Investor Education: SIPC
The United States Congress established the Securities Investor Protection Corporation (SIPC) in 1970. The corporation was created to protect investors from losses if a brokerage firm fails. The SIPC operates as an individual entity overseen by the Securities Exchange Corporation (SEC).
Read our overview of SIPC here!
The Biggest
“There is a tide in the affairs of men which, taken at the flood, leads on to fortune.” —Shakespeare
Stock markets once again had a mixed week, with the S&P 500 down about 0.3% last week and the Nasdaq posting a positive return of about 0.4%.
Less mixed were some of the reactions to legendary investor Stan Druckenmiller’s comments at the Sohn Conference during the week. When commenting on the current environment, Druckenmiller said:
“I’m sitting here staring in the face of the biggest and probably the broadest asset bubble, forget that I’ve ever seen, but that I’ve ever studied.”
And specifically in regards to the stock market, he commented:
“When I look at the market at 20 times earnings. When I look at margins as high as they are. When I looked at the fiscal challenges I just pointed out and the squeezing of private investment…. It's hard for me to envision stocks being higher in 10 years.”
At the same conference, Karen Karniol-Tambour, Co-Chief Investment Officer at Bridgewater Associates, made the following comments about the current level of the stock markets in the U.S. when asked if they were overrated or underrated right now:
“Way overrated. You could get a recession. You don’t have any degree of inflation volatility priced in. You already have Fed easing priced in. There’s just room for downside.”
So one of the all-time great investors and the Co-CIO at the world’s largest hedge fund think, once again, that it’s an especially risky time to be in stocks right now. What’s the average investor to do, assuming he or she wants to pay attention to such risks?
We’ve made the case before that Cash and Knowledge are great hedges, and we still think that’s true. Knowing what you own and having ready cash to take advantage of opportunities that might come along is a tried and true method for surviving volatile markets. On the cash part, Druckenmiller seems to agree, as he also made this comment during the conversation last week:
“You’re going to have unbelievable opportunities in the next couple of years. There’s a lot of dispersion within industries, and just make sure to preserve your capital until they present themselves.”
Tweets of the Week
In Case You Missed it…
Gabelli Interview Panel on Berkshire Hathaway: Adam Mead, Chris Bloomstran, Todd Finkle (video)
Petrobras & the Complexities of Navigating Political Upheaval in Brazil
The Business Brew Podcast: Dave Waters - Searching Nooks and Crannies
Permanent Podcast: Claire Hughes Johnson: Scaling People
Daktronics, Inc. Strengthens Financial Position by Securing $100 Million In Capital Commitments
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