Thankful For Another Great Year On Wall Street

This past Thanksgiving, millions of Americans sat at the dinner table and proclaimed what they were thankful for. For some, it was loved ones, new family members, a promotion at work or a new job altogether, but at the very least, the food that was about to be eaten was mentioned. The success of the stock market in 2019 was undoubtedly one of mine, but I may be in the minority when it comes to people who said such out loud.

However, with the major indexes again trading at new all-time highs, something we have now had occur more than 20 times in 2019, 18 times in 2018, 62 times in 2017 and another 126 times from the start of 2013 until the end of 2016, its hard not to think about how much further this bull market can run.

Adding new money to the market seems very risky today based on how far the market has come the past few years and considering we have seen so many new all-time highs over the past few years.

However, new all-time highs is a very normal thing for the market. Since 1928, the U.S. stock market has seen new all-time highs on 5% of the trading days. Think about that! That’s on average, one in every 20 trading days, the U.S. stock market is hitting an all-time high. From that perspective, a new all-time high sort of seems like not that big of a deal.

Another crazy thought is that since World War II, the U.S. stock market has spent nearly 40% of its time within 5% of all-time highs. Ok, so almost half the time stocks are trading within reach of an all-time high. Furthermore, 54% of the time stocks are trading within 10% of all-time highs.

However, that means 46% of the time stocks were more than double digits below their highs. Continue reading "Thankful For Another Great Year On Wall Street"

Dividend Stocks Yielding More Than Bonds

A weird thing happens when investors start seeing signs of a recession or just start convincing themselves that a recession is inevitable and coming soon; interest rates begin to fall, which means bond yields begin to drop. Most investors are told when they start investing that stocks are risky, but they offer better long-term growth, while bonds are safer, but they don’t offer investors as much potential growth.

While these statements may be true during certain situations, they certainly don’t always hold true. Sometimes, stocks may be both less risky and offer higher growth than bonds. I personally believe now be may one of those times.

As things sit now, bonds are offering rather low yields. The three-month treasury is paying 1.78%, the 12-month treasury is paying 1.75%, while the even longer five-year treasury is only offering a yield of 1.56%. The ten-year treasury is at 1.68%, and the 30-year treasury is sitting at 2.13%. These returns are hardly likely to keep up with inflation over those longer periods. Buying an investment that may just keep up with inflation seems somewhat risky to me.

Even the bond ETFs that have performed well year-to-date and pay yields to their investors aren’t currently offering anything much better than what investors can get from Treasuries. The Vanguard Long-Term Corporate Bond ETF (VCLT) which is up 21% year-to-date is offering one of the best yields at 3.5%. But this ETF is rather risky considering if, and when interest rates turn around, this fund will get hit.

On the other hand, certain stocks are currently offering higher yields, while also offering the chance for stock price appreciation, regardless of which way interest rates run. Let’s take a look at a few of my person favorites equity Exchange Traded Funds, which offer both growth and healthy, reliable yields. Continue reading "Dividend Stocks Yielding More Than Bonds"

Now May Be The Time To Buy A FANG ETF

The phrase the FANG stocks, which was coined by CNBC’s Jim Cramer, represents five high flying technology stocks, Facebook (FB), Amazon.com (AMZN),Netflix (NFLX), and Google’s parent company Alphabet (GOOG - GOOGL). Cramer coined the phrase because how incredible these stocks where performing when compared to other technology stocks, or the market as a whole. These stocks have been market leaders for a few years, during which time we have seen their valuations go through the roof. But, the old saying on Wall Street, “stick with what’s working” has simply continued to work with the FAANG stocks. Until recently.

Facebook, Amazon.com, Netflix, and Google’s parent company Alphabet have all now reported quarterly earnings for the second quarter and while Amazon, Google, and Netflix didn’t get destroyed like Facebook, the group combined with Apple (AAPL), had lost $185 billion in market value during the last few days of trading in July. This decline had some investors wondering if the FANG rally is over, while others are considering this a good buying opportunity.

I personally am in the latter camp considering Gross Domestic Product figures came in at 4.1%, the recent job reports have all been strong, and despite some issues, mainly caused by those in Washington, all economic data indicates that the US consumer and economy is strong.

Furthermore, a strong case can be made that Facebook hurt itself regarding growth due to changes it is implementing following the data scandal back in the spring. The stock fell 19% in one day after reporting earnings. For the most part, the rest of the FANG stocks reported good quarterly earnings from most points of view, despite perhaps not topping lofty expectations set by Wall Street analysts. Continue reading "Now May Be The Time To Buy A FANG ETF"