Volatility is heating up. Triple-digit moves in the Dow Jones Industrial Average are now an almost everyday occurrence. The CBOE Volatility Index (VIX), popularly known as the stock market’s fear gauge, has been marching higher. The index, which uses options pricing to measure expected swings in the S&P 500, implies that investors expect more intense and frequent stock price swings in 2015.  The fear gauge hovered around 14 much of last year, its lowest average since 2006. It jumped to around 20 in the first two weeks of 2015, hitting a one-month high above 22 on January… Read More

Volatility is heating up. Triple-digit moves in the Dow Jones Industrial Average are now an almost everyday occurrence. The CBOE Volatility Index (VIX), popularly known as the stock market’s fear gauge, has been marching higher. The index, which uses options pricing to measure expected swings in the S&P 500, implies that investors expect more intense and frequent stock price swings in 2015.  The fear gauge hovered around 14 much of last year, its lowest average since 2006. It jumped to around 20 in the first two weeks of 2015, hitting a one-month high above 22 on January 15.  The Market Has Shown More Volatility This Year   Intraday swings — the difference between the highest and lowest levels during the trading day — are also greater. The S&P 500 saw swings of an average 29 points per day in January, or 1.4%, according to financial data firm FactSet. That puts 2015 on track for the widest swings in four years, since the index averaged swings 1.6% intraday in 2011. By comparison, the benchmark index in both 2013 and 2014 saw average intraday swings of about 0.9%. … Read More

StreetAuthority expert Jimmy Butts made a prescient forecast in October 2014 when he warned investors about the perils of initial public offerings (IPOs).   #-ad_banner-#To be sure, 2014 was a banner year for IPOs.   In his report, Jimmy laid bare the process by which Wall Street creates fervor for upcoming share issues through “road shows” and media hype.   Investors buy the newly issued shares from company insiders and underwriters and get left holding the bag when they are unable to find the proverbial “greater fool.”   Facebook, Inc. (Nasdaq: FB) is… Read More

StreetAuthority expert Jimmy Butts made a prescient forecast in October 2014 when he warned investors about the perils of initial public offerings (IPOs).   #-ad_banner-#To be sure, 2014 was a banner year for IPOs.   In his report, Jimmy laid bare the process by which Wall Street creates fervor for upcoming share issues through “road shows” and media hype.   Investors buy the newly issued shares from company insiders and underwriters and get left holding the bag when they are unable to find the proverbial “greater fool.”   Facebook, Inc. (Nasdaq: FB) is the prime example, with shares surging on the first day of trading, only to drop by more than 50% over the following three months of trading. But just as Facebook may be the poster child for not getting caught up in the IPO frenzy, it’s also the perfect illustration of a stock that can turn itself around after the post-IPO swoon.   And one mega-IPO from last year may have just found its Facebook moment.   This Global Powerhouse Has Lost Its IPO-Shine In his look at IPO froth, Jimmy took note of Alibaba Group Holding Ltd… Read More

  Consumer spending in emerging markets has been growing at three times the rate of the growth seen in developed economies, according to consulting firm McKinsey & Co.   #-ad_banner-#That trend has compelled many U.S. companies to steadily expand their sales footprint in these economies. The net result:  foreign sales at companies in the S&P 500 rose to more than 50% of sales today, from 30% of total sales in 2000.   But the outperforming U.S. economy and the strong dollar has thrown a wrench in those plans. Foreign earnings have hit U.S. companies as international markets lag and weaker… Read More

  Consumer spending in emerging markets has been growing at three times the rate of the growth seen in developed economies, according to consulting firm McKinsey & Co.   #-ad_banner-#That trend has compelled many U.S. companies to steadily expand their sales footprint in these economies. The net result:  foreign sales at companies in the S&P 500 rose to more than 50% of sales today, from 30% of total sales in 2000.   But the outperforming U.S. economy and the strong dollar has thrown a wrench in those plans. Foreign earnings have hit U.S. companies as international markets lag and weaker currencies get translated into fewer dollars every quarter.   The Procter & Gamble Company’s (NYSE: PG) CFO Jon Moeller pointed to foreign exchange as the primary challenge facing the company and the reason it missed earnings expectations by 6% in the most recent fourth quarter. The company books two-thirds of its sales from outside the United States.  Foreign exchange could reduce 2015 sales by as much as 5% at P&G and lead to a 12% hit to earnings.   Shares of Pfizer, Inc. (NYSE: PFE) slid after the company reported a 3.5% decline in earnings in 2014, thanks to a… Read More

    I’ll share a secret with you. My academic background isn’t finance. Originally, I was trained as a historian and in my professional opinion; Europe has been a mess since the fall of the Roman Empire.   #-ad_banner-#That’s why the agreement in 1999, when 19 eurozone countries decided to put the past behind them and join together under a common currency was nothing short of historic.   The fact that a monetary union was born without an underlying political union has repeatedly led many pundits to predict eventual failure for the European Union (EU). But, love it or hate… Read More

