Category: Macro/Econ

This is the craziest market I’ve ever seen. The pandemic somehow turned a bunch of people into day traders.  At first they were buying beaten-down airline and cruise stocks. Now they’ve moved on to buying shares of companies that have filed for bankruptcy. Hertz, JC Penney, Pier 1, Chesapeake Energy and GNC have all filed for bankruptcy recently but have seen massive price swings over the past week: Granted,...

The post Some Things About the Markets That Will Never Change appeared first on A Wealth of Common Sense.

In the state of Texas, hospitalizations for the virus are up 42% since Memorial Day. The state of Arizona just issued a warning that they’re getting close to full capacity in their hospitals. Many states that have reopened are experiencing surges of cases and deaths, along similar trajectories of the spikes seen in the early days for New York, New Jersey, California, Michigan, etc. And while this uptick in cases hi...

The post Ten reasons the “second wave” hasn’t spooked the markets (yet) appeared first on The Reformed Broker.

He sounds like a student of Buffett. Is that true? I only read the most recent letter. Good material! Thanks, John!

The Federal Reserve made it clear today that rates aren’t going anywhere anytime soon and that the current “stabilization” aka quantitative easing measures now in place for the bond and cash markets are also not going away. They did acknowledge that conditions have improved (aka, stocks went back up). Here’s Peter Boockvar: Both the bond market and the stock market are picking up on the fact that ...

The post Rates appeared first on The Reformed Broker.

The weekend of March 21-22, I wrote about the performance dispersion among S&P 500 companies using the following chart: At that time there were 156 companies down 40% or more in 2020 alone. Eighty-six stocks were down at least 50% and 40 companies had fallen 70% or worse less than 3 months into the year. What a difference a few months makes. Here’s the updated performance chart broken out by return buckets as o...

The post Backtests vs. Real Life in the Markets appeared first on A Wealth of Common Sense.

This week’s Animal Spirits with Michael & Ben is supported by YCharts: Mention Animal Spirits and receive 20% off your subscription price when you initially sign up for the service. We discuss: The biggest 50-day rally in stock market history The fastest stock market ever How far the market has come since March Why people underestimated the Fed Why were so many people wrong about the May jobs report? Getting hu...

The post Animal Spirits: Stock Market Euphoria appeared first on A Wealth of Common Sense.

Over time stocks fall in and out of favor with the media, analysts and investors. It is too easy to fall in love with a stock only to have your heart, and brokerage account, broken. As an investor that takes a value approach to selecting the best dividend growth stocks, I tend to focus on fundamentals with a heavy dose of analysis. It may be surprising but even this approach will favor certain

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Hanover Foods is a name that is familiar to Oddball investors. We have covered this one four times on this blog (in 2012 twice and in 2013 and 2016). It has also been written about on Corner of Berkshire and Fairfax, Credit Bubble Stocks (twice), and other blogs.

Hanover A shares traded as low as $55 in March and are currently $68, which is where they traded as long ago as 2003. Back then, with about 1.07 million A and B shares outstanding, the market capitalization was $73 million. Now with only 715k A and B shares the market capitalization is down to $49 million.

Shareholder equity then was $95 million. Now, as you'll see below, it is $242 million! Current assets net of all liabilities was only $13.6 million. Now it's $126 million. (So, the price to book is now 0.2x and the price to NCAV is 0.39x.)

Part of the problem is that earnings have declined. In the 2003 fiscal year, Hanover earned $9.8 million on $290 million of sales. In fiscal 2019, earnings were only $2.6 million on $395 million of sales.

The 1% return on equity translates into a 5% earnings yield thanks to the 80% discount to book value.

Will Hanover ever return to greatness? We will be writing about some ideas in the upcoming Issue of the Oddball Stocks Newsletter.

The market gods may strike me down with a bolt of lightning for this one but here goes: 1. New all-time highs in the Nasdaq 100. Technology stocks are once again at all-time highs. Here’s something you may not know — the Nasdaq 100 Index now has 19 new all-time highs in 2020 alone. Most of those took place before the crash but here we are again. From a total return perspective, the S&P 500 is just 4% off...

The post 5 Signs This Might Be a New Bull Market appeared first on A Wealth of Common Sense.

Gregg S. Fisher noted in a 2009 Forbes article that the assumption that investors are rational agents is bunk. He went on to say "We are not rational. We’re human. Even the most brilliant investor can be swayed by emotions into making irrational decisions that result in financial loss." Logic has very little to do with short-term movements in stock prices. Knowing this, there are some things that

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