Broken Pie Chart

Welcome to the Broken Pie Chart Podcast Episode 10. In this episode Derek Moore discusses some economic indicators that matter to investors. Many people hear the terms GDP, Inflation, Unemployment, and the Fed Funds Rate but aren’t exactly sure what they really mean. We look to deconstruct these popular indicators and show how they are important to investors

Welcome to the Broken Pie Chart Podcast Episode 9. In this episode Derek Moore discusses the relationship between bonds and interest rates. Plus, what everyone gets wrong when pointing to bond returns during the late seventies when interest rates were rising and how returns weren't that bad. While we can't predict where interest rates will go, we certainly can learn a lot about what drives bond market values regarding interest rates and how a spike in rates now would be different from the nineteen seventies version

Key Takeaways:

• • What is the inverse relationship between interest rates and bonds
• • Explaining bond par value, coupon interest payments, payment frequency
• • How much bond market values are impacted by changes up or down in interest rates
• • Understanding how Macaulay Duration and Modified Duration can show how sensitive bonds are to changes in rates
• • Examining article from New York Times February 1982 when 30 Year Treasury Bonds yielded nearly 15%
• • What the media is missing when saying bonds returns during 1970 to 1982 period weren't that bad?
• • How higher coupon interest payments and lower modified duration buffered against larger losses in the seventies
• • Nominal returns versus real returns when accounting for inflation
• • How in the long run total returns from bonds are driven mostly by the coupon interest payments?
• • Discussing present value of future interest payments regarding bond principle repayment risk.
• • US Aggregate Bond Index AGG movement thus far in 2018

Mentioned in this Episode:

Global Bond Yields http://www.wsj.com/mdc/public/page/2_3022-govtbonds.html

1982 New York Times Article Archive All Time High In Bond Yields https://www.nytimes.com/1982/02/05/business/record-set-on-30-year-us-bonds.html

Broken Pie Chart Book by Derek Moore https://amzn.to/2MibTSk

US Aggregate Bond Index Returns vs S&P 500 Index Returns 1980-2017 https://www.thebalance.com/stocks-and-bonds-calendar-year-performance-1980-2013-417028

Current US Treasury Bond Yields as well as Modified Duration http://www.wsj.com/mdc/public/page/2_3022-bondmkt.html

Welcome to the Broken Pie Chart Podcast Episode 9. In this episode Derek Moore discusses the relationship between bonds and interest rates. Plus, what everyone gets wrong when pointing to bond returns during the late seventies when interest rates were rising and how returns weren’t that bad

Welcome to the Broken Pie Chart Podcast Episode 8. In this episode Derek Moore reviews the so-called Buffett Indicator as well as the Shiller PE Ratio. With markets once again at all-time highs we are seeing some various articles and commentary on how to tell what market valuations might be considered too high or low.

Key Takeaways:

• • What is the Warren Buffett Indicator?
• • How is the Buffett Indicator calculated?
• • Where to find the Nominal GDP and market cap to use to calculate the Buffet Indicator
• • How do interest rates affect stock market valuations?
• • Present value versus future value of future earnings estimates
• • What is the Shiller PE Ratio?
• • How is the Shiller PE Ratio Calculated?
• • Rolling average of S&P 500 Index earnings vs current PE Ratio
• • Possible solutions to protecting downside market moves
• • How valuation indicators may or may not predict future market moves

Mentioned in this Episode:

Razor Wealth article explaining Buffett Indicator https://razorwealth.com/the-buffett-indicator-explained/

Fortune Article http://archive.fortune.com/magazines/fortune/fortune_archive/1999/11/22/269071/index.htm

Nominal GDP

https://fred.stlouisfed.org/series/GDP

Wilshire 5000 Full Cap Price Index

https://fred.stlouisfed.org/series/WILL5000PRFC

Nonfinancial corporate business; debt securities; liability, Level (NCBDBIQ027S)

https://fred.stlouisfed.org/series/NCBDBIQ027S

Shiller PE Ratio

http://www.multpl.com/shiller-pe/

Broken Pie Chart Book by Derek Moore https://amzn.to/2MibTSk

Welcome to the Broken Pie Chart Podcast Episode 8. In this episode Derek Moore reviews the so-called Buffet Indicator as well as the Shiller PE Ratio. With markets once again at all-time highs we are seeing some various articles and commentary on how to tell what market valuations might be considered too high or low

Welcome to the Broken Pie Chart Podcast Episode 7. In this episode Derek Moore is joined by Alpha DNA Founder Wayne Ferbert to discuss how they are using big data, machine learning, digital internet analytics, and proprietary algorithms to detect changes in consumer demand which can lead to pinpointing earnings surprises in a universe of 3000 companies across various market caps. These changes in trends seen by analyzing the digital internet footprint looks to determine whether companies' quarterly earnings announcements will surprise the street and by how much. Wayne also discusses turning these high-level analytics into investment strategies including a long/short version and a best picks strategy.

