Business cycles can be brutal.Most industry participants suffer when the cycle turns down. The weaker companies exit the market, sometimes voluntarily, other times through bankruptcies. Stronger companies take advantage of their financial strength and can buy assets on the cheap and increase their market share. When the industry emerges from its doldrums, we see a… [Read More]
Economic Articles for Investors, Students and Educators
As value investors, we like to believe that most investment decisions should be based on the individual stock's investment merits. We think that whatever may be happening in the larger global or macro economic context, while interesting, ultimately has very little bearing on our investment results.
The classic value investing process starts with finding the intrinsic value of a stock and checking the stock price against this value. We take into account the individual security risk, determine the portfolio sizing, and establish the margin of safety we require. Then we invest (or not). Eventually, the stock reaches its fair value or our exit price, at which time we sell and book our profits
I agree with this process. However, it is worthwhile to keep an eye on the major global and macro economic trends and events for the following 2 reasons
- Trigger for Undervaluation: Markets go up and down all the time in reaction to political or other events. Ultimately, investors are human and as humans, they are ruled by emotions. Most financial decisions made in the market are not rational - they are a product of fear and emotion. Value investors wait for irrationality to take hold in the market as they tend to bring up many wonderful investment opportunities
- Catalyst for Value Realization: Do you think infrastructure stocks would do well if the US congress passes a massive infrastructure spending bill? Underinvestment in any given sector may have depressed the valuations for the stocks in that sector. These stocks are just waiting for the right moment to realize the value for the investors who were smart enough to anticipate some future event.
Traditionally, investments based on these ideas are termed as Macro and Event Driven investments. They are not necessarily value investing. However, at Value Stock Guide, we include many macro and event driven investment ideas in our value investing process.
You will find here Value Stock Guide's review of major world and economic events driving the markets and the investment outlook. Also below we include other websites that you will find useful to keep abreast of the most pressing economic topics and news of the day
Economic Articles for Students of the Markets
Economics is the study of money, business, and monetary policy. The economy is what shapes a nation’s profit and ability to operate on an ongoing basis. Economies fuel the world’s industry, and shape jobs, production, and standards of living. It is important for people to understand economics as well as how different economic policies work across the world. Students should have a proper grasp of economic terminology and how it relates to business and human standards. The following economics resources have been carefully chosen to provide a solid understanding of how the global economy works. Many of these websites deliver interesting and topical economic articles for students to use in learning and improving their understanding of the global economy.
The leader in economic news, The Economist is the world’s most popular economics related publication.
This website is a resource for students interested in economics as well as economic scholars.
The free public service magazine explores globalization and the endless connections of our world. Published by the Yale University
The home page for Harvard’s Department of Economics, a leading university in the subject.
Use the right hand side to discover different meanings of politically related economic terms.
Keep up with the latest in economic news at the Economy Watch website.
This economic educational organization is one of the most important and relevant to the world’s economy today.
An easy online economics lesson plan for younger grades about how the economy works.
An organization that focuses on economic education in a way that anyone can understand.
This site has plenty of economics and business related lesson plans to choose from.
Some basic principles of economics can be found here.
In depth educational resources to help students learn about the economy.
The home page for the Foundation for Economic Education.
This website has many resources, lessons, economics articles for students, and places to learn more about economics.
This site features graphs and charts to explain things like inflation, money trends, and more.
You can learn more about trading, stocks, and bonds without the risk at the virtual stock exchange.
This page contains helpful information about money and monetary policy.
This easy quiz helps teach the basics of economics.
This site has some helpful curriculum to teach students about the basics of economics.
An article that discusses the basic principles of economics.
Use this easy to use tool to help you determine the average cost of living based on the region chosen.
This insightful website provides economics information with a touch of whimsy.
Software that teaches economics and how it affects the entire globe.
Play this fun and easy game to teach you about basic economics and money making.
Learn more about the essential and important Austrian theory of economics.
This global forum has a focus on developing business throughout the world.
Part of the India Times, the Economic Times covers worldwide economic related issues and up to date news.
A comprehensive list of study guides covering many topics in relation to the economy.
Take a look at the United States’ current debt, in real time.
US Bureau of Economic Analysis
The BEA analyses and reports on current business and economic growth.
Concepts for High School Grads
An interesting site that has basic yet very important economic information that every HS grad should know.
Interactive games, lessons, articles, and much more all related to students centered around economic principles.
A helpful website with links to more information about important economic topics.
View articles in other categories: Dividend Stocks, Large Cap Stocks, Mid Cap Stocks, small cap stocks, Value Investing Tips, Investing Questions, Business, Personal Finance, Investment Guide, Investment Definitions
Some key macro economic concepts
The following are some of the key economic concepts you should know as you navigate the global economy.
| Deflation definition | Why is deflation bad |
What does the Federal Reserve Rates mean for Investors going into the Summer Months?
With the Federal Reserve likely to cut interest rates this year, investors remain unfazed. That’s because interest rate cuts bode well for stock investments. Investors typically enjoy stronger returns in low-interest rate environments because of consumer and business spending rise. However, as markets closed June 21 within record highs, more information was revealed as to… [Read More]
Do Not Write Off Munis: Comparing Historical Municipal Bond Returns to Stock Returns
In this article, we compare municipal bond market returns to the S&P 500 historical market returns from 1991 to 2016. You may be wondering why compare two financial instruments that are as similar as apples and oranges. The reason is simple, one instrument presents less risk and volatility versus the other and by comparing historical… [Read More]
Is a US Stock Market Crash Coming in 2019?
