Over the past several days, we discussed 4 ways to identify market tops: macroeconomic indicators, interest rate raising cycles, valuation metrics and market sentiment. Here, on the 5th and last part of this series, we will analyse interest rate spreads and see what they tell us about the current market. 1. High Yield Spreads Rapidly rising[…]
In previous articles, we discussed ways to spot stock market tops. We already covered macroeconomic indicators, interest rate cycles and valuation metrics. Here we will cover market sentiment indicators and what they tells us about the current market. 1. Bulls vs Bears surveys One common way to assess market sentiment is through surveys which ask[…]
In previous articles, we discussed several ways to identify market tops. We already covered macroeconomic indicators and interest rate cycles. Here we will analyse valuation metrics and see what they tell us about the current stock market. Markets usually peak when there are significant signs of overvaluation. 1. Total market cap relative to GDP If we[…]
In previous articles, we discussed ways to spot stock market peaks. Here, we will show how interest rate increases by central banks usually precede market crashes. More specifically, we look at the relationship between the “federal funds rate”, which is set by the US central bank, and the S&P 500. Typically, the central bank raises[…]
In a previous article, we outlined 5 ways to spot market tops. In this article, we look at how macroeconomic indicators such as GDP growth, unemployment rate and consumer confidence, together, can be a useful guide to identifying dangerous economics conditions for a potential market top. 1. GDP growth Quite often, stock market tops coincide[…]
As Mark Twain famously said, even if history doesn’t repeat itself, it often rhymes. Admittedly, no two market tops are exactly alike, but they all have several elements in common. So, how do you spot impending market tops before they occur? To answer this question, our research team has conducted an analysis of economic conditions[…]
For the past 8 years, we’ve seen an almost uninterrupted increase in US stock prices. According to a note by Morgan Housel from Motley Fool, in the past 100 years there were only 4 periods that compare to this impressive run, and only one of them (in the 1920s) had a significantly better performance after 8[…]
The rally in commodity prices that started in 2016 has greatly benefited the Australian economy so far. Will it last? Data from the RBA shows how commodities bottomed in 2015/2016, and subsequently had one of the fastest gains in years. Source: RBA April 2017 Key Australian exports such as iron ore, thermal coal and cooking coal[…]
The latest NAB business survey was stronger than expected in March, revealing business confidence levels at decade highs. According to Mason Stevens research, the improvement was supported by positive changes in the services, mining and wholesale sectors, and was partly offset by an under-performing retail sector. Source: Mason Stevens Daily If we look at state data,[…]
On March 17, we presented Northern Dynasty Minerals as “A Second Chance at the Ultimate Trump Trade”. Last night, the stock jumped 31.88% after the state of Alaska approved a land-use permit that brings the mining project closer to development phase. The stock is up by almost 35% since we last recommended it.
Since the start of the year, large cap stocks have outperformed small cap stocks in both the US and the Australian markets. In the US, the Russell 2000. an index of small companies, has underperformed the S&P 500 and the Nasdaq by 4% and 8%, respectively. In Australia, the MSCI Australian Small Cap index has underperformed the ASX 200 by 3%. Here’s why.
Ever since comparable index data became available in 1988, emerging market stocks have outperformed world stocks by more than 3% per year. Of course, this came at a cost of higher volatility, but even if we consider a closer time period, the payoff of investing in emerging markets has been significant. Source: MSCI But how[…]