    I’ll share a secret with you. My academic background isn’t finance. Originally, I was trained as a historian and in my professional opinion; Europe has been a mess since the fall of the Roman Empire.   #-ad_banner-#That’s why the agreement in 1999, when 19 eurozone countries decided to put the past behind them and join together under a common currency was nothing short of historic.   The fact that a monetary union was born without an underlying political union has repeatedly led many pundits to predict eventual failure for the European Union (EU). But, love it or hate it, it’s here to stay.   Of course, since the financial crisis of 2008, Europe has been experiencing a series of economic crises, most recently the sovereign debt crisis of 2011-2012. And austerity imposed by Northern European countries upon Southern European countries has led to ongoing economic weakness ever since.   Recent years have been marked by shockingly high rates of unemployment — especially among Europe’s youth — and ongoing social unrest. Even mighty German is now feeling the effects, slashing its 2015 GDP growth outlook by 35% to 1.3% from 2%.   Now, as the eurozone economy faces deflation,… Read More

  The days of dartboard investing in emerging markets are over.   #-ad_banner-#Over the two years ended April 2008, a basket of these markets, as represented by the iShares MSCI Emerging Markets (NYSE: EEM), surged an impressive 60%. You could have invested in any number of these economies and seen solid returns.   This group of markets eventually swooned and rebounded, but it’s increasingly clear that the days of heady returns are gone. In the two years to 2015, the fund lost 11% and individual country funds are posting huge disparities in returns.   As an emerging markets analyst and an… Read More

  The days of dartboard investing in emerging markets are over.   #-ad_banner-#Over the two years ended April 2008, a basket of these markets, as represented by the iShares MSCI Emerging Markets (NYSE: EEM), surged an impressive 60%. You could have invested in any number of these economies and seen solid returns.   This group of markets eventually swooned and rebounded, but it’s increasingly clear that the days of heady returns are gone. In the two years to 2015, the fund lost 11% and individual country funds are posting huge disparities in returns.   As an emerging markets analyst and an expatriate living in South America, I see the shifting economic environment first hand and it’s not just down here. The Russian market is crumbling and stocks of African countries have not done any better.   Yet you can’t paint these markets with a broad brush. Some markets, notably China and India, have done very well over the last year. The iShares China Large-Cap fund (NYSE: FXI) has risen 14% and the WisdomTree India Earnings ETF (NYSE: EPI) has zoomed 38% higher in that period.   In fact, the disparity in emerging markets has reached the point that Jim O’Neill, the… Read More

  Investors rarely have a crystal ball when it comes to market action, but recent events in Europe point the way to some fairly predictable outcomes. I got such clarity after reading comments that German  Chancellor Angela Merkel was ready to accept a Greek exit from the Eurozone. Her comments appear related to the fact that upcoming Greek elections have put the euro under renewed pressure.   #-ad_banner-#Greek elections in 2012 threw global markets into a tailspin when it looked like the Syriza party could take control and push a hard line against European Union bailout demands. The iShares MSCI… Read More

  Investors rarely have a crystal ball when it comes to market action, but recent events in Europe point the way to some fairly predictable outcomes. I got such clarity after reading comments that German  Chancellor Angela Merkel was ready to accept a Greek exit from the Eurozone. Her comments appear related to the fact that upcoming Greek elections have put the euro under renewed pressure.   #-ad_banner-#Greek elections in 2012 threw global markets into a tailspin when it looked like the Syriza party could take control and push a hard line against European Union bailout demands. The iShares MSCI EMU (NYSEMKT: EZU), which tracks the EU countries, plunged 13.5% in  May of that year, while the S&P 500 dropped 7.6% over the same period.   Polls now suggest that Syriza will take control after the January 25 vote. The party’s leader, Alexis Tsipras, has already promised that the country will, “write down most of the nominal value of debt… That’s what was done for Germany in 1953, it should be done for Greece in 2015.”   The potential for a breakup of the euro zone sent the markets reeling just two years ago. While it hasn’t affected the stock… Read More

If every year brought a fresh investing theme, then 2014 was a time for a “flight to quality.” An uncertain global economy led both foreign and domestic investors to focus on the safest and fastest-growing economy in the developed world: The United States. #-ad_banner-#The S&P 500 once again scored double-digit gains and over the past three years, has generated a 21% annualized gain. That’s the best three-year showing since the late 1990’s. Bond markets also attracted lots of money, pushing yields back toward historical lows. A sizable chunk of the gains in our stock and bond markets is the result… Read More

If every year brought a fresh investing theme, then 2014 was a time for a “flight to quality.” An uncertain global economy led both foreign and domestic investors to focus on the safest and fastest-growing economy in the developed world: The United States. #-ad_banner-#The S&P 500 once again scored double-digit gains and over the past three years, has generated a 21% annualized gain. That’s the best three-year showing since the late 1990’s. Bond markets also attracted lots of money, pushing yields back toward historical lows. A sizable chunk of the gains in our stock and bond markets is the result of a tidal wave of foreign money flowing into our country. In October 2014, for example (the most current data available), foreigners spent a net $178 billion on U.S. assets. The move, in hindsight, is quite understandable. Europe remains sickly; Latin America, Africa and Asia are seeing stiff economic headwinds; and geopolitical tensions in Russia and the Middle East remind us that we live in an unstable world. Although many markets lost value in 2014, the rising dollar made the impact even more painful for U.S.-based investors. A Lost Year For A Range Of Markets… Read More

