Latest Research

Three months ago, our “Of Special Interest” section reviewed the historically pronounced effect of the well-known “Sell In May” phenomenon during mid-term years of the presidential election cycle.

The United States’ large P/E premium relative to the rest of the world suggests that foreign equities should produce total returns of about two percentage points (annualized) above the U.S. over a seven to ten-year horizon.

July’s Russell 2000 -6% rout finally deflated some of the Small Cap valuation premium we’ve been grousing about in recent years.

Beverages is one of a handful of “defensive” groups which has staged a comeback in our ratings during the last few months. 

Remember that peaks in market breadth tend to lead peaks in the S&P 500 by at least a few months.

We’ve lived through many other low-volatility market rallies, but until the last couple of months we hadn’t experienced one in which clients, colleagues, and commentators were complaining so loudly of boredom.

Among EM countries, the Indian equity market has been one of the most difficult corners for international investors to gain access. We look at the market characteristics and investment channel options to consider how to best gain exposure to Indian companies.

Cheapest three sectors on a relative basis: Info Tech, Health Care, Energy

Up/Down Earnings: Q2 Starts Off With A Bang

Small Cap Premium Slumps To 17%

Small Cap stocks significantly underperformed Large Cap stocks since late March.

Growth And Value Go Down Together

The S&P 500 couldn’t hang on to its gains and snapped a five month winning streak in July. This is only the third down month in the last year.

Factor performance over the first three weeks of July was very different than the last week, which produced a challenging month-end for quantitative investors.

With the Fed policy approaching actual tightening, the market is trying to price in a rate hike in the next year or so. This is a rather typical market response.

We studied the five previous initial rate hikes and present the average pattern over the one year period prior to these events.

There have been several cases in the last couple years where credit and/or currency risk-off events never affected equities. We will soon find out if this is just another one of those. Caution is recommended.

              The Major Trend Index dropped 0.02 to 1.08 in the week ended July 25th, with four of five categories declining during the period. The string of weakened readings this summer prompted us to cut net equity exposure in our tactical funds on July 10th by 5-6% to 60%, and we stand ready to hedge equity positions further if our disciplines continue to deteriorate.

Net cash flows have now been positive for domestic equity ETFs in nine of the past ten weeks.  YTD tallies, however, remain muted compared to those seen at this time last year.