Weighing The Week Ahead: Why Is The Market So Quiet?

An inverted Treasury yield curve is no longer a reliable signal of recession, and what matters more is the level of the curve, Bank of America economists Ethan Harris and Aditya Bhave said in a note.

This conclusion is not sufficiently explained. Most importantly, it was not explained in advance.

Cullen Roche has some Hard Truths for the Inflation Truthers.

Insight for Traders

Check out our weekly “Stock Exchange.” We combine links to important posts about trading, themes of current interest, and ideas from our trading models. Last week we asked about the current time frames of fellow traders. As always, we cited some great sources and discussed some recent picks from our trading models. Felix rated the top twenty stocks in the NASDAQ 100 and Oscar did the same for the most liquid ETFs. Pulling this altogether was our regular editor, Blue Harbinger.

Insight for Investors

Investors should embrace volatility. They should join my delight in a well-documented list of worries. As the worries (shutdown, Fed policy, trade) are addressed or even resolved, the investor who looks beyond the obvious can collect handsomely.

Best of the Week

If I had to recommend a single, must-read article for this week, it would be Dr. Brett Steenbarger’s A Formula for Trading and Investing Disaster. Here is the key concept:

Many problems of trading and investing have a simple source:  People follow the markets on a different time scale from their intended holding period.Typically this means becoming psychologically attached to shorter-term movements up and down and not holding positions as initially intended.The general rule is that, as pattern-recognizing beings, we will find patterns in whatever time frame we follow.When our egos become attached to the patterns we perceive, we act on what we see at the moment and fail to maximize our trades and investments.

Read the full post for ideas on how to avoid this disaster.

Stock Ideas

Chuck Carnevale’s sector-by-sector quest for bargains is like reading a book with a new chapter each week. This week’s installment takes up retail and the “Amazon effect.” As always, the results of his screen may not be suitable for every investor, but they are always worth considering. His analysis is comprehensive, like a master class in stock valuation and analysis. Here are the candidates that made it through the initial screen and get deeper treatment in the article.

How about some non-US dividend ideas? Lyn Alden Schwartzer makes an interesting case for Canadian banks.

Stanley Black & Decker combines solid earnings growth and a reasonable, growing dividend. Check out William Stamm’s post for details.

Kirk Spano updates his accurate call on Kinder Morgan (KMI), adding to his bullish case.

Too late for Zoom Video Communications (ZM)? Beth Kendig was all over this story before the IPO, accurately predicting the strength. In the post-IPO discussion (which you can get on FATRADER) she has recommended waiting for a pullback to the 40-45 range. Our group also discussed the rise in the over-the-counter ZOOM Technologies (ZOOM). Be careful out there.

Personal Finance

Gil Weinreich’s Asset Allocation Daily is consistently both interesting and informative. Each week he highlights stories of interest for both advisoes and investors. This week he cleverly uses World Banana Day to provide a lesson in finding investments that much the duration of your need.

Abnormal Returns always provides interesting ideas on a wide variety of topics. I am a subscriber, and I read it daily. Each Wednesday’s edition includes a post focused on personal finance. This week I couldn’t decide on a favorite. Christine Benz (Morningstar) explains What You Can Learn From Your 2018 Tax ReturnThis is practical and timely advice. It is well worth thinking about right now while the experience is fresh in your mind.

Tadas also highlights an excellent article by Tony Isola, Teaching The Right LessonsHe describes typical stock market contests, showing why they provide the wrong lessons for students. He then describes a different approach which provides a better simulation of life-long experience. From my long-ago experience I know that simulations can be an effective teaching tool, generating enthusiasm and better understanding of key principles. Doing it carefully is challenging but rewarding. Read the full post for details about the game and how you can give it a try.

Watch out for…

Pinterest. Beth Kendig warns about the low revenue per non-US user. Unfortunately, that is the major source of user growth. I’ll look for her follow up on this story with great interest. For now, be cautious.

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