Latest Research

The S&P 500 gained 1.9% in January. Based on the 1957-to-date valuation metrics presented, the potential downside compared to its historical average remained the same as last month’s reading (-21%).

Herein we provide a year-end update on the factors we determined were important to the active/passive relationship. We found that the market environment and the success of active managers changed significantly in late 2016.

The MTI was roughly flat during January and remains safely in the positive range. Accordingly, equity exposure is positioned at 65%, near the high end of our bullish range of 50-70%.

We think that stocks in Trump’s current term will fall short of Obama’s gains, mostly reflecting a valuation starting point that’s almost twice as high as Obama’s was. “Managing expectations” doesn’t seem like Trump’s style, but in the case of the stock market it might not be a bad idea.

The Major Trend Index stabilized in a moderately bullish range during the past several weeks, yet the Momentum/Breadth/Divergence category is almost the sole carrier of the bullish torch.

The S&P 500 trailing P/E has just climbed above 25x—lower than in March 2009—but incredibly high for any period in which earnings weren’t tainted by recession.

Veteran market analyst Bob Farrell reminds investors that when parabolic uptrends eventually stop, the next move is never sideways. We don’t know that the Dividend Aristocrats and other bond-like stocks traced out a true parabola into last summer’s peaks, but the ugly aftermath suggests they probably did.

The sell-off into last February’s low did not qualify as a bear market, but subsequent action—including the mayhem in “factor-land”—certainly suggests it was a very significant “psychological” low.

Tallying the overseas cash pile, predicting how much may be repatriated, and the potential impact on stock performance are challenging undertakings, which require more art than science.

While Wall Street is extremely well represented in the new administration, we doubt that Wall Street’s performance under Trump will come close to that enjoyed under Obama.

Contrary opinion theory is a valuable tool to investors, but today there are so many self-described contrarians that we sometimes struggle to identify what’s “consensus” and what’s “contrary.”

Read this week's Major Trend Index.

In recent years the Fed has been more forthright than ever about the importance of the wealth effect as a transmission mechanism of monetary policy. But this (or any) policy effect hardly exists in a vacuum, and the Fed would do well to recognize that stock market swings have played an increasingly important role in the country’s fiscal balance.

Read this week’s Major Trend Index.

It seems like it’s been ages since investors have been able to get excited about earnings growth, although our October 21st “Chart of the Week” showed that the S&P 500’s current earnings slump has been unremarkable in both depth and duration.

Our July special report “Active vs. Passive: A Three-Club Headwind” studied the recent dominance of passive indexes over actively managed funds.

Read this week’s Major Trend Index.

A stock market wild card in 2017 is the potential for a significant reduction in the corporate tax rate. President-elect Trump’s desire to lower corporate taxes, if implemented, would have multifaceted impacts on businesses.

For nearly three decades The Leuthold Group has tracked its hypothetical industry group portfolios composed of the previous year’s “Dreams” (best performers) and “Nightmares” (worst performers).