Introduction . Currency movements drive, and are driven by, economic conditions, and have become more important due to globalization. Given the current and looming trade wars, it is not surprising that Google web search for the dollar is at an all-time high (figure 1), and the dollar has risen strongly… Continue reading
Will Earnings Growth Come in for a Landing? . After three years of positive and accelerating growth, earnings growth is expected to slow starting after the current quarter (figures 1-2). 2015-16 growth was held back by the “recession” in the commodity and industrial markets. 2017 charged back as oil prices… Continue reading
Introduction . Tactically varying allocations to different assets can significantly improve returns; however, it is notoriously difficult to do well for most people. Asset rotations are tied to economic and market cycles; thus, the key to timing asset rotations is an understanding of where one is in the cycle… Continue reading
Summary Technology stocks are on fire, as is normal at this stage of the economy Corporations are not underinvesting, as some people may lead you to believe Long-term investment growth is tied to productivity, but in the short-term it may be a contrary indicator The dominant tech companies may be… Continue reading
Introduction . Understanding the position in the cycle is paramount. That point determines returns and risks. Future risks are highest when returns are strong during the latter stages of the cycle, but investors frequently ignore them to their detriment. And the cycle is getting old. Perhaps we have one to… Continue reading
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Introduction . Worries are mounting, but the market keeps rising and it is not just stocks, as other asset classes have charged ahead as well. We are entering the later stages of a cycle when risk rises; however, if earnings growth remains robust, the market normally ignores red flags and… Continue reading
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Introduction . Over the past 30 years, numerous investing “anomalies” have been identified that cannot be explained if the markets are efficient. These factors, which provide the basis of value and growth investing, range from price multiples to momentum to financial variables that measure corporate performance. As passive investing and… Continue reading
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The Expectations Clock provides a framework for modeling performance, expectations of future performance, and human behaviors during phases of the performance cycle. It is a model of human over- and under-reactions to the environment. Success in investments (and business in general) is highly dependent on effectively forecasting future fundamentals… Continue reading
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Sentiment has risen strongly over the last six months to a high level while earnings growth has accelerated, a perfect environment for the stock market which posted strong gains (up 8.9% over the last six months). Consensus estimates call for earnings growth to continue to accelerate, but sentiment already implies… Continue reading
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Over the last six months, the S&P 500 Financials sector has rallied 24.2% (banks are up 34.3%) versus 8.3% for the S&P 500. This return has outpaced every other sector, and financials have also had the best return for the last 52 weeks and one month. Most of the drivers… Continue reading
