Because a picture is worth a thousand words, we wanted to share a few pictures of what a bubble looks like. Many of us experienced our first memorable bubble in the 1990s. It's come to be known as the "Tech Bubble," and this is what it looks like on a chart. Between January of 1995 and December of 1999, a 5 year window, the Nasdaq grew to 9.1 times is starting value. It was one of the most exciting periods the stock market had ever known. However, the Nasdaq Victory Party ended… View More
The Federal Reserve did what just about everyone expected earlier today and raised short-term interest rates by 0.25 percentage points. The federal funds rate is now in a range from 1.25 - 1.50% and the Fed is now paying banks 1.50% on their reserve balances. Today's move was the third 25 basis point rate hike in 2017, matching the Fed's median projection for rate hikes that it made a year ago. At present, the Fed's "dot plot," which it releases at the last meeting of every calendar quarter, p… View More
Stocks were little-changed last week as the conference committee convened to reconcile the differences between the House and Senate tax bills. Several challenges remain, but momentum for a compromise remains strong; Republicans hope to have the bill on the president’s desk before Christmas. Financials, Industrials, and consumer-oriented stocks outperformed; these areas should benefit the most from tax reform and deregulation. Utilities was the worst performing sector as dividend-yieldi… View More
With 2017 coming to its close, we continue to find conflicting opinions on the state of the economy and the outlook for the stock market. On November 14th, Bank of America shared the results of a survey that it says demonstrates investors are “increasingly showing signs of ‘irrational exuberance’, putting more chips on the table even as they worry equities have become overvalued.” Bank of America’s chief investment strategist was quoted as saying, “Icarus is flying ever close to … View More
If 2003 is any guide, we don’t believe investors should overthink the short-term impact of tax cut in 2018. The 10-year rose from 3.1% to 4.6% in six weeks after the 2003 tax cut was passed, GDP surged in 2004, and those companies with vast amounts of cash overseas outperformed. From a longer term point of view, the efficacy of the tax cut will rest with one question – will companies actually use their cash to invest in capital projects? If so, productivity should rise, real GDP will grow, a… View More