Inside The Stock Market ...trends, cross-currents, and outlook
Will Active Management Ever Beat the S&P 500?
It will happen again! Relative overweights in small caps will be an advantage instead of disadvantage to portfolio managers. Small caps can grow earnings faster.
Earnings Momentum: An Unusual Divergence
S&P heaviest weights now experiencing accelerating earnings momentum. Best broad sector earnings momentum: Energy and Healthcare...Worst: Basic Materials, Utilities, and Technology.
Equity Fund Flows…Short Term
ICI reported April net inflows at $10.6 billion, down considerably from January and February but up from March.
View From the North Country
Current government wage inflation statistics don’t jibe with today’s real world. Future releases will show a significant jump.
1997 Volatility: Indicating a Major Stock Market Transition?
Market volatility 1997 to date well above 1992-1996 levels and also above median levels 1957 to present...characteristic of transition years and bear markets.
Worth Noting
Balanced budget agreement assumes current economic expansion will run about 12 years, longer than any other in history.
Risk/Reward Stock Substitutes
Bonds as attractive Risk/Reward substitutes...disguise them with fictional names such as Bondo Ltd., etc.
Getting Back Together On The Upside
Impressive rally did not alter Negative status of Major Trend Index. S&P 500 beat 90% of sectors in April. Earnings holding up well in Q1, but margins likely to shrink as the year progresses.
View from the North Country
Human behavior demonstrates that individuals as a group are risk averse…studies of investor behavior have yielded some interesting findings. Also, Japanese low interest rates in themselves have not yet converted caution and pessimism into confidence and optimism.
1997 Volatility: Indicating a Major Stock Market Transition
Market volatility 1997 to date well above 1992-1995 levels and also above median levels 1957 to present...characteristic of transition years and bear markets.
Index Fund Update
Index fund assets approaching $78 billion, 6% of U.S. focus fund assets... Year to date, index fund flows now account for about 14% of domestic total.
Equity Fund Flows…Short Term
Mutual fund investors less enthusiastic as they learn stock market is not a one way street. Mutual fund investor speculation monitor remains at low levels.
Potential Fuel for the Equity Boiler: Two Diverging Gauges
U.S. focus equity mutual funds’ cash reserves is now almost as high as back in late 1990 and early 1991 (the last major market low).
Equity Fund Flows…Short Term
Equity Mutual Funds registered $1 billion in net redemptions in latest week. March net inflows down from February but still at strong levels considering weak new supply.
Interim Memo: Major Trend Index Turns Negative
Major Trend turned negative March 24th...Clients notified via Interim Memo. Bull market topping out or possibly already has. Market breadth measures signaling significant market deterioration.
DJIA Economic Sector Weightings…A Different Perspective
The four March changes in DJIA components shifted sector weightings for the index, most significantly in Energy, Financial, Healthcare and Technology.
Goldilocks Forever?
The squeeze is on. Lack of corporate pricing power, higher borrowing costs, rising labor costs and the higher dollar will eventually squeeze profit margins. Look out for earnings shortfalls, while analysts catch up to a change in trend.
View from the North Country
Proportionately, equity investment professionals have the most to lose when the Great Bull Market ends. But are investors really aware of their own potential stock market risks?
An Excellent Return Alternative to Stocks...With Much Less Risk
Bonds a good return alternative to stocks. Fed will help put the brakes on the economy while current yields seen to already discount another bump-up in rates.
1997 Volatility Update
Market volatility 1997 to date well above 1992-1995 levels and median levels 1997 to present.
Subscribe to Advisor Newsletter