The financial media loves a catch phrase and, with the apparent emotional hook of the ‘fiscal cliff’ diminished, we needed a new one. The current best candidate is the so-called ‘Great Rotation.’ The idea here is that investors, finally and completely fed up with the dismal returns from bonds, are going to move heavily back into equities. This is the ‘Great Rotation.’ When I Google the term, there are 820,000 search results. Not bad for a phrase that was invented in October 2012 (in a research note from Bank of America, apparently). (more…)
Posts Tagged ‘IPOs’
The Great Rotation?
Posted in Asset Allocation, Bonds, Stock Investing, Tid Bit, tagged equities, fixed income, IPOs, re-allocate, stock rally, Tech bubble, The Great Rotation, trends on February 8, 2013 | Leave a Comment »
Game Theory, Behavioral Finance, and Investing: Part 3 of 5
Posted in Behavioral Finance, Inflation, Investors, Long-term investing, Stock Investing, tagged Amazon, behavioral anomalies, bond investors, Chipotle, glamour stocks, Groupon, investment fads, IPOs, LinkedIn, lotteries, lottery, marketing, Panera, Starbucks, valuation, Zynga on November 2, 2012 | 1 Comment »
In this post, I continue the discussion of behavioral finance with examples of some of the key behavioral biases and where they can be seen in recent market behavior. The specific focus of this post is those biases that drive investment fads and bubbles.
Recency Bias
It is almost invariably the risk that we ignore that really hurts us. The market today is, for the most part, discounting inflation risk. Historically, inflation has been a major threat, especially to bond investors. Today, with yields at historic lows, the implied inflation expectations are exceedingly low. The process by which the market comes up with rationales as to why a risk, that has historically done major damage, no longer matters is at the heart of every bubble. We have had the housing bubble (in which investors became convinced that houses were an infinite source of capital appreciation), the Tech bubble (in which investors decided that valuations based on earnings were irrelevant) and now the government debt bubble (in which investors are implicitly assuming that inflation risk is no concern). The bubbles get out of control largely because people assume that what has worked recently will continue to work. (more…)
The Changing Universe of Public Companies
Posted in Investors, Long-term investing, Mutual Funds, Retirement, tagged employees, IPOs, jobs, manufacturing, public companies, publicly-listed companies, retailers, unemployment, US corporations, US listed firms on October 17, 2012 | 1 Comment »
A new article in Knowledge@Wharton highlights a body of research that suggests that the universe of public companies is very different than in the past. There are, for example, 44% fewer publicly-listed companies on U.S. exchanges than there were only fifteen years ago. The Wharton article is a review of a range of work, including both experts who believe that we are seeing a decline in the role and significance of public firms and those who conclude that we are seeing a natural part of the business cycle. In the late 90’s, it seemed as though every small company, with or without a proven product of earnings, was rushing to cash in on IPO fever. Many of these companies subsequently failed. Today, after a decade of weak market performance and with individual investors increasingly skeptical of the stock market, it is not surprising that fewer firms are going public. The Wharton article also cites increased oversight and regulation of public companies as encouraging firms to remain private. (more…)
What you need to know before you invest in IPO’s
Posted in Active Investing, Asset Allocation, Behavioral Finance, Investors, Leverage, Long-term investing, Market Outlook, Market Timing, Markets, Risk, Stock Investing, Uncategorized, Volatility, Wealth, tagged asset allocation, Avaya, Behavioral Finance, flash crash, Groupon, GRPN, Income Investing, investing, IPO, IPOs, LNKD, long term investing, P, Pandora, Risk, stock investing, volatility, ZAGG, Zyngna on June 13, 2011 | 6 Comments »
I have not seen this type of brand name IPO trading volume for quite some time. From Groupon (GRPN) and Pandora (P) to Zynga (ZAGG) and now Avaya, the media would have you believe that investing in a brand name IPO is a quick fix for your portfolio.
Take the recent public stock offering in LinkedIn (LNKD) for example. The IPO price was set at $45 and jumped to $90 after one day of trading. As of this writing, the price is just below $73. At its current valuation, Morningstar estimates the Price-to-Earnings (P/E) ratio at 466. By comparison, the tech-heavy NASDAQ has a P/E of less than 20 (as of this writing).
Clearly, many people are very excited about the LinkedIn IPO and it shouldn’t surprise you that investors have had a long history of enthusiasm for IPO stocks. But has this enthusiasm ever paid off over the long-term? (more…)
Tid Bit: IPOs’ High Speed
Posted in Tid Bit, tagged BITA, Chinese IPOs, FTNT, IPOs, MMYT, OPEN, TSLA, YOKU on December 16, 2010 | 1 Comment »
Zoom. IPOs are making headlines again.
Ten companies completed their initial public offerings last week, making it the biggest week for IPOs since November 2007. Chinese offerings dominated, with Youku.com (YOKU), described as a “cross between the US’s YouTube and Hulu” jumping $161 in its first day of trading. That’s the largest “first-day pop since Baidu went public in 2005″ according to Renaissance Capital.
Of course, IPOs are often volatile and for every Youku, there’s a Make My Trip (MMYT). That Indian online travel planning site has suffered a big drop in the last few months. (more…)
What Type of Investor Are You?
Understanding your investing profile to achieve your financial goals starts with a few simple questions. The Investor Questionnaire, by Folio Investing, will help you understand your investment time horizon, investor profile and level of risk.
Take Investor Questionnaire-
Folio Investing offers online investing and stock trading to help you reach your investment goals with automated portfolio tools and low-commission or flat-fee pricing.
We're the online brokerage that makes smart investing simple. Picking Stocks and Folio Investing
Subscribe to RSS Feed
Archive
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
Link to Posts by Topic
-
Recent Posts
Most Read
- Can You Get 7% Per Year in Income with Only Moderate Risk?
- More Unconventional Failure
- How To Measure Your Investment Portfolio -- Part One: Volatility & Beta
- Can I Retire? Mike Piper, the Oblivious Investor, Tries to Help You Find the Answer
- Risk, Return and Low Beta Stocks
- What Are the Core Asset Classes for Income Portfolios?
- About
- Risk Budgeting: A Critical Tool for Portfolio Management
- Why Mutual Fund Managers May Not Act in Your Best Interest
- What Are the Core Asset Classes for Total Return Portfolios?