Key Takeaways:

• • The early ways institutions tried to generate alpha including overhead parking lot photos at Walmart and satellite photos of oil tankers
• • How analyzing internet data can identify changes in trends and potential earnings surprises
• • The complexity of turning raw "big data" into something usable
• • How the Internet Advantage Strategy (IAS) Long/Short looks to own the best companies and short the worst ones to minimize systematic market risk
• • The goal of delivering alpha through Alpha DNA's Best Picks Strategy
• • How analyzing the hidden demand trends can help to find edges in earnings forecasting
• • Discussing the Harvard Business Review article around measuring digital strength of a company versus its market cap
• • Opportunities for companies to increase their digital footprint
• • How President Trump's comments about going to a twice a year earnings release versus quarterly might affect company forecasts.
• • What effect if any the recent Facebook data controversy might have in the ability to continue to utilize internet data in their strategies

Mentioned in this Episode:

Harvard Business Review Article https://hbr.org/2017/09/are-you-accurately-measuring-your-companys-digital-strength

Alpha DNA www.alphadnaim.com

Buy and Hedge Book by Wayne Ferbert and Jay Pestrichelli https://amzn.to/2xcfeZv

Broken Pie Chart Book by Derek Moore https://amzn.to/2MibTSk

In this episode Derek Moore is joined by Alpha DNA Founder Wayne Ferbert to discuss how they are using big data, machine learning, digital internet analytics, and proprietary algorithms to detect changes in consumer demand which can lead to pinpointing earnings surprises in a universe of 3000 companies across various market caps

Welcome to the Broken Pie Chart Podcast Episode 6 Adding Downside Buffers to Investment Portfolios Using Options. In this episode Derek Moore is again joined by Jay Pestrichelli, founder of ZEGA Financial and co-author of the book Buy and Hedge to discuss using options to create positions which control but don't own shares of stock market indexes. These positions have the goal of providing upside greater than the market while installing a downside buffer down to a certain level in case markets sell off. Also discussed is the idea of using fixed income as a funding source via dividends to pay for long stock ownership. This switches the risk from an un-buffered long stock profile to more of a short duration high yield fixed income risk profile.

Key Takeaways:

• • What are long stock portfolios with embedded downside buffers?
• • How are options utilized to reduce risk by building a synthetic long stock position?
• • Targets of utilizing a Buffered Index Growth strategy include greater upside participation.
• • Targets also include not participating in the first roughly 25% down moves in markets thus providing a buffer.
• • Understanding frequency and size of downside market moves.
• • Why everyone doesn't adopt a Buffered Indexed Growth strategy
• • How a portfolio has the goal of shifting from a stock risk profile to a fixed income risk profile.
• • How short duration fixed income (bonds) can perform in various market conditions
• • Why losing less in a stock portfolio leads to potentially growing more over time
• • Those within 10 to 15 years of retirement may need more growth but can't take more un buffered, un hedged equity risk
• • Bonds usefulness at low interest rates in portfolios may not be as helpful as they once were

Mentioned in this Episode:

Broken Pie Chart Book by Derek Moore https://amzn.to/2MibTSk

Buy and Hedge Book by Jay Pestrichelli and Wayne Ferbert https://amzn.to/2xcfeZv

Broken Pie Chart Podcast Episode 6 Adding Downside Buffers to Investment Portfolios Using Options. In this episode Derek Moore is again joined by Jay Pestrichelli, founder of ZEGA Financial and co-author of the book Buy and Hedge to discuss using options to create positions which control but don’t own shares of stock market indexes. These positions have the goal of providing upside greater than the market while installing a downside buffer down to a certain level in case markets sell off

Welcome to the Broken Pie Chart Podcast Episode 5 Do Presidential, Senate, and House Party Affiliations Really Impact Stock Market Returns? In this episode host Derek Moore takes listeners through historical S&P 500 Index Total Returns back to 1923 matched up with the President, whether they were republican or democratic, as well as the party affiliation of the senate and house. Many might be surprised at the results when Derek explains the annual average stock market returns by various combinations of control. Plus, see how Presidents back 96 years average annual stock market returns have faired against one another. Including Presidents Coolidge, Hoover, FDR, Truman, Eisenhower, Kennedy, LBJ, Nixon, Ford, Carter, Reagan, G.H. Bush, Clinton, G.W. Bush, Obama, and Trump. Plus, see which presidents have enjoyed the best annual non-seasonally adjusted Gross Domestic Product (GDP) growth on an annual basis.

Key Takeaways:

• • What are the stock market historical results by past presidents?
• • How does the market do when comparing republicans to democrats?
• • How does the stock market perform when republicans or democrats control the presidency, senate, and house?
• • What are historical market returns based upon combinations of party's president, senate, and house?
• • The time a president takes office in an economic cycle may have more to do with results
• • Should the Federal Reserve of the President get more credit for the stock market and economy?
• • Role of inflation and interest rates in stock market returns
• • What was President Obama's average annual GDP growth rate non-seasonally adjusted?
• • How does Trump's GDP annual growth rate in 2017 compare to past presidents?
• • Compare historical per president average annual GDP growth rate.

Mentioned in this Episode:

Article Showing Historical S&P 500 Returns by President, Senate, and House Party https://razorwealth.com/do-presidents-and-the-congress-really-impact-stock-market-returns/

Broken Pie Chart Book by Derek Moore https://amzn.to/2MibTSk