The Long-Term Impact of Compounded Returns The amount earned from compounding grows exponentially over time. Successful investing is all about patience and discipline. So, a lack of patience and investment discipline may impact long-term returns.…
Why U.S. Productivity Is Lower Than Previous Business Cycles? The real yield is the most important measure of financial tightness. But as the real yield is near zero, artificially low interest rates are then associated…
Ray Dalio, Founder and Chairman, Bridgewater Associates In this video at Stanford Graduate School of Business, Ray Dalio discusses his life and career, principles, relationship, conflicts with other nations, increasing wage gap in the U.S.…
Why Demand For Saving Deposits Has Weakened Since The Great Recession? Because risk aversion is declining, like money demand, even if interest rates are rising. This explains in part the rise of the US stock…
Why a Low or Negative Equity Risk Premium Coincides with a Temporary Market Peak? Because it pushes investors into bonds rather than equities. This was the case in 1973, 1981, 2000, 2007 and 2018 before…
Real GDP Increased Moderately Compared to Previous Business Cycles Even if we are currently in a late cycle, history helps us to predict the future and this cycle should not end immediately. Each line begins…
Real Fed Funds Rate Is Very Low Compared to Previous Business Cycles Today, Real Fed funds rate is very low compared to previous business cycles and well below real GDP. If history helps us to…
Why the Stock Market Valuation Matters Before a Recession? When the stock market is VERY overvalued before a recession, it tends to be VERY undervalued. Like the swing of a pendulum, or the stretching of…
Why the US Stock Market Was Overvalued by 14.2% on Oct. 1, 2018 vs. 7.7% Today? Because the value of the forecast changes over time (blue dotted line). The US stock market short-term forecast (S&P 500…
Greek’s 5-Year Bond Yields Have Fallen Below US 5-Year Government Bond Yield Which one would you choose? Greek bonds or US counterparts? This is a great example of financial market madness. Mark Twain once said,…
How’s the U.S. Economy Doing Now? The real GDP Nowcast relies on soft data such as consumer and business surveys and hard data such as retail sales and industrial production. It forecasts the growth of…