09-20-2017, 10:54 PM
American companies are holding $2.5 trillion abroad, an increase of nearly 20 percent over the past two years, according to the latest calculations from forecaster Capital Economics. The total is equivalent to nearly 14 percent of total U.S. gross domestic product.
US companies are hoarding $2.5 trillion in cash overseas
"The market is about as highly priced as it was in 1929," said Shiller on Tuesday's "Trading Nation." "In 1929 from the peak to the bottom, it was 80 percent down. And the market really wasn't much higher than it is now in terms of my CAPE [cyclically adjusted price-to-earnings] ratio. So, you give pause when you notice that." In his first interview since penning an op-ed on Sept. 15 in The New York Times, the Yale University economics professor reiterated to CNBC that there's one vital characteristic protecting investors from losing their nest eggs: Market psychology. "It's not just a matter of low interest rates, it's something about the American atmosphere. It's partly the Trump atmosphere. Investors love this. I can't exactly explain – maybe it has something to do with prospective tax cuts. But I don't think it's just that. It's something deeper, and it's pushing the American market up," he added.
The one thing Shiller says is preventing a 1929-like crash
It's conventional stock market wisdom that when investors run out of fresh cash to deploy, the end of a rally is near. Luckily, we're nowhere near that extreme scenario. As Goldman Sachs pointed out in a recent research note, the current cash position of 3.2% for mutual funds is "normal," showing that "skepticism abounds." In other words, the stock market lacks the type of overexuberant sentiment that can leave it vulnerable.
Investor Laszlo Birinyi says high cash levels will send stocks higher - Business Insider
Bilello goes on to describe “second-level thinking.” An investor might have concluded, upon deeper reflection, that Chipotle’s stock was overvalued, or that its earnings might not rise as quickly as expected. The burrito chain might even suffer from growing pains, which is common in the industry. The investor also may have been attracted to the low valuation for McDonald’s shares, and expect its earnings to decline less than expected. McDonald’s, after all, has weathered many storms since its founding in 1955. In the end, the investor who picked old-school McDonald’s over new and exciting Chipotle made a lot of money. We spoke with four professional money managers, and each named at least one company they thought was undervalued based on their own second-level thinking:
These four fund managers’ secret to success: Don’t go with your gut on stocks - MarketWatch
The data released by the department's Bureau of Economic Analysis showed multi-billion dollar foreign direct investments (FDI) in the U.S. from leading economies around the world in 2016. The U.K. ($598.3 billion) led the way, followed by Canada ($453.6 billion), Japan ($424.3 billion), and Germany ($372.8 billion). However, perhaps surprisingly, the world's second largest economy slumped just outside the 10 leading investors. China pumped $58.2 billion into America last year, almost five times less than Ireland ($279.6 billion). France ($267.6 billion), Switzerland ($196.6 billion), the Netherlands ($191.9 billion), Singapore ($73.7 billion) and Spain ($67.2 billion) completed the top 10 in America last year.
US foreign investment: China falls behind Spain and Ireland in 2016