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Rich Bernstein Negative on Tech as Rates Rise
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Oil & Gas Exploration & Production ETF Allocation Reduced
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Gold and Silver Mining ETFs Allocation Increased
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ViacomCBS Sold
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iShares Silver Mining ETF Allocation Increased
The price of silver has been declining due to...
- March 30, 2021
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Rich Bernstein Negative on Tech as Rates Rise
Rich Bernstein, CEO and CIO of Richard Bernstein Advisors,...
- March 18, 2021
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Is the Retirement Crisis Really a Crisis?
PBS Frontline recently presented a documentary called “The Retirement...
- April 25, 2013
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Alarming Chart of the Stock Markets of 1987 and 2012-2013
Several days ago I posted a chart showing the...
- May 22, 2013
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Bill Ackman Thinks Diversification is for the Lazy
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- March 4, 2010
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T.T.S. Fear Index
Based on a scale of 1 (major complacency) to 10 (extreme fear):
Current and Selected Past Readings:
Date | Index | SMA Comment |
1/20/2021 | 2.3 | Massive stimulus and Fed support have nearly eliminated fear |
3/23/2020 | 7.0 | Coronavirus and oil price war panic investors to the highest level of fear since October 2011 |
12/26/2019 | 2.3 | Lowest level of fear in nearly two years (January 2018) |
12/21/2018 | 6.7 | Raised fears likely setting up a buying opportunity |
1/11/2018 | 1.8 | Unusually low fear could mean we're near the top in valuations |
1/13/16 | 6.3 | Terrible start to 2016 raised fears |
10/3/11 | 8.5 | A good tradable bottom (S&P 500 @ 1,085) based on lots of nonsense |
3/9/09 | 7.0 | Market bottom (S&P 500 @ 666); end of the world was nigh |
10/27/08 | 8.8 | Market had dropped 28% in 5 weeks, Paulson pulled out all stops to save Wall Street bankers |
10/12/07 | 3.2 | Market top (S&P 500 @ 1,562); worldwide housing bubble pricked |
Year-to-Date Performance as of February 24, 2021
Stock Market Advantage (SMA) Porfolio Versus Major Indices
Index/Portfolio | YTD % |
SMA Portfolio | 18.7% |
S&P 500 | 4.8% |
U. S. Small Caps | 12.2% |
Total U. S. Stock Market | 6.0% |
Total Int'l Stock Market | 6.0% |
Total U. S. Bond Market | -2.4% |
David Herro Finds Value in Europe and Japan
Herro searches for investment bargains created by economic macro fears. Herro believes that volatility and instability moves shares from their basic value. As an example, Herro said a company like Daimler AG (DDAIF) which produces Mercedes vehicles, sells product all over the world, trades at a reasonable valuation with net cash on its balance sheet to help it get through the current weak period; so you’re getting quality at a low price.
Herro stated that ground zero of the price destruction has been in financials. He looks for some basic things in stocks including a good, safe capital position. He provided examples of French bank BNP Paribas SA (BNPQY) and Intesa Sanpaolo (ISNPY) in Italy which are strong commercial banks in their local regions.
Regarding Japan, Herro said that it hasn’t been this cheap for this long of a time. They look at price to book value, but also return on that book value. The return historically had been quite dismal, but we are starting to see better returns coming from “blue chip” Japan such as Toyota Motor Corporation (TM) and Canon Inc. (CAJ), Herro said. They are doing a better job of increasing their margins and utilizing their cash, he added.
Herro said Canon earns good profits and has a return of equity probably greater than 15% and generates good free cash. CAJ has been using the cash to expand into emerging markets and buy back stock (10% of the shares outstanding in the past year or so). If this behavior becomes more widespread in Japan it could lift the market, he added.
Herro commented on Toyota which has had recall problems, which were followed by the Japanese earthquake and Thai floods. He believes these are all temporary problems. Toyota should benefit from being a low cost producer and a leader in fuel efficient technology, along with being cash rich. It is also being managed by a modern business thinker, Akio Toyoda (the grandson of the founder).
The interview continued with Herro discussing China where he finds it difficult to find value because the quality companies are expensive and the low priced companies are “wards of the state.”
Earlier this year Herro touted several European financials which subsequently had big moves to the upside [link].
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