Jumat, 30 September 2022

Bear Markets Reveal Value — but Watch Out for Traps!

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Stock Power Ratings

Bear Markets Reveal Value — but Watch Out for Traps!

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Adam O'Dell,
Chief Investment Strategist

Bear markets aren’t fun. It’s excruciating to watch your account’s value decline month after month.

But they do serve a purpose.

In a broad market decline, value starts to reveal itself. Companies that were too expensive during the boom times may start to trade at attractive prices again.

Let’s talk about that.

Value is one of the six primary factors that make up my proprietary Stock Power Ratings system. The others are momentum, size, volatility, growth and quality.

The rationale for value investing is about as simple and straightforward as it gets. You aim to buy a stock for less than its intrinsic value and sell it for a profit later at a fair price.

There are just two problems:

  1. We don’t have a universal definition of “value.”
  2.  Some stocks are cheap for a reason.

But my Stock Power Ratings system can help with that.

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Chart of the Day

Strong Dollar Reveals Imminent Crisis in Global Economy

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Amber Hestla,
Senior Analyst,
True Options Masters

Many things take the blame for global financial crises.

But there tends to be one underlying cause.

Federal Reserve policy is almost always the reason other nations suffer crises.

The Mexican peso crisis in 1994 followed this familiar pattern.

The Fed started raising rates in late 1993.

In November 1994, the Fed raised rates 0.75%. This was an out-of-character move for then-Chair Alan Greenspan, who favored 0.25% rate changes.

The peso fell 50% one month later.

Inflation soared.

U.S. officials organized a $50 billion bailout package by January to stabilize the peso.

Today’s chart shows what the Fed’s latest hike means.

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(Click here to view larger image.)

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1955: James Dean, the American actor who became a symbol for the idealistic youth culture of the 1950s, died in a car accident at 24. His performance in East of Eden earned him the first posthumous Academy Award nomination.


   


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