Latest Research

Small Cap leadership trend maybe re-emerging. Doug Ramsey examines Small Cap performance coming out of bear markets. Historically, they have been able to do well as higher beta plays.

September was a horrible month for the stock market, but now is not the time to be selling stocks. We believe a market bottom is close at hand, and this month’s “Inside The Stock Market” section presents several of our “big picture”, historical market studies to provide support for this belief.

Doug Ramsey examines the history of bank failures and prior liquidity crises (back to 1830) to demonstrate that this current financial meltdown is not unprecedented. The names have changed, but the economic and emotional responses have been loosely patterned over the entire time frame.

Building new portfolio holding in Home Improvement Retail. Our Consumer Discretionary holdings now overweight (versus S&P 500) with an 11% position our Select Industries Equity Portfolio.

While many consumer groups are seeing significant improvement in the GS Scores, careful selection is important as there are still several Discretionary groups rated Unattractive.

Dow Theorists looking at current market environment may be concluding stocks could weaken further. However, historically when confirmation from the Transports takes an excessively long time to develop (like it has currently), the technical pattern has actually provided an excellent buy signal.

We have found that technology has the strongest seasonal tendency of any sector during the market’s “bullish” seasonal period of November through April.

October brings our annual exercise in the “Playing The Bounce” strategy. This month’s “Inside The Stock Market” presents the initial run of stocks which may be subject to heavy tax loss selling. Traditionally, these stocks may be poised to “bounce” back early in the next year as selling pressure wanes.

High Yield bonds have reached our attractive zone at yields of nearly 14%. To us, a gradual accumulation program makes sense.

Improving cyclical leadership could be signaling that the bear market is in its final stages. In 10 of the 12 past bear markets, cyclical stocks turned up prior to the conclusion of the bear.

Adding a new equity group holding in Automotive Retail. This gives us about a market weight in the Consumer Discretionary sector, our most significant exposure in several years.

The broad market continued to trace out a labored recovery from the July lows, yet the day to day performance volatility continued to keep many market participants from getting too comfortable with the trend.

Think we’ve never seen such turmoil in the financial sector? Back in 1986-1995, the S&L crisis wiped out about half of the federally insured thrifts (from 3234 to 1645).

Materials sector has fallen fast and hard in our GS Score rankings and is now the worst rated. Still see further downside based on valuations and technical factors. No, we do not think the underlying commodities can outperform while the stocks fall.

Small cap out performance so far in 2008 is baffling. Earnings growth has been weak relative to large caps and valuations are still excessive. Interestingly, EAFE Small Cap Index is underperforming, while its U.S. counterparts are doing well.

Analyst estimates for oil stock earnings never seem to fully capture the impact that the price of oil has on their earnings.

Presidential election-year performance vs. non-Presidential election-year performance…. Searching for an intersection that doesn’t exist!

In the past, Wall Street activity slowed in August as professionals headed for the beach. However, the “Hyper-connected Era” has changed all that, as evidenced by higher market volatility in recent years during July and August.

Initiating new portfolio positions in Health Care Facilities and Pharmaceuticals. Former Generic Pharma portfolio holdings now being rolled into the broader Pharmaceuticals group.