In previous articles, using Caterpillar, Inc. (CAT) for the figures, we have looked at different ways in which to value the company. Those considered so far have been Asset Valuation, Calculated Intangible Value and P/E Method. In a future article we will consider perhaps the most reliable – the discounted cash flow. To calculate this, we need a weighted average cost of capital (WACC) for CAT, and that is what
Stocks & Bonds
The New York Stock Exchange Index (NYSE) is an extremely important gauge of overall market health. Why? According to the New York Stock Exchange website (www.nyse.com): “..The NYSE Composite Index is designed to measure the performance of all common stocks listed on the NYSE, including ADRs, REITs and tracking stocks. In January 2003 the NYSE reintroduced the NYSE Composite Index under a new methodology that is fully transparent and rule-based.
It’s the rally that just doesn’t want to exhale. And this morning the S&P 500 (SPX – Quote) has taken market shorts to the brink. Futures are up about 16 points, reaching as high as 2070.95 over night. What set off this overnight euphoria? The same thing that occurred just 3 weeks ago out of Japan… yup, more easing. This time it comes courtesy of China, as the Chinese central bank
Over the years, the NYSE Index has been a good indicator of broad market health and breadth. So what is this index telling us now? The chart below takes a 30,000 foot view of the NYSE Index over the past 40 years. Line (1) has been important support at some key times in financial history. The 1987 crash low found line (1) to be support, as well as the 2002-2003 stock
Tony Robbins has a new book out this week called MONEY Master the Game: 7 Simple Steps to Financial Freedom. The interviews that Robbins did with some of the greatest investors of all-time (Buffett, Dalio, Tudor-Jones, Icahn, Swensen, etc.) sound like they’re worth the price of admission alone. In a piece Robbins wrote for Yahoo Finance he discusses an all-weather strategy he developed for the book with the help of Bridgewater’s Ray Dalio.
by Charlie Bilello “Both poker and investing are games of incomplete information. You have a certain set of facts and you are looking for situations where you have an edge, whether the edge is psychological or statistical.” – David Einhorn The Lake Wobegon effect is the natural human tendency to overestimate one’s capabilities. The most popular real world example is that almost everyone believes they are an above average driver.
Netflix stock has long been a favorite with option traders due to its high stock price, high implied volatility and explosive stock moves. But following the severe selloff in mid-October, Netflix (NFLX) has been very subdued. Since October 23rd, Netflix stock as traded in a very tight range between $374.60 and $395.52. That’s only a range of 5.5% in the last month for a stock that has a history of moving
Markets peaks are generally not event driven, but rather take time to develop. However, there oftentimes are very subtle warning signs that show up in the form of divergences, which can give investors an early indication that things may not be as rosy as the news/media, and even the price charts are suggesting. This is especially true at critical inflection points, in my view. I have a feeling that we
With all the fancy charts, fundamental analysis, and experience with price action, you would think that the majority of traders would be profitable. The sad fact is that most are not successful. The majority of all traders contribute to the profits of the minority that are profitable. Even seemingly successful firms like Amaranth and Long Term Capital Management can, and do, blowup. Individual traders like Victor Niederhoffer, who looked like
The last two years of the U.S. stock market’s relentless bid has been, to say the least, at thing of wonder – especially for traders who have been around for more than a couple of decades. From the vantage point of many fundamental/macro analysts, it has repeatedly pushed the upper bounds of value and has yet to take time to even catch its breath. One can argue that the fundamentals