For a slew of reasons, Vladimir Putin continues to garner remarkably high approval ratings in Russia, even as he has become a pariah in the rest of the world. Yet one small group of Russians is none too pleased with Putin’s reckless behavior: The Oligarchs. #-ad_banner-#These Russian billionaires are savvy enough to understand that the imploding Russian economy isn’t simply due to falling oil prices. It’s due to severe economic mismanagement. Billions in invested capital have been wiped out, both in the portfolios of these oligarchs and foreigners unlucky enough to have exposure to this BRIC economy. You would think… Read More

For a slew of reasons, Vladimir Putin continues to garner remarkably high approval ratings in Russia, even as he has become a pariah in the rest of the world. Yet one small group of Russians is none too pleased with Putin’s reckless behavior: The Oligarchs. #-ad_banner-#These Russian billionaires are savvy enough to understand that the imploding Russian economy isn’t simply due to falling oil prices. It’s due to severe economic mismanagement. Billions in invested capital have been wiped out, both in the portfolios of these oligarchs and foreigners unlucky enough to have exposure to this BRIC economy. You would think that ruinous government policies and an imploding economy would lead even the most stubborn autocrat to come to his senses. In fact, I expected Putin to fold his cards a few months ago suggesting that “after having boxed the Russian economy into a corner, Putin appears ready to alter course.” That was a naive view, though another $25 per barrel drop in oil prices and a subsequent run on the Russian ruble in the past two months didn’t help matters either.  Yet the Putin lesson has been played out time and time again, and as we approach to 2015, it’s… Read More

During the Renaissance and the Age of the Exploration, where did everyone want to go? India. Christopher Columbus found Hispaniola (today, the Dominican Republic and Haiti) by accident while sailing westward to India, thus naming the newly discovered islands the “West Indies.” #-ad_banner-#Even the Beatles went to India seeking enlightenment. I like Indian food. Ravi Shankar’s trippy sitar tones are incredibly cool. But what I truly dig about India is the yet-to-be-realized investment potential. Right now, an amazing collision of timing and fundamentals are priming the region for incredible growth. As the chart of the iShares India Index ETF (NYSE:… Read More

During the Renaissance and the Age of the Exploration, where did everyone want to go? India. Christopher Columbus found Hispaniola (today, the Dominican Republic and Haiti) by accident while sailing westward to India, thus naming the newly discovered islands the “West Indies.” #-ad_banner-#Even the Beatles went to India seeking enlightenment. I like Indian food. Ravi Shankar’s trippy sitar tones are incredibly cool. But what I truly dig about India is the yet-to-be-realized investment potential. Right now, an amazing collision of timing and fundamentals are priming the region for incredible growth. As the chart of the iShares India Index ETF (NYSE: INDA) demonstrates, the Indian market outperformed its Chinese and American counterparts handily. More importantly, the India growth story is just starting to sprout legs and still has room to run. The Right Stuff The Indian economy is growing in all the right places by transitioning from an agriculture-based workforce to a manufacturing one. Consider these numbers: Over the past 12 years, agricultural employment, as a percent of the total economy, shrank to 47.2% from 59.8%. During the same period, industrial employment grew to 24.7% from 16.1% and services grew to 28.1% from 24.1%. The most important sector in… Read More

The Bosphorus River, which divides the eastern and western sections of Istanbul, is also thought of as the dividing line between Asia and Europe. Indeed, that location has enabled Turkey to develop strong trading relationships in every direction. As the global economy rebounded from the 2008 crisis, Turkey’s fast-growing role in world trade helped the country lure massive sums of foreign money, which led to 9% GDP growth in 2010 and again in 2011. #-ad_banner-#Then, the Turkish miracle abruptly ended. Inflationary bottlenecks appeared in the economy, eventually leading central bankers to boost interest rates to nearly double-digits. And the frenzy… Read More

The Bosphorus River, which divides the eastern and western sections of Istanbul, is also thought of as the dividing line between Asia and Europe. Indeed, that location has enabled Turkey to develop strong trading relationships in every direction. As the global economy rebounded from the 2008 crisis, Turkey’s fast-growing role in world trade helped the country lure massive sums of foreign money, which led to 9% GDP growth in 2010 and again in 2011. #-ad_banner-#Then, the Turkish miracle abruptly ended. Inflationary bottlenecks appeared in the economy, eventually leading central bankers to boost interest rates to nearly double-digits. And the frenzy of investments led Turkey to run large trade deficits, leading economists in 2013 to categorize the country as one of the “Fragile Five.” Adding insult, local trading partners, such as Egypt and Syria, saw their economies collapse amid political upheaval. And Europe, which had been making overtures about an eventual Turkish entry into NATO, dimmed its ardor for the country, and the prospects of an imminent NATO entry have since vanished. Fast forward to the third quarter of 2014, and the Turkish economy is growing at just a 2% pace, which economists believe will mark the… Read More