Carnegie Market Blog

 

Bezos Annual Letter and Flattening Yield Curve

Posted by Brent Luce on Apr 20, 2018 4:13:56 PM

Jeff Bezos Annual Letter

Earlier this week, Jeff Bezos’ annual Amazon.com shareholder letter was released.  This “Buffettesque” letter is must-read for anyone interested not only in Amazon.com or business in general, but it also sheds light on the disruptive and transformative forces affecting investments and the way we live our lives.  It is packed with good ideas and amazing updates related to Amazon.com itself.  I could make many comments on the letter, but I will just provide you with the letter itself:  Read Jeff Bezos' Annual Amazon.com Shareholder Letter.  Once you read the letter, See Why Business Leaders Love Amazon CEO Jeff Bezos' Letter So Much

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Topics: Recession, $AMZN, Amazon.com, Jeff Bezos, yield curve

Are Stocks Really Better than Bonds?

Posted by Brent Luce on Jun 10, 2016 3:21:22 PM

Quote of the Week

“He who is not courageous enough to take risks will accomplish nothing in life.” – Muhammad Ali 

Bonds Versus Stocks

A widely held belief among investors is that over time, equities will do better than bonds.  While I believed this to be true, I thought it would be interesting to test this.  I was particularly interested in what happened if someone were unlucky enough to have invested all of their money in stocks near the peaks prior to the two major bear markets experienced in the past 30 years.  The chart below shows the current value of $100,000 invested in stocks and bonds on a given date in the past.  To clarify, if one had invested $100,000 in stocks in 1988, he/she would currently have around $1,600,000.  Investing the same amount in bonds would have resulted in a current value of $600,000. 

Looking back over the past thirty years, there is only one short period of time where buying bonds and leaving it there until today would have been better than stocks – the bull market peak before the 2000-2002 bear market.  Even in this case, bond out performance has been marginal.  Interestingly, even if one had invested in stocks at the peak of 2008, right before the biggest bear market since the Great Depression, they would still have been better served being in stocks.  MORE:  Why Stocks Outperform Bonds

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Topics: Recession, Non-Farm Payrolls, Investor Sentiment

Happy Anniversary Stock Market

Posted by Brent Luce on May 20, 2016 4:46:44 PM

Happy Anniversary!

Today marks a one-year anniversary for the market.  One year ago today, the S&P 500 hit its all-time high.  As I just typed “Happy Anniversary!”, I am reminded that today is my 16th wedding anniversary too.  What a coincidence!  Anyhow, looking at the table below, you will see that while the S&P 500 is slightly down in the year since its peak, sector performance is quite dispersed, and the Russell 2000 – an index of smaller capitalization stocks – is down considerably.  So, investors’ returns over the past year have been much more about which parts of the market they were invested in rather than just being invested in the market.  MORE: An Unhappy Anniversary for the Market

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Topics: Recession, Oil Prices, Market Peak, Capacity Utilization

Kuwait on the Prairie

Posted by Brent Luce on Feb 23, 2016 3:22:02 PM

Recession?

Every day, I hear the constant debate about whether the U.S. is going into a recession.  If it does happen, it will be the most telegraphed recession in history.  Interestingly, four states are already in a recession – Wyoming, South Dakota, Alaska and West Virginia.  This is not surprising, as all of these states are highly exposed to energy in one form or another.  Read More: Recession Already Reality in Spots.

The pockets of recession make me think of Williston, North Dakota.  Williston is ground zero for the fracking industry and the population was exploding until the bottom fell out of oil prices.  It was such a phenomenon that several documentaries focused on the new boomtown and the dark side that its unprecedented growth had brought with it.  Today, the town has an emptier feeling.  Read more here about the decline from The New York TimesThe image below illuminates how hot the North Dakota shale oil boom had become.  This is a satellite image of the U.S. at nighttime in 2013.  For the most part, this map makes a lot of sense; all of the major cities are bright spots and most of the west is dark.  BUT…What is that huge city that is bigger than L.A. and Chicago in the middle of prairieland?  It turns out that this is the light from the Bakken oil fields.  

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Topics: Bakken, Housing Prices, Recession, Consumer Confidence

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