Published December 24, 2021
Despite the broad market S&P 500 hitting new highs, this year has been one of frustration for much of the stock market. The roughly 2000 stocks that make up the small cap index have gone nowhere since February. A breakout in November offered hope that small cap stocks would join the large-cap brethren in charting new high ground. But that effort was quickly turned away. (more…)
Published December 17, 2021
This week we offer another outlook for 2022; this time from Delta. Reading various outlooks from different groups can, taken together, provide a view of what the ‘market’ expects. Note that our models rely on actual price data and do not include any forecasted information such as these outlooks. (more…)
Published October 22, 2021
The stock market is driven by earnings + liquidity + sentiment. With the Federal Reserve providing money at near-zero interest rates, the liquidity piece of the formula has been overflowing. Sentiment, or how optimistic/pessimistic investors are regarding the economy and markets, has generally been favorable. Corporate earnings have been stellar, rebounding strongly from the Covid-induced weakness. (more…)
Published October 15, 2021
There is always plenty of talk about whether the stock market is ‘fairly’ valued, expensive, or cheap. It is a question without an answer; there are only opinions. Because in the marketplace, the price is determined solely by what investors are willing to pay. (more…)
Published October 8, 2021
Markets have clearly been gripped by uncertainty over the past month as interest rates have risen while concerns about government funding and China have called into question the trajectory of the economic recovery. Below is a portion of an excellent overview from Schwab’s Liz Ann Sonders on the noisy information facing investors these days. (more…)
Published October 1, 2021
For the first time in a year, the stock market delivered a negative monthly return. We have written about the negative seasonality of September, which has proved out once again. October can be a dicey month as well, with wide swings in performance. (more…)
Published September 24, 2021
Monday’s gap down to begin the week was notable for the current stock market rally. It was the first time in almost a year that the S&P 500 broke the intermediate term trendline (in blue on the chart below). It has been an exceptionally long period of calm. (more…)
Published September 3, 2021
The S&P 500 has spent ten straight months above its 50-day moving average, one of history’s longest stretches of calm. Ultra-low interest rates from an extremely cautious and accommodative Federal Reserve have supported risk-taking investors by keeping the cost of money near zero. Very strong corporate earnings have rewarded investors by expanding the ‘E’ in the P/E ratio, justifying the market’s run upward. (more…)
Published August 27, 2021
We have written often in recent weeks about how extended the market seems to be. Some of this content has come from Schwab. Back in the late 1990s, Schwab notified clients more than once that the market’s valuation was excessive and to be careful. Similarly, they have been proactively warning this summer of higher-than-normal market valuations and a market ripe for some downside action. There are notable differences between now and the late 1990s. (more…)
Published August 20, 2021
The following content from MarketWatch highlights the reason why we are model-driven investors. It is all too easy to get caught up in speculation about what markets “should do” and let that drive our investment decisions. We find it far more productive for our money to row with the market’s price trend, recognizing that market prices move up as well as down, and allowing ourselves the flexibility to pursue gains regardless of market price direction.