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Most, but not all of these are actual client questions recently fielded by The Leuthold Group. A few are questions we think some of you might like to ask, but are reluctant to do so.

A performance run down for our equity market sectors ranked by May 1990 performance. All screen based Quantitative Themes are included, both active and experimental.

So far in 1990, the two markets have moved very much in tandem, at least in terms of direction. Has the bond market been keying on the stock market or has the stock market been keying on the bond market?

In recent months we have been increasingly impressed by the improving relative performance of consumer growth stocks. This month a four stock package of consumer growth stocks was introduced as a formal portfolio sector.

"Gorby" Visits The Leuthold Group...Graying Of America And The Pension And Related Services Business...Client Feedback On Japan...California Real Estate Update

A few months ago John Lillard, President of JMB Institutional Realty, had a great idea for us. One of John's suggestions was that we compile histograms of past stock market performance to help put the recent outstanding stock market performance in better perspective. Yes, some of our best ideas come from clients.

The bond market surged upward in the first part of May, and then consolidated those gains for the remainder of the month. Bonds have again blasted upward here on the first day of June.

In mid-April, the bond market broke sharply, stabilizing late in the month. The decline brought T-bonds down into the upper ranges of our buying zone (9%-10%). But in the first days of May they have rallied to 8.90%.

The stock market bent in April but did not break. Nevertheless, our market disciplines continue to repeat their dreary message.

Upon returning to the office at month end, my first impression of April stock market action was positive. But then I dug into our indicators, chart books and numbers. It was clear my first impression was wrong.

A performance run down for our equity market sectors ranked by April 1990 performance.

The stocks are cheap because they are currently very unpopular. Peace has, at least momentarily, pretty much swept the world. Unfortunately I doubt this will last. Human nature has really not improved much over the ages.

How far would today’s stock market have to fall to achieve normal benchmark valuation levels? How far would it have to fall to reach 1987 post-crash levels? On the brighter side, how far up would today’s market have to move to match the valuation extremes of 1987’s third quarter?

A month ago, this work appeared to be giving some support to the “soft landing” thesis. But the earnings reports published in April provide a more negative message.

What’s Up In Japan...Not High on Northwest Airlines...The Good Guys Are Leaving (Office)...Fat Is Where It’s At (Fearless Forecast)...Harley Davidson (Model Portfolio Stock) Introduces New Fat Boy Bike...Phony Evel Knutson Communique Surfaces!

Our Major Trend Index remains decidedly negative. The current ratio of 0.67, although improved from a week ago, is about the same as a month ago. Thus our opinion is unchanged. It appears we are in the early stage of a cyclical bear market.

A performance run down for our equity market sectors ranked by first quarter 1990 performance. All screen based Quantitative Themes are included, both active and experimental.

This month, we are featuring a chart appearing regularly in Jim Floyd’s Quantitative Themes quarterly publication. About 20% of The Leuthold Group’s clients are subscribers to QT, but we thought the other 80% might find this study of interest.

The November 1985 issue of this publication featured a piece “Really Understanding Undervalued Investing”. In recent months, some readers have asked for reprints of this piece - this 1985 projection is now reality.

Back on January 1, 1984, American Telephone & Telegraph was broken up into the seven “Baby Bells” and AT&T. At the time, Wall Street was not impressed with the prospects. But the telephone “Break-Up” Portfolio was hard to beat 1984-1989.