Pathlight Investors’ Top Recommended Reads - April 2014

Pathlight Investors’ Top Recommended Reads - April 2014

  • Posted on: 9 December 2015
  • By: admin

Ready for some more great articles?  Here's our picks for April 2014:                                                      US budget deficit – the CBO Mon said the US gov’t deficit will fall to $492B this year, a smaller number than the prior $680B forecast (http://goo.gl/LB4T7T).  “But if current laws do not change, the period of shrinking deficits will soon come to an end. Between 2015 and 2024, annual budget shortfalls are projected to rise substantially—from a low of $469 billion in 2015 to about $1 trillion from 2022 through 2024—mainly because of the aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt” (http://goo.gl/r4hLJT).

 

 Draghi ratchets up his EUR warnings; suggests any further upside would prompt additional EcB easing; "In a sense, if you want our monetary policy to remain as accommodative as it is today, a further strengthening of the exchange rate - I don't want to give you a level where we will act or not, I am giving you an orientation - would require further monetary policy stimulus” – Reuters    http://goo.gl/k4fjqd   

 

GM sales may suffer – customers increasingly anxious re the recall and sales could take a hit; dealers are fielding calls from prospective customers concerned about the safety of GM autos – Reuters   http://goo.gl/yA28Er   

 

Health care – insurers are concerned they will need to raise prices in ’15, a decision that could invite political scrutiny; the White House hit its enrollee goal, but the mix of sign-ups were older and more expensive than the industry hoped – Reuters   http://goo.gl/wNrsRC   

 

And On A Lighter Note…

 

Father moves daughter’s messy room to driveway as a lesson in responsibility: http://goo.gl/iZGnGb

 

 

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Easy Come, Easy Go: The Challenge of Investing in Momentum Stocks

Easy Come, Easy Go: The Challenge of Investing in Momentum Stocks

  • Posted on: 9 December 2015
  • By: admin

The following is an excerpt from our April insight piece, Easy Come, Easy Go: The Challenge of Investing in Momentum Stocks, which can be found HERE

The stock market’s high-flying momentum stocks have fallen back to Earth as investors locked in profits this past month. Despite the adoration of 3-D printing, biotech, internet, and social media stocks, Pathlight has long warned about the risks of investing in companies whose valuations just don’t make sense. Investors can certainly make a lot of money in these types of businesses if they get the timing right, but just as fast, profits can vanish. In looking at the table below, one can see that recent investors into the above-mentioned categories have experienced a painful ride.

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Pathlight Investors’ Top Recommended Reads - March 2014

Pathlight Investors’ Top Recommended Reads - March 2014

  • Posted on: 9 December 2015
  • By: admin

Ready for some more great articles?  Here's our picks for March 2014:  
 

China – the country defended its population controls and said it won’t announce a time frame for completely ending the one-child policy – WSJ http://goo.gl/XoqOQe  

 

Companies rush to list shares – IPOs are occurring at the fastest pace in years.  In the first two months of this year, 42 companies went public in the U.S., raising $8.3 billion (at this time in ’13 only 20 companies had listed).  “investors are bidding more aggressively for newly minted shares this year than they have in more than a decade” – WSJ   http://goo.gl/bUoFNZ   

 

Crude by rail: The WSJ reports that pipeline companies are abandoning proposed projects in the Bakken Shale and that it is becoming clear that crude by rail isn’t a temporary phenomenon. WSJ http://goo.gl/ZqE2EQ   

 

Keystone pipeline - New Post-ABC News poll: Keystone XL project overwhelmingly favored by Americans (Washington Posthttp://goo.gl/bPrbnn). 

 

China suffers its first corporate bond default – three retailer holders of a bond from Shanghai Chaori Solar told the FT they received only a small fraction of the interest owed Thurs night and didn’t expect any more money.  FT   http://goo.gl/UALQuE  

 

China property markets – China Vanke, the country’s biggest property developer, said net profit rose 21% in ’13.  Vanke said housing demand was stronger than expected in many Chinese cities.  WSJ   http://goo.gl/yWsyHz   

 

China – a finance official suggested China could miss this year’s 7.5% GDP growth target – WSJ   http://goo.gl/SHgRF2   

 

And On A Lighter Note…

Rooster driving Michigan neighborhood bonkers: http://goo.gl/g3vLSh

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Happy 5th Year Anniversary Bull Market!

