Latest Research

In September, $3 billion was switched from money market funds to equity mutual funds and $5 billion was switched out. Over 50 investment services now make mutual fund and market timing recommendations. Herein we track the dramatic increase in fund switching and comment on the implications.

In October, the market flip flopped with big growth stocks leading and cyclicals and basics mostly lagging. We continue to think underlying market leadership is “growth,” but we are no longer so sure. We have taken a hard look at the “cyclical” argument, including two of our own proprietary earnings momentum tools. From an earnings standpoint, 1987 might be a better earnings year than most expect.

You are undoubtedly sick of reading about program trading, but this “In Focus” feature may be helpful. Portfolio Insurance, Index Fund Arbitrage and Interest Enhancement Programs are now all-important stock market factors, at least at times. We also offer one controversial but probable restriction that may well be imposed on the program gang.

Even considering these deficit related problems, we have to remain cyclically bullish on T-bonds for the next few months. The bond market just has too much going for it. Most of our inflation work remains cool, but this month we present two momentum measures for the PPI and CPI that may appear ominous to some.

You all have experienced the frustrations of investment committee meetings. Read how Rosenberg Capital Management approaches group decision making. It Ain't Like the Good Old Days... U.S. dominance in the worldwide economic scene has greatly diminished. Aussie update: buy bonds and see the movie.

The Major Trend Index improved somewhat in September but remains in negative territory. The strong September down move was no surprise, it appears that a major cyclical market top is in progress. Portfolio “Insurance” played a significant role in the September decline and it could play the reverse roll in a future market rally.

Only two of the thirty-five equity sectors we regularly track recorded plus signs for the month. The S&P 500 was down 7.7% in the quarter, the DJIA off 6.5%. By the looks of our sector performance distribution, I would venture to say most professionals, maybe 70% or more, failed to beat the S&P.

For two months, cyclical stocks have been turning in some very strong relative performance while growth stocks have been fading. This month, we take a close look at this surprising shift. At this point, we still are not at all sure it is for real.

We are establishing a new 6% position in the airlines this month. I just heard five Wall Street firms put out new buy recommendations today. Let us hope the crowd is not always wrong.

Herein, we examine the new surge of indexing on the part of pension funds, explaining why we think it may be just the wrong time to be abandoning active investment management. While ultimately most equity managers can be expected to underperform the averages, the timing of the current rush to indexing may be all wrong. Shades of the late 1970’s!

The bond market worked lower in the first half of September but rallied later in the month, cutting losses for the month in half. Short rates were little changed during September.

Something strange is occurring in the gold market and it is not related to inflation. We have been discussing this for the last two months and here is an update for those interested. I continue to believe most portfolios should own some gold.

Fiscal Responsibility Update...Who were the bad guys this year? How to make a killing in the Oil Patch and an update on Australian bond.

Realizing no one really cares much for wet blankets, I am reluctant to report that our Major Trend Index remains negative. The continued negative status leads to the conclusion that the stock market is in the process of forming a broad distribution top.

Even though the S&P 500 edged into new high ground, with the DJIA coming within a hairbreadth of doing the same, a number of other stock indices have recovered less than half of their July losses.

The stock market, at least according to the most popular market indices, has rebounded to its former 1986 peak levels. Updated histographs are included herein, providing perspective in terms of P/E’s, Dividend Yields, and Book Value ratios for the S&P 400.

We would not be at all surprised to see the Japanese becoming quite active in acquiring foreign oil reserves and perhaps investing heavily in some major oil companies. In this section, nine major reasons are given to support this contention.

Bonds moved higher in August but did not make new highs. However, it is only a matter of time. Most of our inflation work is still cool, but this month we present one of our tools that is mildly disturbing. The commodity spot price diffusion index seems to be on the rise, although not yet in negative territory.

Something strange is occurring in the gold market and it is not related to inflation. We touched on this a month ago, but this time we have added some thoughts. I continue to believe most portfolios should own some gold.

Fiscal Responsibility Coming in August (An update on performance, not the real thing)..…Programs & Portfolio Insurance:  The new hot product in pension circles. Will the implementation of these programs have an impact on the stock market? We think it could.