Latest Research

S&P Normalized valuations are already in the zone that have defined many important bull market tops.

The game is now over for Discretionary, and this opinion is supported by the sector’s decline to the bottom of our GS Score ten-sector composite.

Healthy Tigers is not a new exhibit at the zoo, but rather a new index of stocks that will benefit from expanding health care in emerging Asia countries, especially in China.

Established new Select Industries Portfolio group holding in Technology Distributors, boosting Info Tech sector exposure to 38% of total equity assets.

During February, the only quantitative factor producing positive performance was Momentum. All other factors produced negative returns.

This month’s “Quantitative Strategies” section presents a preliminary look at some long term trends in Valuations and Profit Margins for specific industry groups.

Bond bubble deflating, as investors demand higher yields to compensate for rising inflation and mountain of debt.

In this month’s “Of Special Interest” section, Jim Floyd updates the broad sector profit margins charts. Information Technology now producing 15% margins, the highest levels ever. Energy and Materials sectors still relatively low, but rising commodity prices will support higher margins in 2011.

Fundamental rationales also have strong psychological elements. Normalizing earnings helps minimize the startling impact of declining earnings.

From our perspective as disciples of Normalized EPS, the entire bull market to date has come from P/E expansion. However, that stands to change as global Normalized EPS are again on the rise.

Economic growth is re-accelerating, but that growth is coming at a cost…price pressures are building significantly. Manufacturing prices are up along with commodity prices.

Select Industries Portfolio is getting exposure to the Energy sector, with the addition of the Oil & Gas Drillers group.

As we expected, it was not a memorable “Playing The Bounce” year.

Modest revisions were made to the industry groups that are evaluated by our GS Score framework. Driving objective was to make all groups more viable for investment consideration.

Quantitative Factor review for January shows Large Caps, Quality, and Profitability factors finally performing well. It’s been over a year since stocks with better Profitability outperformed in an up S&P month.

Quant implications for earnings revisions. Revisions tend to follow actual earnings, not lead them. Better economy now producing upside surprises, which has good short term implications.

The bond bubble is deflating, as investors demand higher yields to compensate for expected rising inflation and the U.S. mountain of debt.

The current period of small cap leadership is the longest ever. And while small caps have been selling at a premium, the premium has persisted for a long time.

All time honored seasonal anomalies are indicating stocks can go higher in 2011. The good news is our Major Trend Index agrees, and has actually been getting stronger the last few weeks.

2010 was better than it felt for the equity markets, but while 2011 may be better for the economy, it might not be as strong for the equity markets. Could the bull market be running out of milestones?