Latest Research

All bull markets since 1896 are examined and compared with the current specimen in terms of cumulative month by month gains. In terms of dynamics, this is an exceptional market, but hardly unprecedented. Also, all the long sustained uninterrupted uptrends of the past (like those in the 1950’s) are examined. Is this another one of those? We don’t think so. The current specimen has gone too far too fast.

The bond market is also in the midst of secular and cyclical bull moves and the six-month consolidation may be over. If T-Bonds clearly exceed November 1982 peaks, assume the cyclical bull market is back on track with a cyclical target zone of 8.5% yields...lower on a secular basis.

The stock market is about half way through a secular bull move beginning in 1974. The cyclical bull market exploding in the summer of 1982 is still healthy according to our Major Trend Index. However, the intermediate term correction looks like it’s finally here.

We have increased our Oil Patch holdings by 5%, now 14% of Equity Portfolio assets. The recent spot oil price trends now seem to confirm our preliminary conclusion that crude price declines are over…..at least for a while.

During March, the cyclicals outperformed the growth stocks. Growth stocks were clearly superior from mid-1981 through November 1982. But since December, momentum has shifted in favor of the cyclicals. The long-term trend appears to have reversed in favor of the cyclicals.

“How to Beat the Stock Market?” In a bubbling high-tech market, a strong dose of low P/E enforcement is good for the soul. So, in mid-March, my wife and I had dinner with good friend, David Dreman. “Inflation Watch – Time for Some Caution?” Today, with most inflation measures under 4%, we are approaching what has historically been an environment of moderate inflation, perhaps even price stability.

An update of our historic research tracking all years of significant inflation acceleration and deceleration since 1900. If inflation does rise to 6% by year end 1983, the stock market outlook is not so bright.

The bond market is also in the midst of secular and cyclical bull moves. But intermediate-term is now a question mark. However, if bonds exceed November 1982 peaks, assume cyclical bull market back on track. Go with the flow.

In Search of Excellence, a new book on outstanding corporate managements is all the rage. But, as the authors indicate, it is not an investment book. We have extensively tested the past investment results achieved investing in companies with “best-management” reputations. It is not good.

We think the stock market, probably powered by an oil stock rebound, may run another 5%-10% before the long-anticipated correction becomes reality.

An examination of the technology sector, concluding supply has caught up with demand and sharp intermediate down-draft coming. However, the High-Tech game is far from over. This may be only “half time.”

Comments on current farm conditions, inflation measures, DJIA 1982 earnings calculations, “Whoops” bonds, California script, and Minnesota’s new oil field.

Fearless Forecasts, our Annual feature of whimsical, but sometimes accurate prediction of coming events. Not for stuffy or squeamish readers.

Science & Technology and Inflation Hedge (natural resource) stocks led the market in January. Near term rise in some commodity prices does not indicate high inflation returning. Longer-term measures still at comfortably low levels and most trending down. Don’t panic.

The P/E for this most popular market measure is incredibly distorted by a handful of component stock. When will Dow Jones bite the bullet and improve this index? 

It would appear the bond market correction has further to go. In a few months we will probably recognize this as the first interest rate “hiccup” of the economic recovery.

Long-term municipals now extraordinarily cheap relative to other fixed income instruments. Strange as it may seem, Muni’s may even be relatively attractive for non-taxable portfolios.

1983 Economic and Market Predictions: Economy has bottomed. Rebound to be somewhat stronger than most expect, with earnings up 20%-25% from 1982 depressed levels. Unemployment and T-Bond rates seen at 8.5% and stock market as high as 1250. Last year’s predictions reviewed.

All systems again “go” for stock market. Major Trend Index remains Positive by comfortable margin. Short-term looks good too, maybe 1150 before another pause.

While it certainly does not appear the big bull market in bonds is over, it would not be surprising to see an additional five to eight-point correction from current levels.