HORAN Capital Advisors

Sentiment In An Elevated Market

 February 26 2017     David Templeton
With the weekend nearly over and any research or reading completed, most investors now know the Dow Jones Industrial Average has been on a rare eleven day winning streak. What makes this more amazing is this is occurring as the market hits new highs with each close. One conclusion drawn from this seems to be the market is nearing a correction or consolidation point and I will be the first to admit...

The Significance Of The S&P 500 Yield Falling Below The 10-Year Treasury Yield

 February 20 2017     David Templeton
For most of 2016 the dividend yield on the S&P 500 Index was greater than the yield on the 10-year U.S. Treasury. Historically, this has served as a positive sign for forward stock price returns. With the strong equity market returns in 2016 and the move higher since the election, the S&P 500 yield is now lower than the 10-year Treasury. In addition to the move higher in stocks, bond prices have d...

Recent Outperformance Of Low Volatility A Sign Of Risk Off Ahead?

 February 12 2017     David Templeton
Since the election in the U.S. it has been a 'risk on' environment for stock investors. Last week though, the Powershares Low Volatility ETF (SPLV) broke out of a sideways trading range to the upside. At the same time, the Powershares High Beta ETF (SPHB) remains trapped in a sideways range. Might the move higher in the low volatility ETF be a signal there is underlying action by some investors to...

Positive Sentiment And Fundamentals Rests On Positive Political Expectations

 February 11 2017     David Templeton
I believe there are two broad issues at play that are having a positive influence on equity prices. The first issue is a fundamental one and related to a much improved corporate earnings picture. Looking solely at companies in the S&P 500 Index, Thomson Reuters publishes a weekly report summarizing the quarterly earnings reports of companies. Friday's report notes,Q4 '16 earnings are expected to i...

Room For More Debt?

 February 6 2017     Matt Woebkenberg
As was mentioned in a previous post, S&P 500 companies have taken advantage of cheap debt to fund continued capex and share buybacks since the recession.  This has driven total debt to new all-time highs.  Though there has been much concern about the "abuse" of low interest rates to create a rally fueled by buybacks, it does not strike me as much of an issue.  In fact, it makes sense for companies...

Dogs Of The Dow 2017: Know The Strategy's Bets

 February 5 2017     David Templeton
The Dogs of the Dow strategy is one where investors select the ten stocks that have the highest dividend yield from the stocks in the Dow Jones Industrial Index (DJIA) after the close of business on the last trading day of the year. Once the ten stocks are determined, an investor invests an equal dollar amount in each of the ten stocks and holds them for the entire next year. The popularity of the...

YTD Equity Market Declines In 83% Of All Up Years Since 1945

 January 29 2017     David Templeton
CFRA Research, in conjunction with S&P Global, recently published a report on the probabilities of a market pullback. A number of interesting data points are outlined in the report, but a few interesting ones are as follows:"during bull markets since 1945, the S&P 500 experienced a pullback (a decline of 5.0%-9.9%) once a year, on average,""a correction (a 10% to 19.9% decline) every 2.8 years, an...

Market Breaks Out Of Sideways Trading Range To The Upside

 January 28 2017     David Templeton
Over the course of the last three trading days this week, the S&P 500 Index and Nasdaq broke out of the trading range in place since mid December. We highlighted this range in a recent post that noted sizable corrections are unlikely when earnings are improving.For most of the period since the beginning of the second quarter last year, new highs have exceeded new lows, indicating the broader stren...

Buybacks vs. Capex

 January 27 2017     Matt Woebkenberg
The below chart shows that through the end of 2015, S&P 500 companies were contributing a similar percentage of revenue to capex as they were back in 1995 (6.495% in 2015 vs. 6.5% in 1995). This same percentage capex contribution, however, is now only covering 113.4% of depreciation, when it covered 132.73% at the end of 1995.[Note: going back to 1980 or 1990 shows that companies are clearly inve]...

Individual Investors Cautious On Equity Market

 January 26 2017     David Templeton
If the contrarian individual investor sentiment measure reported by the American Association of Individual Investors indicates anything, individual investors seem to be questioning the sustainability of this market rally. Because the Sentiment Survey is a contrarian measure, just maybe the market advance has further upside. In AAII's report this morning, bullish sentiment fell 5.4 percentage point...
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