Posts by Darryl H

The Sharpe Ratio is essentially a measure of risk adjusted return which measures investment return per unit of risk. Presumably, the higher the Sharpe Ratio the better. Many quantitative investment firms require potential portfolio managers (PMs) to be able to demonstrate their ability to build investment portfolios with Sharpe Ratios exceeding a certain value. Again,…

As investors read the daily financial news and listen to their favorite investment gurus on television or the internet, who should they trust? All can agree that the stock market has risen over time at an average rate of about 10% per year and that likely will continue over the long term. Unfortunately, many investors…

If you have a financial adviser, then you probably have a way of determining if your adviser is a good fit or not. Usually, investment track-record and trust are two of the biggest factors when it comes to determining whether or not you are happy with your adviser. Being a financial adviser is essentially a…

With back-to-back quarterly declines in GDP, we are currently in a recession based on the technical definition. GDP growth for the first two quarters of 2022 was -1.6% (Q1) and -0.9% (Q2). Going beyond the technical definition of a recession, it is debatable as to whether we are in a recession primarily because of the…

There are two kinds of PE ratios that are typically calculated, absolute PE ratios and relative PE ratios. Absolute PE ratios are essentially a stock’s current price divided by its most recent 12 months of earnings. Relative PE ratios tend to compare a stock’s absolute PE ratio to an industry average or to a stock’s…

As an investor in the stock market, one of the decisions you will have to make is when to buy stocks and the timing of those stock purchases. During the decision-making process you will hear discussions about the current economic environment, including factors such as inflation, deflation, GDP (Gross Domestic Product), unemployment, trade wars, interest…

Having the right investment strategy should help investors with minimizing their low and maximizing their high return years. Investors should focus on the best combination of quality, value, and financial strength when making their stock picks to build their investment portfolios.  Also, it’s not necessary that investors place too much emphasis on a specific industry…

As the Federal Government attempts to put the brakes on historically high inflation, the markets continue to be volatile. Unfortunately for the Fed, their inflation fighting tactics are one-sided in that they have absolutely no control of what is happening on the supply side of the equation. Raising interest rates can certainly reign in demand…

Although history can be used as a guide to help investors get more clarity about the future, it is still important to keep your emotions in check and not let them interfere with your investment decision making process. Let’s face it, no matter what the past says about the future it cannot be predicted by…

Why do certain stocks react negatively to news that interest rates might rise over the long run? Probably because present values of future cash flows will be less and therefore the value of certain stocks should decline. That is a good basic answer, right? Makes sense, but how low should a stock’s price decline if…