Skip to content
Learning that drives better investment decisions

The Long Shadow of Tech Stocks

Top 5 of the Week of September 3

Jack Forehand from Validea heads up our Top 5 this week with a look at the traps in value investing. For Mayport Wealth Management, Adam M. Grossman considers investors making prescient calls about the future. And Nicolas Rabener, writing for Enterprising Investor, asks if the Fed model makes a good valuation tool.

From Pension Partners, Charlie Bilello examines crowding in tech stocks. And Barry Ritholtz, Chairman & CIO of Ritholtz Wealth Management, reveals what really ends a bull market…


The Pitfalls of Value Investing

Embed from Getty Images
 

  • As a value investor, it’s assumed that you just buy cheap stocks and the market will eventually adjust to affirm your inspired purchases
  • The real world isn’t like that though; many stocks are priced cheaply because they are “value traps” and they deserve to be, not because they’re a diamond in the rough
  • The problem is that methods which attempt to avoid these traps can result in investors missing out on those that are good investments

Read Full Article


The Difference Between Heeding Prophecies and Observations

Embed from Getty Images
 

  • While self-proclaimed fortune tellers like Nostradamus are not worth listening to, there are prescient people whose observations—not prophecies—might be worth taking note of
  • There are some such individuals today who observe that the market has rarely been more expensive than it is at the moment in history
  • So, it’s likely that the market will correct itself, but who knows when—in fact, it may even get more expensive first—so don’t try to time it but do protect your nest egg through asset allocation

Whose observations do you listen to? Share your comments in the section below

Read Full Article


Are You a Believer?

Embed from Getty Images
 

  • If you’re a Fed model believer, then you trust that you can use bond yields as a level to assess if stocks are over- or undervalued
  • At the moment, the Earnings Yield is above the 10-Year Treasury Yield which is why many suggest that stocks are still undervalued—and attractive accordingly
  • But, data shows that cheap stocks will yield above-average forward returns, while expensive stocks will produce below-average forward returns—regardless of where bond yields sit

Read Full Article


The Long Shadow of Tech Stocks

Embed from Getty Images
 

  • The shadows of the dot-com bubble are long stretching and cause many investors to beware technology stocks inspite of their positive performance
  • The current situation isn’t as alike the early 2000s as investors seem to think, the gains of today’s tech stocks are much more temperate than the rapid leaps back then
  • Metrics show that crowding, however, is currently on par with that point though and while it’s not negative to a sector it’s worth keeping an eye on multiple signals to assess portfolio risk

Read Full Article


Age Is Only a Number

Embed from Getty Images
 

  • Bull markets don’t just wither and die with old age, and the length of the bull market is not what you should be looking at
  • It’s important, instead, to know why it should concern you as an investor how long a bull market is
  • Don’t buy into the idea that there is a “magic sell-by date” on bull markets, you can get tricked into selling equities that way and missing out on potential gains

Read Full Article


Top 5 of the Week is a summarized collection of financial investment articles that we like and think you might like too. Having written thousands of pages of equity strategy and company research between us, we understand the allure of the ever-changing world of finance. Investing is an art form—and like everything, something you can work on and improve at. There are some excellent writers out there on the finance web, some offer a running commentary on today’s market, some are doing research, some have tips on how to Become a Better Investor, and some just lift the cloud of fog behind a lot of financial jargon. Each week we will keep you up to date with the top 5 articles worthy of your attention.


 

Anything you would like to discuss about this week’s top 5? Do you have another favorite that isn’t mentioned here? Feel free to add it below. Let’s start a discussion in the comments section!

Do you like Top 5 of the Week? Feel free to share it with your friends.

 


DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article. The Become a Better Investor Team doesn’t necessarily endorse any stocks or shares mentioned in the articles or the author of such articles linked to and summarized in Top 5 of the Week and cannot guarantee the accuracy of its information.