Published January 22, 2021
One reason for the surging stock market recovery over the past nine months, despite extraordinary unemployment, has been the shift from spending to saving among a broad swath of the population. (more…)
Interest Rates Rise as Inflation Expectations Return
Published January 15, 2021
After a sharp two year decline in interest rates which saw the 10-year U.S. Treasury yield plunge from 3.0% all the way down to 0.5%, rates have broken back above 1.0% and appear headed well higher. (more…)
Market Performance for 2020 and Beyond
Published January 8, 2021
Despite a sharp plunge in stocks early in the year, 2020 was a solid year for the stock market and most assets as shown below. Only assets related to energy and real estate posted notably negative returns. (more…)
2020 – a Rollercoaster Ride Ends Well for the Stock Market
Published January 1, 2021
Below is a good recap of the year in investing excerpted from the Wall Street Journal. Our model-driven, long-short approach to investing responded well, protecting us from the worst of the market selloff while participating well in the rebound. We appreciate you, our family of subscribers, and wish you a healthy and prosperous 2021! (more…)
Are Stock Markets Too Richly Valued Now?
Published December 25, 2020
Investors cannot help but be amazed by the stock market’s performance this year. What began as a promising continuation of a decade-long bull run quickly turned into one of the sharpest plunges in market history as Covid-19 upended economies worldwide. Shocking as that plunge was, the subsequent rebound was even more surprising, with stocks going on to record highs despite unemployment remaining extremely high and other economic indicators remaining well below their pre-pandemic levels. The record level of stock prices in the face of still-weak economic data suggests a stock market that might have run too far too fast. A couple of notable writers on investment topics in major publications have recent tackled that topic, concluding that stocks are indeed at extremely rich prices. (more…)
A Falling U.S. Dollar Fuels Stock Gains Abroad
Published December 18, 2020
We recently noted the strength of non-U.S. stock markets. One of the primary reasons for that strength has been currency-related. The U.S. dollar, often a safe haven in times of stress, has been declining as investors focus on a recovery in global economies in 2021. (more…)
Here’s Why Stock Markets Are So Bullish These Days
Published December11, 2020
The stock market has been roaring ahead, having posted a spectacular monthly return in November. That big monthly gain portends further strength ahead as LPL’s Ryan Detrick points out in his table entitled “What Happens After 10% Monthly Gains? Bulls Smile – Historic S&P500 Index Gains Have Led To Continued Strong Returns”.
The Stock Market Has Expanded Participation and Become Expensive
Published December 4, 2020
Below are some slides from a recent presentation by Charles Schwab market analyst Liz Ann Sonders. They give a good overview of recent market action. The first slide shows how the top 5 stocks in the market drove returns through the first eight months of the year. Since August, the other 495 stocks in the S&P 500 have at least helped do the lifting. (more…)
The Case for a Shift Toward International Stocks
Published November 27, 2020
Our recent articles have described the market’s sudden shift toward value/cyclical market sectors, like energy and financials, and away from the prior market leaders, namely the tech/consumer FANGMA stocks (e.g. FANGMA = Facebook, Amazon, Netflix, Google (Alphabet), Microsoft, Apple). The article below from Delta Research makes the case for a similar shift in market leadership toward non-U.S. markets. (more…)
Have We Just Witnessed the Start of a New Multi-Year Bull Market?
Published November 20, 2020
The stock market has blasted upward in a very bullish sign for investors. Last week we talked about how value sectors were finding buyers. This week, we offer even more evidence of the new bullishness in the stock market. Driving this bullish attitude is the announcement of coronavirus vaccines. Those announcements have led investors to expect a return to some economic normalcy in the first half of 2021. (more…)