Latest Research

Using non-normalized trailing operating earnings, Small Caps are selling at a 24% valuation discount to Large Caps. Our Ratio of Ratios has now spent two full years below the 2% long-term-median premium for Small Caps.

The first up-leg of the bull market has catapulted many Large Cap valuations to levels seen only in 1999, 2000, 2019, and pre-pandemic 2020. At the six-month point on September 23rd, the S&P 500 P/E on 5-Yr. Normalized EPS had already reached 26.9x—a reading that is 30% higher than at the same point of any other bull market.

“Bull markets climb a wall of worry,” the old saying goes. We’ve heard that piece of wisdom (or imagined we heard it) every week since early summer. But we doubt it was meant to apply to today, when the paralyzing fear is not of potential loss, but of foregone upside (i.e., fear of missing out, or FOMO).

With Q2-2020 reporting now finished, our final Up/Down ratio reads 0.74. This is slightly better than Q1’s 0.71 reading (although both are historically abysmal).

Treasuries’ ability to provide downside protection has weakened; a better way to play defense is probably through duration reduction within corporate credit (including both investment grade and high yield).

We believe the worst outcome would be a drawn-out, contested presidential election that ends up in the Supreme Court. We review historical market patterns under several election-result scenarios.

AdvantHedge was up 2.3% in September. It trailed the inverse S&P 500 (+3.8%) and the inverse Russell 2000 (+3.3%).

The Leuthold Core and Global Portfolios both had losses in September but held up well relative to the broad market, thanks to outperformance of the underlying equity strategies. 

Read this week's Major Trend.

There was little movement among the sector rankings. While Health Care and Information Technology remained the top-two rated sectors (out of eleven total), Consumer Discretionary jumped to the 3rd spot from 5th. Communication Services and Consumer Staples each dropped one position to move into 4th and 5th place, respectively. The bottom-three rated sectors, Real Estate, Energy, and Utilities are unchanged.

We examine a variety of industry groups with noteworthy relative price action on both “reopening” and “closed economy” days. Our objective is to shed more light on the industry groups that are consistently moving together on these days.

Special Purpose Acquisition Companies (SPACs) have become increasingly popular of late. We ask a seemingly simple question: “How do companies fare following a SPAC merger?”

Earnings estimates for 2021 are being projected above the records posted in 2018 and 2019. We ask the question, “How do we get there?” Here we present an introduction to this topic that we will examine at length and provide a full analysis in mid-October.

Outflow from equity-focused mutual fund categories remains relentless despite the recovering stock market, while bond ETFs continue to blow-out record inflows.

The S&P 500 broke a five-month winning streak and stumbled -3.9% in September.

As steadfast believers that “price paid” is a major determinant of an investment’s risk and return, we snap to attention whenever we hear that an asset is selling at a multi-decade low.

Look, quick! Before it reverses! The Top-5 firms in the S&P 500 have underperformed in September! I’m sorry, you’ll have to forgive my sense of urgency, but the astounding speed and consistency in which these firms have outperformed may have burned the notion into my brain that they can only “go up” (or at the very least beat the index).

Read this week's Major Trend. 

Look, quick! Before it reverses! The Top-5 firms in the S&P 500 have underperformed in September! I’m sorry, you’ll have to forgive my sense of urgency, but the astounding speed and consistency in which these firms have outperformed may have burned the notion into my brain that they can only “go up” (or at the very least beat the index).

Read this week's Major Trend.