The week began with somber news of the bombing at the Boston Marathon. Before getting into our Wall Street week in review, we here at Dividend.com would like to send our best wishes to those affected by the attacks and to the city of Boston as a whole.
Now, back to the market review..
Aside from a brief uptick on Tuesday, the markets have been mostly in the red throughout the week. The 9% fall in the price of gold on Monday really set the bearish mood for the week. However, the sell off of the yellow metal was not the only catalyst in the pullback; earnings season really kicked off, and the reports largely disappointed investors. Though there have better-than-expected earnings here and there, its been mostly underwhelming, perhaps setting the tone for a bearish second quarter.
Below we look back at the week that was on Wall Street with seven articles circulating the business, finance, and economic space this week:
1. Researchers Finally Replicated Reinhart-Rogoff, and There Are Serious Problems.
at Next New Deal
This piece was the big, breaking news in the finance and economics blogosphere this week. Because of research done by economist Carmen Reinhart and Kenneth Rogoff, various nations have been operating their respective economies under the assumption that they cannot see substantial growth with more than 90% debt-GDP ratio. As such, various countries, including the United States, have been scaling back government spending with austerity measures. However, Mike Konczal shows that there was a flaw in the analysis by Reinhart-Rogoff that may discredit the research.
2. Gold and Silver–Where Do We Go From Here?
at Behavioral Macro
Mark Dow explains how those who trumpet gold, saying that it is the only safe haven investment in this fragile economy, drove up the price of the yellow metal. This ultimately hurt small, retail investors who listened to these claims and kept buying the commodity. When the gold crash occurred, it was the retail investors who took the brunt of the losses. In the big picture, gold, according to Dow, reached its top, especially amid an economic recovery (albeit slow). As such, gold may be looking for its bottom in the near-term.
3. Individual Investors Remain Pessimistic
at Pragmatic Capitalism
Despite markets reaching all-time highs (save for the slight pullback this week), individual investors seem to be pessimistic about the short-term outlook for stocks. Charles Rotblutt outlines some of the reasons for the bearish mood from individual investors.
4. The Death of Value Investing
at Business Insider
Value investing is one of the best and most well known investing strategies. Supporters like Warren Buffet champion the strategy as the best way to accumulate wealth. However, Ashvin Bachireddy explains how technology and the internet may have changed the investing landscape, making value investing more-or-less outdated.
5. Could Apple Use its Cash to Go Private?
Analysts and investors have been begging Apple (AAPL) to do something with its vast amount of cash (according to the company’s last earnings report it had $137 billion in cash and long-term investments). Responding to a colleagues’ tweet, Matt Yglesias wonders whether Apple could use its vast stockpile of cash to take itself private sometime down the road.
6. Are Earnings Expectations Realistic?
at Mauldin Economics
The stock market be near all-time highs, but that does not mean the overall economy is thriving. Sheraz Mian of Zacks Investment Research explains that the fragile economy may mean earnings expectations from companies may not be realistic estimates. He shows why these expectations are not realistic and gives tips on how to invest in a low growth environmental.
7. Picking a Perfect Dividend Portfolio
In this article, Mark Hulbert gives some helpful insight for investors to construct an attractive dividend portfolio. He says that building a good dividend portfolio is not always about investing in companies with high dividend yields, but finding healthy and valuable companies that can bring the greatest overall returns.
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