Investors Holding Cash Confounded By Market Action

Posted by David Templeton on Wednesday, April 23, 2014
Until today, when the S&P 500 Index declined .22%, the market had managed to move higher on the prior six trading days. The six day climb followed what some investors thought might be a correction beginning to take place in the market.On April 2nd the S&P reached 1891 before declining 4% to 1816 on April 11th. The six subsequent trading days saw the S&P 500 Index rise 64 points to 1880, nearly recapturing the high reached on April 2nd. This type of trading action has been the norm for this marke...
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Investor Letter Spring 2014: The Weather Is To Blame

Posted by David Templeton on Tuesday, April 22, 2014
As we noted in our fourth quarter Investor Letter, we cautioned investors about looking at past returns and projecting those into the future. The first quarter of this year was a perfect example where returns in 2013 did not carry over into the first quarter. Our Spring 2014 Investor Letter provides commentary on the rotation that has occurred in the market during the first quarter. What makes the economic assessment more difficult at the moment is the fact this winter's weather was some of the ...
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Week Ahead Magazine: April 20, 2014

Posted by David Templeton on Sunday, April 20, 2014
Nearly four months into the trading year and the market indices have essentially traded sideways from the beginning of the year to Thursday's close. The S&P 500 Index is up .89%, the Nasdaq 100 is down 1.60% and the S&P SmallCap 600 Index is down 1.17%. On the other hand, as we noted in a post late last week, certain segments of the market have experienced significant corrections: social media and biotech, for example. One link in this week's magazine is an article written by Ben Carlson of the ...
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Dow Dogs Are Front Of The Pack

Posted by David Templeton on Saturday, April 19, 2014
Interestingly, we last highlighted the Dogs of the Dow strategy about this time last year and at that time the Dow Dogs were outperforming the overall Dow Jones Industrial Average Index. For all of 2013 the Dow Dogs of last year outperformed the Dow Index as well as the S&P 500 Index. As we turn our attention to 2014, the Dogs of the Dow are again outperforming many of the broader market indices except for the utility index and the transportation index. The Dow Dog strategy consists of selecting...
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Week Ahead Magazine: April 13, 2014

Posted by David Templeton on Sunday, April 13, 2014
Many of the links in this week's magazine cover commentary about the recent rotation that appears to be occurring within the equity market. Additionally, several article links provide insight into important economic reports for the coming week. Lastly, earnings season for the first quarter kicks into high gear with a number of companies reporting this week and next. The link to this week's magazine is provided below.The Week Ahead Magazine: April 13, 2014
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The Downside To Chasing Prior Winning Strategies

Posted by David Templeton on Sunday, April 13, 2014
We have discussed the potentially negative investment consequences resulting from investors projecting recent outcomes into the future, recency bias. One key for investors to keep in mind is to determine if a recent result is the beginning of a longer term trend either up or down. What is difficult in this type of assessment is trends are not of equal duration. The first chart below shows small cap stocks have outperformed large cap stocks since the end of the bursting of the technology bubble ...
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The Market Beyond First Quarter 2014

Posted by David Templeton on Saturday, April 12, 2014
Five out of the last six trading days have seen the Dow Jones Industrial Average rise or fall by more than 100 points. This type of market volatility certainly can be unsettling to investors. In addition to these 100 point plus or minus swings, is the increased commentary by some well known market strategists that are calling for a significant downturn in the market. In spite of this volatility and the rhetoric on television news shows, the S&P 500 Index is down less than 4% from its high and on...
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Bullish Sentiment Reading A Positive Data Point For Stocks

Posted by David Templeton on Thursday, April 10, 2014
This morning the American Association of Individual Investors reported individual bullish investor sentiment decline 6.9 percentage points to 28.5%. This compares to the February 6, 2014 level when bullish sentiment was reported at 27.9%. All of the decline in bullish showed up in the bearishness reading that rose 7.3% to 34.1%. The 8-week moving average of the bullishness reading declined to 36.9% and is the lowest level since this average was reported at 35.8% in mid July of 2013. For investor...
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Week Ahead Magazine: April 6, 2014

Posted by David Templeton on Monday, April 07, 2014
In spite of the weak finish to the market on Friday, most U.S. equity indices ended higher on the week. The Dow Jones Industrial Average and the S&P 500 Index finished the week up .5% and .4%, respectfully. The NASDAQ though declined 1.2% as many momentum related stocks experienced the brunt of the sell off. Economic data is pretty light this week with FOMC minutes being released on Wednesday, jobless claims on Thursday and PPI and consumer sentiment on Friday. One article in this week's magazin...
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The Labor Force Participation Rate: Now A Controversial Variable

Posted by David Templeton on Sunday, April 06, 2014
If there is one seemingly boring economic statistic that is now creating a lot of controversy it is the continuing decline in the labor force participation rate. Much of the debate around this statistic is important because it provides insight into the health of the economy and more importantly the labor market. As can be seen in the below chart, the participation rate (maroon line) is now at a level reached in 1978.From The Blog of HORAN Capital AdvisorsI surmise if we could go back to 2007 a...
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