Happy 5th Year Anniversary Bull Market!

  • Posted on: 9 December 2015
  • By: admin

The following is an excerpt from our recent research piece "Happy 5th Year Anniversary Bull Market!"  The full report can be found HERE

For the last five years, stocks have been in one of the strongest bull markets we have ever seen, with the S&P 500 rising roughly 183% from the March 2009 lows through March 6, 2014.  While this bull market has been powerful, most investors, and even more non-investors, still don’t believe in it.  They feel as if it is all a mirage manufactured by central banks around the world and that we are destined to pop this most recent stock bubble, just as we did in the dot.com era of 2000. 

On the fifth anniversary of the most recent bull market, we wanted to provide a defense of stock market performance.  And since pictures are worth 1,000 words, we are going to let the following pictures, along with just a few of our words, do the talking for us.  Hopefully, these visual representations can sway a few of the most skeptical out there to our camp and give stock market supporters a degree of comfort.  

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Republished - U.S. Stock Markets Nearing All Time Highs: Why They can Move Higher

Republished - U.S. Stock Markets Nearing All Time Highs: Why They can Move Higher

  • Posted on: 9 December 2015
  • By: admin

The following is an excerpt from our April research piece, U.S. Stock Markets Nearing All Time Highs: Why They can Move Higher, which can be found HERE
 

For literally years, actually four years now, investors in stocks, market participants, media pundits, and so-called experts have been focused on all that is wrong in the world. Too much debt, check. A potential Eurozone break-up, check. Lackluster job growth, check. The end of the economic world as we know it, check.  However, despite all the doom and gloom and predictions that missed the mark (widely), U.S. stock markets are within a stone’s throw of reaching their all-time highs. 

As you can see in the chart below, the Dow Jones Industrial Average is at a level not seen since late 2007. Surprisingly, the discussion still remains centered around what can go wrong. We often say that when only one side of the story is told, one argument easy to make, it’s time to look at the other side, which is precisely the objective of this commentary. 

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2013 Year-In-Review

2013 Year-In-Review

  • Posted on: 9 December 2015
  • By: admin

The following is an excerpt from our recent research piece "2013 Year-In-Review."  The full report can be found HERE

As we close out 2013 and prepare to ring in a new year, we in the U.S. have a great deal to rejoice about and celebrate. U.S. equity markets finished off their fifth straight year of positive returns and are now at all-time highs, which means many 401k balances have recovered to pre-recession levels. U.S. home prices continue to climb, meaning many consumers feel wealthier. Additionally, we are beginning to see an acceleration in hiring, and the unemployment rate in this country is at the lowest level since November 2008, which means more Americans are heading back to work.

Pathlight’s thesis when we entered 2013 was that the negativity surrounding the economy and equity markets was simply tired. We also stated that the myriad reasons why stocks could not continue to rise were so well known and understood that they presented little barrier, given continued economic growth and the easy money policies....

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2014 Outlook: A Year of Change

2014 Outlook: A Year of Change

  • Posted on: 9 December 2015
  • By: admin

The following is an excerpt from our recent research piece "2014 Outlook: A Year of Change"  The full report can be found HERE.

We are calling 2014, A Year of Change. This change, albeit modest, is substantial directionally as we are finally seeing the recurring themes of the last five years dissipate. Fear has turned into increased confidence. Low interest rates have started to rise. Economic growth is expected to accelerate. European breakup talk has been replaced by discussions about an improving Europe. These changes make the investment backdrop for 2014, different from years past and perhaps even a bit more challenging.

At Pathlight, our optimistic view over the last five years had been based on our opinion that the pervasive negativity was not only misplaced, but excessive. We felt that as minor improvements materialized, investment performance would follow. It didn’t really matter if economic growth was 2% or 4%--or if job growth was 100,000 per month rather than 180,000. What mattered was the avoidance of a major negative macro event that would steel concerns of another 2008 meltdown–which fortunately didn’t happen. In 2014, that is now different. With heightened expectations, investment results will likely require more than just macro event avoidance. It will require continued improvement globally in the economy, jobs in the U.S., consistency in China, and increased stability in the Eurozone.

 

 

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