Harry S. Dent Jr.'s Blog, page 154
April 30, 2015
The Stock Market Claims Another Victim…
Recently in Ahead of the Curve, I discussed a couple of catalysts that may serve as the gravitational force that pulls equity prices lower.
Over the past couple of years, the stock market has been resilient in the face of rich valuations, too much bullish sentiment, and evaporating liquidity.
However, the price action of transport stocks have started to react to demand headwinds and softening growth. Meanwhile,
An Electric Dilemma: Is This The End of Solar Panels?
How much are you willing to pay for independence?
I’m not talking about starting a new nation or cutting the chord with civilization. I’m referring to a part of modern life that is crucial to our standard of living, and which most people take for granted — a steady flow of electricity.
In a world where more of what we do is under surveillance, having the ability to grab back some control is admittedly attractive (wouldn’t you like to tell your electric company to take a hike?).
But as more people install solar panels and force electric companies to buy back their excess power, utilities are suffering with soft demand and higher costs.
Installing your own solar panels can cost tens of thousands of dollars, but today you can lease them for little to nothing. In return, the solar companies accept all federal and state rebates earned, along with a monthly portion of the expected savings on electricity. But that doesn’t free homeowners from the power grid.
April 29, 2015
Insider Scoop: The Best Way to Profit These Next Six Months
Like so many investment sayings, there’s truth to the “Sell in May and go away” adage… and many caveats. Ultimately, your decision to follow or ignore this market-timing strategy depends on how you invest and protect capital.
Buy-and-hold investors might do well to heed the advice.
But for other investors, particularly those of us who employ active and statistically sound strategies, “sell in May” isn’t the most useful advice, as short-term opportunities to profit will continue to present themselves.
April 28, 2015
Is Government Helping Us, Or Vice Versa?
April 27, 2015
Follow the Leader: Company Insiders as Value Investors
I’ll start this with an important distinction: There are two very different kinds of insider trading.
There’s the “Martha Stewart” kind that will get you thrown into white-collar prison. And there’s the legal kind that is tracked and reported by the U.S. Securities and Exchange Commission (SEC).
Don’t worry, I’m not here to recommend a move out of Martha’s playbook (I don’t think prison would agree with me). There’s something much more important we can learn from insider trading.
The SEC requires all company officers, directors, and shareholders owning 10% or more of a company’s voting shares to disclose any dealings they have in their company’s stock. If the CEO of the company is buying — or selling — the stock of the company he manages, the investing public has a right to know, and the SEC makes the data available to anyone who cares to look.
I’m a big believer that the men and women running a company should have real skin in the game, so I take notice when a stock has heavy insider buying.
An insider can sell for any number of reasons. They could be diversifying, planning their taxes, or even buying a chalet for their mistress.
But there is only one reason why an insider would buy the shares of their company on the open market: At current prices, and based on their intimate knowledge of the company, they consider the stock to be attractively priced.
Well, what is true of the parts can also be true of the whole. The literature shows that company insiders tend to be pretty good value investors — they sell when others are speculating and buy when others are wary. Their moves as a group can give us insight as to the overall attractiveness of the market.
Take a look at the chart below, which tracks aggregate insider trading alongside the S&P 500.
Insider buying was insignificant in the quarters leading up to the 2007 top, but insiders went on a buying spree as the S&P 500 was bottoming in late 2008 and early 2009. Insider buying spiked again during the last real correction we had back in 2011.
Notably, insider buying has really trailed off over the past several quarters as the market has grinded higher. With the markets this high, insiders clearly don’t see the value these days.
Does this mean that the bottom is about to fall out? No, but it tells me that it might be a good idea to keep a little more dry powder in reserves than usual. When the insiders start buying hand-over-fist again, we’ll want to have cash on hand to follow their lead.
Charles
The Curse of The “Mini” Bubble: China’s Period of Worsening News
On April 16, the Shanghai Composite stock index rose 4.4% and Hong Kong’s market went up 7.9%.
The next day, China’s exports got reported down 15% year-over-year… while the stock index rose another 2.9%, crossing 4,300. The news hasn’t changed, but now it’s over 4,500!
Is that whacky or what?
Exports count for anywhere between 35% to 50% of China’s GDP. Just think of all the made-in-China gizmos and gadgets you might have in your own household! For them, a 15% drop is a big deal.
They’re the largest manufacturing and export operation in the world today. That means you also have to consider all the emerging countries exporting raw materials to China to feed this operation.
April 24, 2015
Modifying Human Embryos: A Biotech Miracle, or One Step Too Far?
In 1997, Columbia Pictures released a Sci-Fi thriller called Gattaca. The setting takes place in a world full of genetically engineered people whose lives are pre-determined by their DNA.
In the film, people are matched together based upon their gene types, babies are engineered for best-of-breed in labs, and their roles/careers in society are directly linked to their DNA profile.
That’s simultaneously extremely scary… and extremely efficient. Where’s the balance?
Why “Buying American” Is Not as Easy as It Sounds
With three young adults in the family, our driveway often looks like a used car lot.
The five vehicles run the gamut from an old Suburban to a late model luxury sedan. With that many cars, typically we replace one every year, and 2015 is the year of the wife (as if the other years aren’t, but that’s a different story!).
As we began our quest, we made a pointed effort to look at American brands.
Since the financial crisis, we’ve taken a closer look at how we spend our money and where it ultimately goes. Like many others, we decided to actively buy American products when we can.
We’re not Luddites. We won’t sacrifice quality just for the sake of buying a domestic brand, but we do recognize that the money we spend is someone else’s income.
