The Independent Market Observer

A Preview of the Jobs Report

May 31, 2018

Much of the economic data suggests that the slowdown in the first quarter is passing—this morning’s personal spending report is a good example. But, as always, what matters most for the economy is jobs.

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Is “Italeave” Greece 2.0?

May 30, 2018

First, there was “Grexit,” which was the name given to the possibility that Greece would leave the eurozone. Then, there was “Brexit,” the plan for the U.K.’s exit from the European Union, which is actually happening (at least potentially). Now, we have “Italeave,” which I think sounds better than the other contender, “Italexit.” So what’s going on with Italy?

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Monday Update: Housing Slow, Investment Rising

May 29, 2018

Last week was a slow one for economic news, but the releases we did see were important. This week, we will get a broad look at the economy.

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Memorial Day Reflections 2018

May 25, 2018

As we head into the Memorial Day weekend, I would like to take a moment to honor members of the U.S. military for their service and their sacrifice. I wrote the following post in 2015, although the sentiment remains true today.

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Investing Is Hard

May 24, 2018

After last week’s posts on how I invest, I have been talking with a number of people, in person and online, about how they approach investing. It has been a very interesting and educational week, and I have come out from it with one conclusion: investing is hard.

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Indices: Market-Cap Weighting and Beyond

May 23, 2018

We closed yesterday’s post on passive investing with the observation that while market-capitalization-weighted indices (i.e., stock indices that include stocks based on how much the company is worth) have certain biases baked in, other indices have their own—but different—biases. There really is no perfect solution, and you just have to be aware of the bets you are making. That is what we will talk about today.

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Different Ways to Be a Passive Investor

May 22, 2018

After last week’s series about how I invest, a reader raised an excellent point with respect to passive investing. With all of the flows into passive strategies—pushing many stocks higher without regard to their individual merits—is it a safe time to go passive?

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Monday Update: Growth Rebound Continues

May 21, 2018

Last week's economic news was all about whether there are signs of a rebound after a weak first quarter. This week will be a slow one, but the releases we will see are important.

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How I Plan to Invest

May 18, 2018

After going through my investment thought processes over the past couple of days, today I am going to outline—in general—what I actually plan to do with my excess cash. So, let’s revisit some of the ideas we’ve talked about this week.

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Appearance on CNBC's Power Lunch, May 17, 2018 [Video]

May 18, 2018

On Thursday, I appeared on CNBC's Power Lunch to discuss the current state of the market, rising rates, and investor skepticism. Overall, things are good, so how much better can they get? Listen in to learn more.

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Where Can We Beat the Market?

May 17, 2018

We closed yesterday’s post on whether markets are efficient with the conclusion that it could be possible to beat the market. But, to do so, we would need either better information or to view things differently—specifically referencing time horizons as one way to do that. Let’s start with a couple of areas where better information is a real possibility. Then, we’ll take a deeper look at the second idea, which is both more subtle and more interesting.

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Are Markets Efficient?

May 16, 2018

We closed yesterday’s post on how to invest with the question of whether markets were efficient—and what that would mean for how we invest. A foundational assumption of most investment theories is that markets are efficient, which is to say that all information is reflected in an asset’s price. If this holds true, then it shouldn’t be possible to beat the market because—by definition—everything that could affect prices is already accounted for.

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Thoughts on How to Invest

May 15, 2018

Given what I do all day, you might imagine I have this investing thing all figured out. In fact, I probably wrestle with it more than most people. Part of what I do is think about many different types of investments and strategies. With all of those options in my head, it can be hard to make decisions about what is best, for me, at any given time and situation. Right now, for instance, I am in the process of putting what is (for me) a largish amount of cash to work. Do I buy in, despite my concerns about valuations? Do I wait and forgo any interim returns? If I decide to buy in, what should I buy?

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Monday Update: Inflation Pulls Back

May 14, 2018

Last week was largely focused on prices, although we got a look at consumer confidence. This week, we’ll be watching the economic data to see whether earlier signs of a slowdown are passing.

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A Longer-Term Look at Oil

May 11, 2018

After writing yesterday’s post on the price of oil, I thought it might be useful to take a longer-term look at the behavior of oil. I think this will provide some context to yesterday’s discussion, as well as to future developments. To start, let’s look at the price history over the past 30 years.

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The Price of Oil: Is It Time to Worry?

May 10, 2018

Oil has been in the news quite a bit recently. Prices have risen to multiyear highs, and the recent decision by the U.S. to reimpose sanctions on Iran has rattled markets even further. We know that oil prices are a key risk indicator for the economy, but is it time to start worrying? Plus, what do higher oil prices mean—if anything—for the financial markets?

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A Look Back at the Markets in April and Ahead to May

May 9, 2018

As we start moving further into May, I think it’s a good time to take a look back at April’s economic news, plus what to expect in the month ahead.

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Monthly Market Risk Update: May 2018

May 8, 2018

Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. So, what do these risks look like for May? Let’s take a closer look at the numbers.

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Monday Update: Growth Strong But Slowing

May 7, 2018

Last week was an extremely busy one for economic news, which gave us a look at all major sectors and concluded with the all-important employment report. Overall, while the economic statistics remain quite positive, there are signs of slowing. This week, the main focus will be on prices, plus we’ll get a look at consumer confidence.

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Economic Risk Factor Update: May 2018

May 4, 2018

April’s data continued to be solid overall. Job growth recovered and March’s weak report was revised upward significantly, easing one concern. Consumer confidence also bounced back a bit. More worrying is that business confidence moved further off the high, although this would be a change in trend rather than an immediate concern. Fed policy continues to be stimulative, which is helpful, despite the recent rate increase. Overall, the economic data indicates that growth continues, although it may have peaked.

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The National Debt and the Deficit: A Solvable Problem?

May 3, 2018

A reader asked the other day, simply, whether I was worried about the debt. As I was considering a response, I realized it was going to be a long one and that I had not written about this issue for quite a while. So, here we are.

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Will Quantitative Tightening Sink the Market?

May 2, 2018

As we move away from the financial crisis and as policies normalize, it is a good time to take a look at what the removal of those policies might mean. After all, many of the actions taken in the aftermath of the crisis were explicitly designed to do certain things. If those actions were successful, then presumably their reversal would have the opposite effect.

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Market Thoughts for May 2018 [Video]

May 1, 2018

April was a good month, as both U.S. and developed markets were up. This news was encouraging, indicating that the economy seems to be bouncing back after two down months. In fact, the fundamentals are quite strong, with company earnings surprising to the upside to a degree we have never seen before. Plus, sales beat expectations, which is a positive reflection of the markets and the economy.

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