I’m calling it; that’s enough talk about Janet Yellen and the Federal Reserve’s likely strategy to continue printing money until the economic renewal picks up steam.
America has spent trillions to save its housing, financial, and auto sectors, and in the process, it has likely crippled the future generations with its massive build-up of national debt.
Yet at the same time, across the Pacific Ocean, China has seen decades of economic growth that has driven the country to surpass Germany and Japan to become the second-largest economy in the world, trailing only the United States. But unlike good old America, the Chinese have also managed to build up reserves of over $3.5 trillion.
And while there are still many in the United States who dish on China, I’m not in that camp. Having traveled to China, I can tell you the growth there has been staggering and it is reflected in the building of massive super cities that make New York City look small.
The money and wealth creation in China from the rural areas to the urban centers has driven the domestic consumption, and I expect this trend to continue.
And while the focus here was on the Federal Reserve and its suspect quantitative easing strategy, the Communist Party in China was meeting to discuss the future of the country.
At the core of the massive reforms in China will be major changes to its current policies as the country gets set for what will likely be another 20 years of growth superior to the United States and other Western countries. China doesn’t want its economic engine to stall…. Read More
Apple, Inc. (NASDAQ/AAPL) is maintaining its position as the top seller of smartphones in the U.S., but in the more important global market, Apple is trailing behind its competitors. Unless Apple gains traction in China and the emerging markets, the stock is going nowhere—and that is exactly what institutional money is saying. In the last six months, institutions sold a net 29.14 million shares of Apple, cutting institutional ownership by 5.5%, according to Thomson Financial. The takeaway point in this scenario? When institutions sell, you need to take note and follow the pro money.
Simply put, by looking at where the institutional money is flowing, you can get a better sense of the market. Institutional investors are the money guys who have better access to important information and know when it’s time to jump ship. When a top-ranked analyst says jump, it’s usually wise to jump.
Take a look at the high momentum Internet services stocks. Institutional ownership is declining here, and I’m not surprised, given the massive run-up in prices this year.
Netflix, Inc. (NASDAQ/NFLX) has been the current target of heavy selling by institutions, as the share price surged above $300.00 and the valuation got out of whack at 86 times (X) its estimated 2014 earnings per share (EPS) and a massive price-to-earnings growth ratio at 8.62. Talk about overvalued! Institutions realize this, and over the past six months, 16.13 million shares were dumped, representing a decline of 4.5% in institutional ownership, according to data from Thomson Financial.
Even insiders at Netflix are selling, with 1.06 million shares sold via 26 transactions. On November 4, Neil Hunt, Netflix’s … Read More