The Wide Moat Channel

Leave the Renminbi Out of US-China Trade Talks

A potential agreement could contain many “win-win” elements, notably concerning intellectual property rights and export subsidies. But pushing China to commit to a more stable exchange rate risks creating major problems when the next big Asian recession hits.

Germany, Startups, and Inflation

Wie Gehts mit Deutschland?; Jump-Starting U.S. Startups; Big Data Is Changing Inflation

Copper Well Positioned to Lead the Next Resource Cycle

Global copper capacity could be short some 41,000 tons by as early as 2021, says one commodities research firm. Meaning: We could be looking at another commodities super-cycle, with the red metal leading the way.

Time to Change Strategy

Friends don’t let friends buy and hold. At a minimum, you need some type of hedging program on your equity portfolios. Using a simple 200-day moving average to signal the time for going to cash, while not the best, will help protect you from the worst of a massive bear market.

Light Vehicle Sales Per Capita: Our Latest Look at the Long-Term Trend

The moving average for the per-capita Light Vehicle Sales series peaked in 1986. Thirty-plus years later, it is now down 30.2% from that 1986 peak.

Fed Evaluates Policy and Portfolio Strategy

A quiet and unsurprising FOMC statement belies the important policy discussions and decisions ongoing at the Fed.

Eurozone Debt Disputes Make an Unhappy Union

Once upon a time, bonds backed by a government’s full faith and credit pledge were generally considered less risky than corporate bonds. Times have changed. In today’s political climate, not all governments inspire us with the same confidence.

Five Key Ways Advisors Deliver Value in 2019

What is the value of a financial advisor in 2019? We break down the full value of an advisor’s services in this easy-to-follow equation.

ECRI Weekly Leading Index Update: WLI YoY 24 Weeks Negative

This morning's release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 146.4, down 0.5 from the previous week. Year-over-year the four-week moving average of the indicator is now at -0.87%, down from last week. The WLI Growth indicator is now at 1.12, also down from the previous week.

Market Remains Overvalued

Here is a summary of the four market valuation indicators we update on a monthly basis.

  • The Crestmont Research P/E Ratio
  • The cyclical P/E ratio using the trailing 10-year earnings as the divisor
  • The Q Ratio, which is the total price of the market divided by its replacement cost
  • The relationship of the S&P Composite price to a regression trendline

Quarterly Letter

What a difference three months make. For the full year 2018, every primary asset class was negative: the S&P 500 lost 4.6%, commodities were down 13.9%, long-dated US Treasury bonds were down 1.6%, and gold gave up 1.9%. Contrast that with the first quarter of 2019 – every one of those assets was up!

Market Cap to GDP: An Updated Look at the Buffett Valuation Indicator

With the latest April close data and Q1 GDP Advance Estimate, we now have an updated look at the popular "Buffett Indicator" -- the ratio of corporate equities to GDP. The current reading is 124.5%, up from 123.7% the previous quarter.

The Q Ratio and Market Valuation: April Update

The Q Ratio is a popular method of estimating the fair value of the stock market developed by Nobel Laureate James Tobin. It's a fairly simple concept, but laborious to calculate. The Q Ratio is the total price of the market divided by the replacement cost of all its companies. This update includes the April close data.

Is the Stock Market Cheap?

Here is the latest update of a popular market valuation method using the most recent Standard & Poor's "as reported" earnings and earnings estimates and the index monthly average of daily closes for the past month.

4 Transportation Sector Research Candidates: Do You Dare Have Your Money Travel With These Stocks?

As a rule, I have never been very fascinated by the Transportation Sector. This is especially true regarding airlines and air transport companies. Nevertheless, there are two airlines and two air freight carriers in the Transportation Sector that I felt comfortable featuring in this article.