The Endless Loop: The Liquidity Dry-Up

  • The liquidity in the market has been decreasing steadily over time
  • Less liquidity results in more volatility, which results in less liquidity, and ends up creating a potentially never ending feedback loop
  • The increase in passive fund investments can put a further squeeze on liquidity in the markets and within those funds
  • The increasing concentration of investor dollars results in a less diversified industry as a whole

The market has been on a wild ride recently, with extreme swings up and down that has left the most seasoned investors weary. It has been showing some signs of weakness for a while, and ended 2018 in the red. There are several things that deserve further analysis, and could tell us the direction that the market is going in the upcoming year. Two of the most important things to pay attention to is the dry-up of liquidity, led by the shift from active investing to passive investing.

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The Sin Industry: Altria’s Taking A Gamble On Vaping and Cannabis

  • Altria has historically been strong, but has dipped in value over the past year
  • They made a $12.8B stake in JUUL, pushing Juul to triple decacorn status
  • JUUL is a young company that has experienced substantial growth over the past three years, and currently represents the future of e-cigarette industry
  • Altria is breaking into the Cannabis industry through Cronos, a Canadian grower that is richly traded

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It is Just a Cycle: Reversion to the Mean

  • The Fed has no choice but to hike rates to normalize the economy
  • Fear and irrational anxiety are moving the markets
  • Understanding market cycles will lead to the highest returns in the long run
  • Corrections are not always a bad thing

Following the Fed Trend: Always One Step Behind 

The Fed hiked rates recently in a move that left markets reeling, and with the President attempting to fire Jay Powell, the Fed Chairman. The Fed moved the target range of the feds fund rate to 2.5% in the fourth hike of 2018. This number is still historically an extreme low. The rates haven’t even approached pre-Financial Crisis levels.

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The Recession Proof Play: Dollar Stores

  • Dollar stores are taking over rural America, with strong annual growth numbers and strong sales
  • The growing wealth gap enables this takeover, and encourages Dollar Stores to grow at a rate of over 1,000 stores per year
  • If we enter into a Recession, Dollar Stores could gain even more traction

The Dollarization of America

Grocery stores have evolved over time, from first delivering non-perishables such as spices and teas to becoming digitally integrated supercenters that offer everything from tires to papayas. The Piggly Wiggly was the first self-service grocery store, established in  1916. Since then, the $820 billion Consumer Packaged Goods industry has seen rapid growth, encompassing everything from home delivery services to online grocery shopping.

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Losing the Race: Under Armour’s Downward Trajectory

  • Under Armour is losing ground and needs to pay attention to the direction that the industry is going
  • There are several nonoperational issues plaguing the business
  • Under Armour is getting left behind in the fitness space
  • The athleisure trend reflects a lifestyle change that will permanently impact retail

Under Armour: The Importance of Performance

The story of Under Armour seems to be the classic entrepreneur fable – football guy lives in his grandma’s basement, selling shirts, and makes it big with an ESPN the Magazine advert that delivered $750,000 in sales within a year. Ten years later, the company reaches $1 billion in revenue, and has a top spot in the industry.

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Capturing Generational Alpha: How Millennials Invest and Why It Matters

  • Millennials have the most to gain from investing – because they aren’t invested
  • Millennials are the most educated, the most indebted, and the future of the world.
  • Capturing Millennial potential wealth in the stock market is extremely important from an institutional and economic perspective

Generational Changes: The Millennial Takeover of the Job Market

Millennials are the largest generation in the US workforce and are the the largest growing customer base for companies. Gen Z is close to graduating from college, and will soon be following in the Millennial’s footsteps. By 2025, Millennials will compose the 75% of the labor force, and soon, they will be the primary investors in the stock market as baby boomers continue to retire and Gen X heads in the same direction.

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Eddie Lampert’s Biggest Failure: The Collapse of Sears and The Importance of Corporate Governance

  • There is a big difference between managing a company and managing a hedge fund
  • Wealth creation begins with focusing on employees and customers in the retail business. If neither are happy, the company will fail.
  • The retail sector has headwinds, but some companies are prevailing, with room for continued growth

The Rise and Fall of Eddie Lampert

Eddie Lampert was “The Next Warren Buffett” back in 2006. Now, he is the chairman and former CEO of Sears, a company attempting to claw its way back from the retail ashes. How did Lampert, an activist investor, go from creating the “next Berkshire Hathaway” to throwing money into the fire that he created of a former retail giant? Was it systematic, the unavoidable failure of retail? Or was it internal, due to bad corporate governance, controlling the stores ineffectively?

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Afraid Of The Dark? Why The S&P 500 Is Not A True Measure Of Stock Market Strength

  • The S&P 500 has gained 6.73% over the last 30 years whereas the average investor saw a return of 3.6%.
  • 37% of Americans are more afraid of investing (more than the 14% that are of the dark).
  • Creating a reliable index will encourage more investors to enter and stay in the stock market.

For the past 10 years, we have been on a tremendous bull run (until the past few days). For the past 10 years, there has been talk about when another correction will occur (with yells that it’s starting now). For the past 10 years, the 54% of Americans that are actually in the market should have seen their wealth increase more than 300% since the market bottomed out in 2009.

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Why No One Cares About the Stock Market

  • The VIX is up almost 27% Year over Year, but is still near all-time lows
  • The S&P 500, Dow Jones, and the Nasdaq are all posting record highs
  • The average consumer does not reap the benefits of a rising tide, but gets hurt by a crashing wave

Welcome to the Recovery

We have been in the longest bull-run ever for over a month now. The market is repeatedly hitting all-time highs, bolstered by strength from stocks like AAPL, AMZN, and Boeing. The leading economic indicators, including manufacturing and inventory, are showing incredible strength. The Fed is hiking rates. Everything is pointing to an economic recovery, right?

Not from the viewpoint of the average consumer.

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The For-Profit Education Sector: How to Profit from Policy Change

  • The Trump administration has made it easier for for-profit educational companies to turn a profit
  • There are significant shifts in the education sector, with moves towards online learning and student loan accountability
  • There are significant headwinds facing the for-profit companies, but if they can gain investor trust, we will see substantial growth

The average college student is faced with a significant amount of financial burden. There is market saturation in the workforce, with too many graduates and not enough jobs in their chosen field. College tuition payments have skyrocketed, for reasons not limited to increases in the number of senior administrators, increases in the construction on campus, and declines in state funding for universities.

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