Latest Research

Still prefer the Small caps over Large caps, despite the fact that small caps are now selling at 1% premium relative to large caps, and that the small cap leadership phase is getting long in the tooth.

This month, at the request of a client, we examined stock market performance volatility in the periods leading up to past Presidential elections.

Making first Financial sector purchase since 2001, buying Life & Health Insurance. On a  selected basis, there are pockets of attractive Financial groups, but we still advise being underweight this sector.

Industrial Metals group had nice rally after big decline in April. Early May increase in this portfolio group holding was very timely.

Based on recommendations from the investment services industry, Russell will shift the final day of its index reconstitution process to the last Friday in June, which is June 25 this year, instead of the last day in June.

For the May 2004 Number’s Game, we decided to do something new and different and take a closer look at Enterprise Value.

While 2004 YTD inflow levels are not in “record” territory, this year has, so far, seen the second highest YTD level in history.

In terms of attitudinal factors, this excessive optimism and risk-taking may be a sign of an overheating market and impending correction.

The best performing groups in May were some of the YTD worst performers.

We see Health Care as a key theme in 2004. The sector is defensive, but sports high growth rates– hitting an investment “sweet spot”, which should allow for strong relative performance in any market environment.

GDP growth of 5.0% projected for 2004. But, fast growing U.S. budget deficit ($507 billion in 2004?) is a significant problem for bonds.

Contrary to some strategists’ studies the U.S. stock market is not cheap relative to NIPA (National Income and Product Accounts) corporate profits. In fact, like the majority of Leuthold studies, this metric indicates the market is overvalued.

Kate Welling Interviews Steve Leuthold: The Leuthold Group’s commonsensical adherence to investment disciplines, thoughts on rising inflation, attractive investment opportunities, Iraq, the reliability of U.S. government calculated statistics and estimates, and an abundance of other topics along with engaging banter.

Bull market still intact, but investor appetite for risk remains subdued. April’s preference was for defensive and conservative strategies. Old axiom “Sell in May and go away” doesn’t seem to apply during the 130 days leading up to election day.

Our equity exposure still overweight in small and mid cap stocks, but we expect the market is progressing to a state of parity.

Although the biggest gains are behind us, based on 1900-to-date, past bull market recoveries, the stock market still has potential upside of 13-16% over next 6-9 months.

REITs and Financials still unattractive despite retreating in April. Financial sector weight in S&P 500 still too high given the interest rate climate.

Over the last few years, we have been employing a beta adjusted relative strength calculation for high beta groups, along with the traditional relative strength. There are often more revealing signals given by the beta adjusted relative strength, especially in recent years.

Lately, there has been renewed interest on the topic of new equity offerings, and not without good reason. After a three-year dry spell in underwriting activity, the offerings calendar has seemingly sprung to life in 2004.

S&P 500 valuations using corporate profits (National Income Accounts), not as cheap as suggested and are likely faulty, in our opinion.