Inside The Stock Market ...trends, cross-currents, and outlook
On Buying the “Best Managed” Companies
Does it pay to buy companies Wall Street widely recognizes as having good management? Probably Not! This study examines 45 companies which over the last ten years have received the “best managed” accolade. What happened, to their earnings, dividends and the stock prices after being anointed “best managed”?
Still Down, But Getting Close?
The stock market may be on the verge of 1982’s best buying opportunity, even though for the time being the caution light is on. Early Warning Index and Major Trend Index both Neutral now and 750-780 may be just around the corner, and, a “surprise” financial shock may no longer be a surprise.
View from the North Country
Did you see Mike Blumenthal’s article, “What Ronald Reagan can learn from Jimmy Carter”? If not, read this brief synopsis. Advises RR to adjust economic program quickly and decisively to new conditions. Don’t hang tough, then retreat step by step. Changing course is not politically wrong.
Keeping the Tradition: The View of 1982
Tradition calls for predictions and prognostications this time of year. Some call it thermal pollution time. This ritual is, however, a relatively harmless practice, just so long as investors do not take it too seriously.
Inside the Stock Market
Still a super cycle bull market, but cyclical uptrend in question. Major Trend Index still positive but has slipped badly. Early Warning Index turned Negative Dec. 21…Caution!
Interim Memo
The coronavirus epidemic/pandemic is getting the bulk of the blame for the sudden collapse in U.S. equities, and certainly qualifies as one of the few “black swans” seen in modern market history. We do not think the ultimate path of the coronavirus contagion can be analyzed at this point, and medical experts foresee possible outcomes ranging from a serious epidemic to a short burst of illness that fades with the summer weather.
Estimating The Upside
Given the very long-term ebb and flow of market valuations, it is hard to believe that—with old valuation norms finally and decisively violated to the downside—the market will spring back to anything like the valuations seen in the middle of this decade.
Random Notes
Polling The Pro's: We have no new results this issue because no polls were taken. Next issue, you will see what institutional types in Seattle, Portland, Denver and Los Angeles think about the stock market's prospects.
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