Latest Research

Are mortgage rates still too high for a rebound when looking at real mortgage rates?

Why is right now a great time to buy Energy stocks?

So far so good, as sales and earnings numbers reported have been better than expected. Eric Weigel explores newly emerging trends from a number of angles and makes some cautious inferences.

Methodology for the new screen and the Dividend Sustainability Rank are discussed in detail. Dividend strategies continue to gain popularity, as equity investors grapple for yield.

In late October, Select Industries Equity Portfolio established three new holdings in Drug Retail, Hypermarkets & Super Centers, and Data Processing & Outsourced Services. Even with the MTI in Positive territory, we are maintaining some defensive exposure, as global economic worries persist.

Correlations finally drop during the October market rally. Both Value and Growth factors outperformed during the month. Some momentum factors have diverged… each is an atypical occurrence.

The Risk Aversion Index fell sharply during October. Despite the sharp drop in the index, it has not fallen enough to generate a new “lower risk” signal. Our take on the current reading  is “wait and see” with a bias towards lower risk.

This month’s “Of Special Interest” examines Federal tax revenues from corporations versus individuals. Despite strong revenue and earnings growth, corporations paid fewer taxes this year; all of the government’s revenue increase came from individuals.

Most costly market decoy in the last six weeks has been unusual (relative) strength of the Dow and S&P 500 indexes. Resilience in blue chips is characteristic of the early and middle phases of a bear market, but recent blue chip performance has been so stellar (again, in a relative sense) that most investors curled up comfortably in the “correction” camp…while small caps, cyclicals and virtually all foreign markets were screaming “BEAR!”

Select Industries Equity Portfolio established new holding in Biotech, which boosted Health Care exposure in that portfolio to over 45% of assets.

A new High Quality Cycle has clearly emerged and is going strong. Note that the previous High Quality Cycle started at the end of 2007 and lasted more than a year.

Industry groups and stocks continue to set records with performance correlations. Defensive groups have seen the largest percentage gain to current correlations relative to the last five years. There truly has been no place to hide in this market.

This month’s “Of Special Interest” examines the bear market facts. Doug Ramsey doesn’t expect the current bear market to reach historical bear market medians in terms of decline or duration. Non-economic bear markets are usually much shorter than recession-induced bears.

A Risk Contagion is now underway, and we continue to stay defensive and favor higher quality assets within the fixed income space. A silver lining: When the Risk Aversion Index moves above 1, odds start to favor a decrease in risk aversion going forward. The bulk of the move is probably done.

An examination of both near term and longer term historical profit margins broken out by sectors is presented in this month’s “Of Special Interest” section.

Several U.S. indexes and world stock markets have already lost 20% or more from recent peaks, satisfying the parameter for a bear market.

The yellow metal itself celebrated 40 years of “independence” by pulling ahead of the S&P 500 on a cumulative, total return basis since the gold window was closed.

Doug Ramsey provides an analysis of non-recession related bear markets. Historically, non-recession related markets are shorter in duration than recession induced bear markets, but the decline is essentially the same magnitude.

Interesting development coming out of China recently that is getting little attention. The Chinese government is planning to allow ETFs with Hong Kong listed companies as underlying securities to be traded on the Shanghai and Shenzhen Exchanges.

Better understanding the behavior of equity market volatility is a prerequisite for making improved decisions either as a way to profit directly from the changing nature of volatility, or as a way to hedge equity market exposure.