Green Book January 2014

The 2014 Outlook: More Volatility, But Ultimately An Up Year

Gains will likely be modest, and secondary stocks could finish the year flat-to-down. The year will likely be marred by a moderate to severe mid-year correction, and Small Caps could easily suffer a 20% hit during that swoon.

Exploring The Historical Relationship Between Stock And Bond Returns: An Update

We were surprised to see that all differentials ten years and longer are still below their respective 1926-to-date medians, indicating they still have the potential to keep moving towards historical median levels. We expect stocks to outperform bonds going forward.

2014 Time Cycle—Lower Your Expectations & Be Patient

It’s time to update our time cycle composites, and what they say for equities in the U.S., U.K., Germany and Japan and long-term interest rates and credit spreads in the U.S.

Group Scores Worked Well In 2013, What We Like For 2014

All five factor categories did well, and the best performing Attractive industries came from six different sectors and ranged from traditionally defensive to more cyclical groups.

January Anomalies Revisited

The January Small Cap bounce effect ain’t what it used to be, but extrapolating the month’s market action for the next eleven months is a “less bad” idea than any other time of the year.

Buy The Bridesmaid, Not The One Looking To Rebound

The investment leadership of a given year has historically had better-than-even odds of outperforming in the following year at both the asset class and equity sector levels.

Emerging Markets: Dismal 2013, Hopeful 2014

What worked, what didn’t; what you need to consider for investing in Emerging Markets this year.

Small/Mid/Large Caps

Small Cap Premium Continues Upward To 21%. The red-hot equity market of 2013 was especially good for Small Caps with a +38.8% total return.

A Shift In Fund Flow Trends Holds Through Latter Half Of 2013

Both equity and bond categories set all-time nominal net cash flow records.

A Taper & Hibernating Bears