Welcome back to Wednesday Wangdoodles. We had so much fun with our first installment that we are back for the second time this month. For the newbies to Wangdoodles, I will help point you to interesting investment and financial articles that are worth a few minutes of your time. Hope you enjoy.
- It's been 16 years since Alan Greenspan's famous irrational exuberance speech. He was very vague about where the exuberance was occuring. Last week Janet Yellen has gone where no other Fed Chairman has ever gone before. She specifically pointed to "substantially stretched" valuations of social media and biotechnology stocks. Should she be giving us stock picks?
- When will we see the Fed finally raise rates? Recent comments from regional Fed presidents, including SF's John Williams, suggests it could come a touch sooner than the 2nd half of 2015. Unemployment has improved faster than Fed forecasts and even doves like Williams see the need to begin to raise rates. On the other hand, hedge fund manager Dan Loeb says anticipating a rate hike is like waiting for a friend that never shows up. He believes if US GDP growth slows to around 2%, which it is, then the Fed will wait even longer.
- The House of Representatives passed a budget that bars the SEC from imposing fiduciary standard on broker-dealers during the next fiscal year. This means brokers can continue to put their interests, in other words big commissions, ahead of their own clients. If you are being sold any type of product (especially annuities), your advisor/broker isn't held to a fiduciary standard, they are held to a suitability standard. Make sure you understand the difference because it can cost you an incredible amount of money in the long run.
- Retail investors have added $100 billion to equity mutual funds and exchange-traded funds in the past year, 10 times more than the previous 12 months. Is this a sign of a market top? "If Wall Street, after poring over all known data, comes up with a target and we're already there, and you still see individual investors buying and they're typically the ones that are late to the party, it would seem there is limited upside," Terry Morris, senior equity manager at Wyomissing.
- El Pollo Loco, which specializes in Mexican-style grilled chicken, is set to go public this week with a $100 million IPO priced between $13-15. The company has struggled with profitability in recent years which will likely make for a shaky short term outlook. LOCO will look to buck the trend of recent restaurant IPOs, NDLS and PBPB which are trading substantially below their first day of trading.
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