Latest Research

As new home sales skyrocket alongside plummeting mortgage rates, we revisit the historical relationship between Homebuilding stock returns and industry-specific factors that impact housing affordability and homebuilders’ bottom lines.

The Reddit short-squeeze saga had very little impact on this short strategy. We tend to avoid securities with extremely high short interest, we don’t pay more than the standard rate to borrow shares, and we diversify across a large basket of holdings; all of which reduce the risk of a single-name short squeeze manipulating portfolio results.

The Leuthold Core and Global Portfolios were both about flat in January, holding up better than the broad equity markets.

Investors looking for the long-awaited rebound in the Value style point to the potential for rising interest rates as a possible driver of style rotation. Higher rates would benefit many Financial companies—a sector closely linked to the Value style. In fact, numerous commentators believe that Value cannot experience a major run without the participation of Financials.

The S&P 500 had a monthly loss of 1% to start 2021. This moved our downside-to-median estimate just a tick under its contemporary extreme of -42%.

Read this week's Major Trend. 

We’ve read far too much about what Joe Biden and a newly-blue Congress might do in the months ahead, but less so about the conditions Biden and his team inherit. Such “initial conditions” usually have a heavy hand in policy outcomes, market outcomes, and even a president’s legacy.

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Presidents and the popular press have become obsessed with performance over the “first 100 days” in office. That prompted us to see if there have been any persistent stock market effects related to this 100-day window. There are many ways to slice the data, and the more we sliced it, the fewer the observations.

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With new leadership in Washington and--with large-cap growth’s decade-long stranglehold on outperformance looking shakier than ever--a potential leadership change in equity markets as well, Leuthold Group CIO Doug Ramsey will share his current views and what he will be looking out for in 2021.

Investment styles and factors are generally interpreted as having an inherent preference for either bullish or bearish market environments. The theoretical tilt of each style is based on its design and its sensitivity to economic, profit, and valuation cycles. However, theory and practice do not always agree, and we must look to actual performance to confirm our impressions.

Often, what market pundits like to pass off as bold, contrarian forecasts are merely rationalizations and extrapolations of trends that have already been in place for some time.

Read this week's Major Trend. 

As we turn the page on 2020, a peek ahead to the S&P 500’s 2021 operating earnings is probably in order. You never know, earnings and valuations might be important again one day.

Financials was the “cheapest sector” in each of the last three years, and its significant underperformance versus the S&P 500 has shaved the historical “alpha” from this strategy. Still, those souls who’ve had the stomach to own the Low P/E sector each year have beaten the S&P 500 by 2.9% per annum since 1991.

With the Bridesmaid approach we’re attempting to capture “stealthy momentum,” rather than pure momentum. Fundamentalists—and especially value investors—might find that to be a distinction without a difference. 

We’ve worried over the last several years whether momentum and other “alpha” factors have become exploited to the point of diminishing returns. It’s an arms race out there...

Our work on the annual “momentum effect” dates back 15 years, and was originally based on equity sectors rather than asset classes. The hypothetical approach is to entirely dispense macroeconomic trends, sector fundamentals, and valuations, and base the allocation decision exclusively on momentum.

“Risk-adjusted returns” were all the rage after the Great Financial Crisis. Now that such returns are likely to become relevant again, naturally, there’s little scrutiny of them.