Risks to the stock prices abound. Are we in for a US stock market crash in 2019? I think the chances are high, and I outline my 7 top reasons
Position Your Portfolio Defensively Going into 2019
As a keen observer of the markets, I have been quite concerned about the prevailing valuations for quite some time. For the last 2-3 years, I have talked about how the market indexes were being carried forward by a small selection of momentum stocks while the rest of the market was in a funk. Many… [Read More]
How Does the U.S. Current Trade Policy Affect the Stock Market?
The bulls have come back to Wall Street it seems, with Yahoo! Finance reporting that three major stock indices began June on a high note. Nasdaq composite closed at its highest since March 12, mainly driven by technology stocks that have surged lately, notably Apple, Microsoft, and Twitter. Both the Dow Jones Industrial Average (DJIA)… [Read More]
Index Fund Bubble: Buy Index Funds Now at Your Own Risk
Index fund bubble is about to burst.
Bold statement, perhaps, given the almost maniacal belief in the superiority of index funds among the general public
But the idea is based in sound reasoning, and ever since I started talking about this, more and more investors are now sounding the alarm bells. Let’s look into the reasons why
Controlling Risk and Potential Losses from your Investments during BREXIT
It’s almost been a year since the UK made a majority decision to leave the European Union. Now that it has been confirmed that the Conservatives will continue to govern the country, the process of Brexit can well and truly begin. Over the past year, there has been much speculation as to how Brexit will… [Read More]
How to Invest in Oil and Profit Now After OPEC Cuts
New OPEC Oil Agreement Changes Every Thing First time in 8 years OPEC has come together and agreed to a reduction in production by 750,000 bpd. This is remarkable for the Saudi and Iranians to come together. While the deal may unravel, it seems unlikely. Saudi Arabia in particular bought themselves some time in the last… [Read More]
How to Invest After BREXIT?
Britain’s decision to exit the European Union has profound implications for the global economic structure. But how does this impact you as an investor? Let’s take a look at how the global business may be affected and how you may want to reposition your investments to take advantage of the changes or at the very… [Read More]
Investing in Deflationary Environment – Effects of Deflation & Best Investments
Deflation is a rare occurrence. However, given the state of the global economy and a general prevailing sense that Europe may be slipping into deflation, many investors are concerned about the possibility and wondering about a strategy for investing in deflationary environment.
Quick Video of me on Benzinga Pre-Market Show
I spent the morning of Dec 24 talking to the nice folks at Benzinga on their Pre-Market show. The interview was about me and VSG and also has some of my thoughts on the market now and crystal ball for 2015. Enjoy Hope you are enjoying the holidays and a Very Happy New Year!
Investment Opportunities as the Keystone Pipeline Approval is Stalled
In 2006, the North Dakota Bakken production was 5240 barrels per day. Today, it produces 1.1 Million barrels per day. With the Keystone pipeline approval being delayed, 75% of the North Dakota oil is transported to the refineries in Nova Scotia and Texas over the rails and the oil transported by the tank cars has… [Read More]
We May be Reaching the Point of Affordable Renewable Energy
The current administration has placed a priority on developing renewable energy industry in the United States. As is the case with any substitution product, the adoption hinges on the ultimate cost to the consumers. For the producers, it is often a catch-22 situation. To be competitive in the market, they need to build up scale… [Read More]
Are Market Indexes Providing a Misleading Portrait of the Economy?
One of the simplest methods of understanding the current financial market is through analysis of market indexes and comparing their values to past reference points like the 52 week high and the 52 week low. Many investors have had their eye on these market indexes lately, confused about why they seem to be doing so… [Read More]
Economic Data Often Drives Capital Markets
Macro changes to economic circumstances are a significant driver of the flow of money throughout the globe. As economic information is released to market participants and investors absorb new information their wiliness to commit capital to specific areas changes. Global macro changes can cause specific influences to certain securities such as currency pairs, sovereign debt,… [Read More]
Gold Holds Gains after the UK is Downgraded
Gold exchange traded fund prices rallied for the third consecutive day, moving out of oversold levels as investors moved back into precious metals. The strong performance led gold minors higher which helped the broader equity indexes gain traction. Overall sentiment remain negative, and it will likely take a while before bullish sentiment in the precious… [Read More]
Will Europe’s Malaise Spill Over into the US?
Spring is in the air and similar to the last three spring seasons, issues related to the Euro zone has taken center stage injecting a modicum of fear back into the capital markets. Although US investors were treated to an early fiasco in the form of the Italian elections, the banking disaster in Cyprus is… [Read More]
US Economy Back on Track – Can the Economic Growth Continue?
After today’s stock market rally, does anyone even remember that just two days ago we received data that showed that the consumer confidence sunk to the lowest level since Mar 2009, a two year low? The CCI came in at 39.8 which was lower than most pessimistic forecast, according to the Bloomberg survey. So it… [Read More]
The US Debt Default Scenario for Investors
Media is having a field day discussing the nightmare that will unfold on the citizenry if US does default on its federal debt. No doubt that the possibility exists, and a US debt default will have a large impact on our personal finances. But as value investors, we are more inclined to look past short… [Read More]