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Warren Buffet explains the wealth gap

An advanced market economy Buffett believes the market economy has become more and more “specialized” with “economic rewards flowing to people with specialized talents.” This, he says, has caused the wealth gap with many people barely getting by while others thrive. “It was an agrarian economy a couple hundred years ago,” he said in an interview with CNN. “Very hard, you know, to get 20 times the wealth of the next guy because you were a little bit better farmer.…

May 2024 Stock and Fund Picks

May 9, 2024: Aggregate demand management by the Fed hasn't slowed its biggest aspect, Consumer Demand, all that much. Consumers running out of pandemic savings and running up too much debt may become the more predominant effect. By contrast, aggregate supply has taken care of itself. That said, the higher interest rates have slowed growth more among the higher leveraged smaller firms, leading the smaller firm indexes to lag until just recently. Reducing aggregate demand growth through higher interest rates…

December 2023 Stock and Fund Picks

December 21: We appear to be near the bottom of the current business cycle. It's a very shallow bottom with no clear signal as to when corporate profits might also bottom out. The upside will be characterized by slow growth and stock prices that become overvalued quickly during rally's and lead to frequent bouts of profit taking and stock repricing. In fact, this scenario has just occurred. Slower economic growth is partly a result of the Fed's interest rate policy…

January Stock and Fund Picks

January 20: Sooner or later all good things, even overdue pull backs and corrections, must come to an end. By now those trading on the emotion of "fear" about alleged interest rate increases will have capitulated and sold near the bottom. Naturally, they will buy back in near a top. Then they will vote for Bernie Sanders. For the rest of us, its time to move on. Stocks to consider at this point in time are: LMB, TSM, PLAB, ACMR,…

July Stock and Fund Picks

July 6: Looks like the stock markets are topped out and dependent on earnings increases to move them any higher. The sector doing the best during the last 3 months appears to be health care as indicated by the first three top ETFs: XLV, IYH, and VHT. The top 5 ETFs include two related to Canadian stocks: FLCA and BBCA. Since the overall market is not likely to move much in the near future, there are still some specific stocks…

April Stock and Fund Picks

Stay the course: Stay in cash and do not buy any new stocks or funds at this time. If I don't recommend you deploy capital then I can't be accused of giving you overly risky or just plain bad advise. If you already have a dividend reinvestment portfolio then just hold it and let it buy up shares at cheaper prices. For those with a CEF income portfolio, just hold it (of course, any MLP funds are riskier during the…

February Stock and Fund Picks

All business cycle monitoring sites from Seeking Alpha indicate an ongoing expansion that is simply slowing down due to a lack of private sector investment, industrial production, and anti-supply-side protectionist trade policies. Instead of cyclical indicators only, I prefer to also look at the misery index as an indicator of a potential recession. The misery index is the positive or direct relationship between the unemployment rate and the inflation rate. This relationship replaces the old and no-longer in existence Phillips…

January 2020 Stock and Fund Picks

All policies have negative consequences. The hope is that positive consequences will outweigh those that are negative. For example, in the late 1990s Pres. Clinton placed recruitment restrictions on the CIA that caused its staff to shrink by half. Clinton also cut CIA and military funding substantially. The 9/11 terrorist attacks followed. Bill Clinton also replaced regulatory authority under Glass-Steagall that gave the SEC oversight of investment derivatives, like those of the subprime mortgage crises, with the Gramm-Leach-Bliley Act that…

September Market Beating Stock Picks

Week 1 (Sept. 4 - 7): Trade is still a negative while just about everything else (eg., domestic economy and GDP growth, relatively low real interest rates, and company earnings) are positives. On a different issue, I don't get why the NFL allows anyone to take a knee during the national anthem.  There are a billion and one things to protest and every player can take a knee for one reason or another such that no one stands.  This disrespects…

July 2018 Stock State Update

"Trump trade" noise leads to panicky sellers.  Yet, the underlying domestic economy is robust, as is earnings growth.  Actionable conclusion:  Buy the dips.  Panicky sellers simply create opportunities for the hunters.  Which of the two would you rather be?