Latest Research

Looking forward, groups from the Information Technology, Health Care, Consumer Discretionary, and Financials sectors look appealing.

The decrease in correlations has been helpful for investors, but the lack of volatility in the measure has arguably been more important.

2013 ended up being a good year for quantitative strategies, particularly those that focus on using Momentum

Up/Down Earnings: Q3 Ends Below Average. Median Q3 YOY Revenue Comparisons: Small And Mid Caps Continue Leading. Q3 Median Company Earnings Growth: Mid Caps Continue Leading

What worked, what didn’t; what you need to consider for investing in Emerging Markets this year.

For 25 years we’ve tracked hypothetical industry group portfolios comprised of the previous year’s “Dreams” (20 best performers) and “Nightmares” (20 worst performers).

The investment leadership of a given year has historically had better-than-even odds of outperforming in the following year at both the asset class and equity sector levels.

The January Small Cap bounce effect ain’t what it used to be, but extrapolating the month’s market action for the next eleven months is a “less bad” idea than any other time of the year.

While gold garnered most of the headlines last year (down 27%), commodities performed badly across the board in 2013. We expect more of the same in 2014.

Following a great year for trend-following, capitalizing on key reversals in sector performance will be important in winning the 2014 performance derby.

Earnings growth over the next few years will—in the  best case—be forced down to the rate of top-line growth (nominal GDP).

This year should be a solid but unspectacular one for the U.S. economy, with real GDP growth of about +2.5%. We expect the Consumer Price Index to rise just 1.5%. Unemployment should continue to fall.

Gains will likely be modest, and secondary stocks could finish the year flat-to-down. The year will likely be marred by a moderate to severe mid-year correction, and Small Caps could easily suffer a 20% hit during that swoon.

It’s time to update our time cycle composites, and what they say for equities in the U.S., U.K., Germany and Japan and long-term interest rates and credit spreads in the U.S.

The thin liquidity likely magnified the move in both rates and credit spreads, but we continue seeing a friendly macro environment that supports high quality credits.

We were surprised to see that all differentials ten years and longer are still below their respective 1926-to-date medians, indicating they still have the potential to keep moving towards historical median levels. We expect stocks to outperform bonds going forward.

The reversal in fund flow trends that began mid-way through 2013 was solidified this week as the year came to end. Domestic equity mutual fund net cash flows ended the year in positive territory for the first time in 8 years at an estimated $16.7 billion. Conversely, bond mutual funds recorded their largest nominal annual net cash outflow ever at an estimated $87.9 billion.

The Major Trend Index jumped 0.04 to 1.14 in the final weekly calculation for 2013. While we don’t have a high conviction view for 2014, we enter the year with both the Core and Global Funds fairly aggressively postured with net equity exposure at 64%.