Displaying items by tag: stocks

(New York)

Alongside rising rates and yields, accelerating dividends are a nice feature to have right now. The S&P 500’s dividend growth over the last five years has averaged 13.4%. However, every stock on this list has seen growth north of 20%. The five stocks, which come from quite varied sectors, includes UnitedHealth Group, AO Smith, Zoetis, Mastercard, and Nvidia.

FINSUM: The only catch for this group is that dividend yields, on average, are low, with UnitedHealth Group having the highest at 1.4%, well behind the average S&P 500 yield. The advantage, however, is that a stock with strongly rising dividends is more likely to see capital appreciation.

(San Francisco)

Yesterday was an absolutely monstrous one to be an investor in Facebook. In what will likely go down as a history-making day for the company, Facebook shares dropped a whopping 20% yesterday, equating to more than $100 bn of value lost. The huge losses were sparked by weaker than expected revenue growth as well as flat or falling user bases. That sent the stock down 7%. However, it was the guidance provided on a conference call that really spelled doom. The company’s CFO said that he expected weak revenue growth to continue, while costs were expected to rise 50-60% this year.

FINSUM: The big rise in costs is coming because Facebook is hiring 20,000 staff to increase cybersecurity. The need to do so does not bode well for the stock or the tech sector generally.

(New York)

The S&P 500 experienced a correction earlier this year, and since February, has been stuck in a rut. While the declines were not terribly deep, the doldrums were very long lasting. In fact, this was the longest correction (without a rebound or a fall into a bear market) since 1984. That meant the market was in correction for 115 straight sessions.

FINSUM: The market has finally regained some momentum, but it feels odd that stocks have been gaining in the face of largely negative trade war news. Then again, stocks love to climb a wall of worry.

(Washington)

The trade war appears to be headed down a poor path ever more quickly, and in response, global stocks are seeing losses. The US is continuing to make threats about ever larger tariffs on its trading partners, and Trump is poised for a tense meeting with European Commission head Juncker in Washington today. The president yesterday referred to tariffs as the “greatest”, and the US put forth a $12 bn support package for American farmers hurt by tariffs.

FINSUM: Stocks don’t know what to do, as this trade war is growing increasingly difficult to handicap. Add to that the uncertain over global central bank policy, and we have a very nervy mix for markets.

(Caracas)

Investors will know that the stock market is supposed to be a good inflation hedge, but precious few developed market investors will have ever seen how a market (or people) actually reacts during a period of heavy inflation. For a practical example, look no further than the misery that has befallen Venezuela. Inflation currently stands at 46,000% and is expected to accelerate to 1,000,000%. The government’s printing presses can’t keep up. But how has the stock market performed? The country’s benchmark index is up 73,000% in the last year. Wealthy Venezuelans are using it like a bank, buying stocks to deposit cash, and selling them when they need a withdrawal.

FINSUM: This is something you read about but rarely see in practice. It is an absolute shame what is going on in Venezuela, but a good lesson about the interconnection between stocks and inflation in practice.