Latest Research

This month’s “Of Special Interest” takes a look back at and updates some our favorite charts from 2010.

Now that the election is over and QE2 in the works, resist the temptation to “sell the news.” We expect to see the market rally through the end of the year. Sentiment still benign and valuations still attractive.

Not much happening with this year’s edition of “Playing The Bounce.” Initial list of qualifiers posted a loss of 1% in October, while the S&P 500 was up 3.7%.

YTD the winner is momentum! This is slowly developing to the angst of many model-tweekers. Note though that how one defines momentum can make a difference in what you see.

Chun Wang uses the CRB Index as a risk proxy to test the effectiveness of a range of quantitative factors in various environments. Commodity prices have become an increasingly important measure of risk, since higher commodity prices indicate a greater risk appetite and vice versa.

Bond bubble continues to inflate, much like money pouring into tech stocks at the height of the internet bubble.

All our asset allocation portfolios have commitment to gold and silver. This month’s “Of Special Interest” focuses on the yellow metal. Valuation matrixes are of little use, but we do present a variety of relationships that may help at least understand the price movements of gold.

The kneejerk reaction to worries about excessive sovereign debt has been to bail out of the European sovereign debt and pile into U.S. sovereign debt. Unless the U.S. can get its own fiscal act together, we may face this same panic reaction farther down the road.

“Playing The Bounce” season is once again upon us. This is a tactical trading strategy designed to identify beaten-down stocks which come under heavy selling pressure at year end. When selling abates, stocks tend to “bounce.”

Major Trend Index now Positive (both global and domestic). Even though we are bullish, there are several bullish arguments that we still don’t buy.

It has become more and more difficult to filter out the short term economic noise. By focusing on this minutia, investors can easily lose sight of the big picture.

Housing stocks, and the enablers that helped create the bubble (Financials), are following the usual pattern of busted bubbles. After the bust, these past bubbles typically see a beta bounce establishing post crash highs. After that, it can take many years before these highs are again broken.

Correlations between asset classes have been running quite high over the last couple of years. Eric Bjorgen looks at current tightly correlated sectors that historically have not been so correlated.

Stock/bond Risk-reward relationship beginning to return to normal. Back in Q1 2009, performance differential between S&P 500 and 10 year T-bonds was at generational lows. In prior periods of bond superiority, stocks ultimately came soaring back. Expect to see stocks do much better over next 5 years.

A look at Asian valuations show China to be fairly valued (neither overvalued nor undervalued), but there are other attractive (cheap) ways to play consumer stocks in Asia.

Relationship of Momentum stocks and Value stocks has historically demonstrated that at market tops, Momentum does best while Value lags. That pattern is occurring now, but based on prior history the top would not come until Q1 2011.

August turned out to be a very volatile month, not the “doldrums” that many investors would have wanted to see during this traditional summer vacation month. Budding optimism that had developed in investors back in April has now apparently been completely washed out by the poor August performance.

Doug Ramsey looks at his own 15 month election cycle work to examine historical performance for a variety of different asset classes.

We turn our attention to the domestic equity markets to determine where market history has hidden its seasonal landmines.