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Economy
The top 10 stocks in the S&P 500 now account for more than 1/3rd of the value of the S&P 500.  Valuations in this group are vastly elevated compared to their historical levels, highlighted by Nvidia trading at a staggering 41 times sales.  It’s hard not to compare today’s environment in the large cap Technology...
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In our last article we covered the Bubble in “Safe” Stocks, where investors are paying outrageously high multiples for companies that are believed to be more recession resistant such as consumer staples.  In this article I figured I’d cover a stock Mr. Market and the doom and gloom propagandists view to be “risky” based on...
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Since early March, the stock market has been far more driven by fear than fundamentals, which has led to what I believe to be a bubble in stocks perceived as being “safe.”  When you pay 50% too much for a stock, a simple reversion to the mean can cause disastrous permanent losses of capital.  Conversely,...
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Investors and market participants often get told that the way to get rich is buying quality companies or properties.  Firstly, it is important to define quality.  For many, quality is conflated with credit risk.  For example, U.S. government debt is often seen as having the least chance of a default than any other bonds, mostly...
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A decade-long policy of virtually zero interest rates impacted assets globally and built the everything bubble.  It would be naive of us to think that the unraveling of this would not cause things to break.  Last week, we saw it occur with the implosion of two large crypto and venture capital-focused banks.  These institutions (Silvergate...
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Markets continue to exhibit higher volatility due to economic data that indicates that higher for longer Federal Reserve interest rate policies are more likely.  At TTCM, we view predicting macroeconomic data as being a rather pyrrhic enterprise, as success rates for even supposed experts, are far less than 50%.  By focusing on individual securities and...
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Volatility has begun to pick up in equity markets as bond yields have continued to creep higher, based on fears of higher for longer inflationary pressures.  I’ve warned before about being too aggressive in this environment.  Too many people expect equity markets to perform like they did in exceptionally low interest rate periods and that...
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In early 2023, we have seen a bit of a return of the speculative euphoria that was so pervasive in 2020 and 2021, which has driven up asset prices once again.  Market participants are more optimistic about things based on the belief that inflationary pressures are headed far lower, which should result in the end...
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  “You don’t find out who is swimming naked until the tide comes out.” Warren Buffett   Financial markets over the short-term are akin to middle school popularity contests.  The euphoria or pessimism of the day generally reflects recent price performance.  Because there is 24/7 coverage, media pundits feel like they have to give reasons...
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We are in the early weeks of earnings season, and overall, the results have been quite impressive.  The banking sector saw continued improvement in net interest margins, with credit normalizing a bit.  One must remember that we are coming off the most enormous stimulus package in history in 2020, which created the best credit environment...
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