A report from IBISWorld, which publishes reports on market industry research, said that some of these industries below are “expected to continue their meteoric rise and far outpace the rest of the economy.”
Although construction and homebuilding were hurt during the recession, the green building industry has weathered the storm quite nicely. According to IBISWorld, sustainable building has had annualized growth of almost 29% since 2002 and is expected to grow by more than 18% during this year. Private demand has grown for sustainable building, and state building codes have encouraged builders to use sustainable materials. Both of these things have contributed to the rise of this sector. Over the next few years, sustainable building is expected to grow at Read more »
The picture below illustrates that people, while purchasing basic necessities aren’t giving their money away to thousands of brands but are rather giving their money to just but a dozen or so global companies which, are the leaders in productions and international trade.
Historically, dividends have been critical for maximizing total returns. But what are driving stock prices to all-time highs today? From Guggenheim Partners’ Scott Minerd: Multiple Expansion Driving the Rally in U.S. Equities. The P/E multiple, defined as the ratio of price to trailing 12-month earnings, has been the main driver of the rally in U.S. equities over the past two years. The S&P 500 index has increased by over 34 percent since the beginning of 2011, of which 28 percent has come from multiple expansion. During the same period, growth in corporate earnings has slowed. The trailing 12-month earnings for S&P 500 companies rose 2.4 percent in 2012 and another 2.5 percent for the first seven months of this year, registering the slowest earnings growth in non-recession years since 1998. Without renewed earnings growth, a continued rally in stocks driven by multiple expansion may be not sustainable. When multiples are expanding, stocks are getting “more expensive.”
S&P 500 RETURN AND THE BREAKDOWN OF CONTRIBUTION
Read more »
One of the prejudices people encounter in the investment process is overconfidence in the quantitative estimates of the market, profitability, probability, etc. The following is an example of overconfidence which is shown in research conducted by Clark and Statman.
In 1986, the Dow Jones was evaluated under the condition that the dividends paid by companies within the index are not reinvested and thus was set to 40 points. In 1998, the index was at 9000 points. What do you think the value of the Dow Jones would be if companies within the index were reinvested and increased its value? Try to guess at least the range and order values.
Answer: If the dividends paid by the companies of the index would have been reinvested, the Dow Jones would have been 652,230 in 1998! Those who suggested a number close to that do not suffer from overconfidence in regards to investment analysis
With the recent approval in July by the SEC that will allow hedge funds to advertise and market themselves, I thought it would be a good time to write about what hedge funds are designed for and some risks you should know about. This is not meant to imply all hedge funds are risky or bad investments, because there are some fine hedge funds out there. However, you should be aware of what these investments are because you are probably about to be exposed to their advertising.
1. Who are hedge funds designed for
For the most part, hedge funds (unlike mutual funds) are unregulated because they cater to sophisticated investors. In the U.S., laws require that the majority of investors in the hedge fund must be accredited. That is, they must meet certain annual income requirements and have a net worth of more than $1 million excluding a primary residence. The idea is that investors who meet these requirements will have a significant amount of investment knowledge. Hedge funds can be thought of as mutual funds for the institutional and ultra-high-net-worth investors.
Hedge funds are generally illiquid investments as they often require the investor to keep their money in the fund for at least one year. They often invest speculatively to maximize capital appreciation. Most hedge fund investment strategies aim to achieve a positive return on investment regardless of whether the market is rising or falling. Read more »
Currency fluctuations are a natural outcome of the floating exchange rate system that is the norm for most major economies. The exchange rate of one currency versus the other is influenced by numerous fundamental and technical factors. These include relative supply and demand of the two currencies, economic performance, outlook for inflation, interest rate differentials, capital flows, technical support and resistance levels, and so on. As these factors are generally in a state of perpetual flux, currency values fluctuate from one moment to the next. But although a currency’s level is largely supposed to be determined by the underlying economy, the tables are often turned, as huge movements in a currency can dictate the economy’s fortunes. In this situation, a currency becomes the tail that wags the dog, in a manner of speaking.
Currency Effects are Far-Reaching. While the impact of a currency’s gyrations on an economy is far-reaching, most people do not pay particularly close attention to exchange rates because most of their business and transactions are conducted in their domestic currency. For the typical consumer, exchange rates only come into focus for occasional activities or transactions such as foreign travel, import payments or overseas remittances.
A common fallacy that most people harbor is that a strong domestic currency is a good thing, because it makes it cheaper to travel to Europe, for example, or to pay for an imported product. In reality, though, an unduly strong currency can exert a significant drag on the underlying economy over the long term, as entire industries are rendered uncompetitive and thousands of jobs are lost. Read more »
Денежно-кредитное управление Сингапура заявило, что сумма активов под управлением, размещенных в стране, в 2012 гоу выросла на 22% и достигла 1,63 трлн сингапурских долларов ($1,29 трлн). 70% всех средств были инвестированы на рынках стран Азии (против 60% годом ранее), а сумма средств под управлением хедж-фондов выросла на 8% до $77,5 млрд. Многие прогнозируют, что к 2015 году Сингапур по размеру размещенных в стране активов под управлением обгонит традиционного мирового лидера — Швейцарию.
В последнее время Швейцария и ее банковский сектор находятся под серьезным давлением со стороны многих развитых стран и влиятельных международных организаций. Сложная ситуация и у Люксембурга, который согласился на автоматический обмен информацией о банковских счетах с налоговыми органами стран ЕС. В отличие от этих стран Сингапур предпринял целый ряд политически выверенных шагов, которые позволили избежать конфронтации с борцами с «налоговыми гаванями» и при этом повысить привлекательность в глазах лояльных инвесторов. Ведь именно надежность, определенность и предсказуемость особенно важны при выборе места для долгосрочных инвестиций. Read more »