Short excerpts from articles I found interesting.
I may not agree with the author and the following material is not intended as investment advice.
- Like a good musical, the stock market is ending the first half on a high note that leaves you wanting more. The Standard & Poor’s 500 index is up 8.9% this year, with 24 record highs, and counting. Even more remarkable is how the maximum drawdown over these six months never exceeded 2.8%, which makes this the second smallest first-half drawdown in 89 years, and a mere gnat bite compared with the first-half average of 11.2%, notes Bespoke Investment Group. All gain and no pain—not even Rodgers & Hammerstein could have concocted a sunnier first half.
- “…One of the oldest stock market indicators is flashing a buy signal. The measure, known as Dow Theory, sends a bullish signal when transportation and industrial stocks make new 52-week highs simultaneously. This happened back in October and nothing has derailed its course despite the naysayers…Mizuho Securities sees conditions that are ripe for a market decline of 10 percent or more. The company’s biggest concern is that stocks are expensive, especially when compared to the rate of U.S. economic growth and corporate profitability.”
- “…The biggest U.S. banks passed the first round of stress tests. As such, the 34 biggest U.S. banks all would have enough capital to withstand an extreme recession, according to the results of the first round of the Federal Reserve's annual stress tests. Crude oil officially entered into bear market territory this week, down over 20 percent from its highs this year”
- “…After years of rejecting China’s A-shares for Emerging Markets Index inclusion, this week MSCI’s Index Policy Committee announced that China’s domestic equities will now qualify for its index inclusion beginning in 2018.
- “…In less than two decades, more than half of all publicly traded companies have disappeared. There were 7,355 U.S. stocks in November 1997, according to the Center for Research in Security Prices at the University of Chicago’s Booth School of Business. Nowadays, there are fewer than 3,600…Back in November 1997, there were more than 2,500 small stocks and nearly 4,000 tiny “microcap” stocks, according to CRSP. At the end of 2016, fewer than 1,200 small and just under 1,900 microcap stocks were left.
- “…Several factors explain the shrinking number of stocks, analysts say, including the regulatory red tape that discourages smaller companies from going and staying public; the flood of venture-capital funding that enables young companies to stay private longer; and the rise of private-equity funds, whose buyouts take shares off the public market.
- “…The stock market has more than tripled in the past eight years, so the eclipse of so many companies hasn’t been a catastrophe. But it does imply that investing in some of the market’s trendiest strategies might be less profitable in the future than they looked in the past.”