking for safety. They’re less concerned with making money and more concerned with not losing. When money flows into riskier small caps that have much higher upside, but […]

Rates are going up, perhaps slowly, but still going up. Lower rates didn’t help the general public, but they definitely helped corporate America.

Just as a healthy, “risk-on” market sees money flowing to small cap stocks, money also flows from safe-havens to less proven companies that have greater upside potential. A quick glance at the leader and loser board each week tells us where money is flowing.

Most middle class people have the bulk of their net worth tied up in a house. It’s not a great investment – more like a forced savings program – but considering how bad people are at saving, home ownership carries more positives than negatives.

Reminiscent of the dot com bubble days, the percentage of IPOs that are currently unprofitable is at its highest level since 2007. During good times, this gets ignored, but if the market/economy weakens, flight to safety rotates money out of these stocks.

Margin debt is dollar value of stocks held above and beyond the value of a portfolio. So if a $100K portfolio has $110K of stock, it’s said the investor is $10K on margin.

The US has a consumption-based economy – it desperately depends on people buying stuff. When inventories build, either companies are way too optimistic predicting demand or demand is weaker than it normally is.

Nobody likes runaway inflation, but its equal-and-opposite cousin, deflation, is pretty bad too – just ask those who lived through the Depression.

Junk bonds are bonds issued by companies that have low credit ratings. There is less confidence the company will make their payments, so they have to offer them at a higher rate.

Going back to the middle of 2014, the dollar has been very strong.