A selloff in the final trading minutes of the year pushed stocks into the red for the shortened holiday week. Technology stocks lagged for the week, led by Apple after some analysts suggested demand for the iPhone X was lower than expected and there was backlash against throttling performance of older phones. The market’s muted reaction in the first full week of trading after the passage of the tax bill suggests most of the benefits were widely expected and are likely already baked into prices. Weekly Returns S&P 500: 2,674 (-0.3%) FTSE All-World ex-US: (+0.6%) US 10 Year Treasury Yield: 2.41% (-0.07%) Gold: $1,303 (+2.2%) EUR/USD: $1....
With the New Year approaching, maybe it’s time to consider a new approach to investing. Unlike most forms of portfolio construction, Portfolio Armor’s hedged portfolio method eschews diversification. It looks radical at first glance: instead of allocating your investor’s assets among dozens of individual securities, you put their money in up to 8 names, some of which may even belong to the same sector. In a nutshell, you buy and hedge a handful of securities that have high potential returns net of their hedging costs. Easier Said Than Done The first step here is to find alpha, which is difficult enough, without other conditi...
While stock volatility remains at record zombified lows, few can keep their eyes off the unprecedented daily moves in the cryptocurrency space in general, and bitcoin in particular, where 30d realized volatility is in the mid-90%’s, implying a daily move of nearly 6%. In fact, as we showed last week, the only asset/commodity that is more volatile than bitcoin is electricity. Which explains why the dominant slogan of the crypto community is not just “Hodl”, but “Hodl” on for dear life. But what happens if and when volatility returns to equities, though perhaps not with the same intensity as the daily moves in Cry...
Financial and political power are two sides of one coin. We all know the rich are getting richer, and the super-rich are getting super-richer. This reality is illustrated in the chart of income gains, the vast majority of which have flowed to the top .01%–not the top 1%, or the top .1% — to the very tippy top of the wealth-power pyramid: Though all sorts of reasons have been offered to explain this trend–I’ve described the mechanisms of financialization here for years–two that don’t attract much mainstream media attention are money laundering and control fraud, i.e. changing the rules of what’s le...
While the cap-weighted S&P 500 gained 19.42% on the year, the average stock in the index was up less than that at just over 18%. There were exactly 50 stocks in the S&P that gained more than 50% on the year, and there were only 3 that gained more than 100%. We were a bit surprised that only three stocks posted triple-digit returns given the year that markets had. We were even more surprised to see a Utilities stock at the top of the best performers list! That’s right — NRG Energy (NRG) was the top performing stock in the S&P 500 in 2017 with a gain of 132.3%.The other two triple-digit gainers were Align Tech (ALGN), and Ve...