In our recent article, “Respect The Predictive Power Of An Inverted Yield Curve”, a colleague noted that investors ignore this highly reliable indicator at their own peril. Today, I will argue for why investors should perhaps ignore this highly reliable indicator because “it may be different this time”.To be clear, it may not be different this time, but it is always worth considering both sides o...
During the early part of this year quite a bit was written about the outperformance of small cap stocks versus large cap stocks. One commonly referenced reason for the outperformance was based on the trade and tariff issues and the potentially greater negative impact this would have on large cap stocks. It does seem though the trade issues are slowly being resolved and this headwind subsiding for ...
Investors directed sizable investment fund flows towards equities for the week ending 9/19/2018 as reported by the Investment Company Institute (ICI) on 9/26/2018. Total equity inflows for that week equaled $10.2 billion dollars. This completely reversed the $10.4 billion net outflows reported over the prior seven weeks that ended 9/12/2018. Bonds continue to receive inflows as well and equaled $4...
September this year certainly seemed like an odd month. For example, the fifth business day of the month was Tuesday, September 10 as Labor Day in the U.S. was on Monday September 3. The first business day was September 4. The end of the month is this Friday, September 28. I mention this as the Presidential cycle is getting more attention since the mid term elections are a little more than a month...
In the mid 1990's famed investor Peter Lynch stated, "Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves." With this quote in mind it seems a number of investment pundits are once again trying to sell fear regarding the current equity market. This morning I ran across the following chart on Twitter.S...
One morning my then 4-year-old daughter, we’ll call her Bee, asked me “What are the rules of the family?” Kids have a way of asking you deep questions when you are least prepared. My quick answer was:
Stick together
Love each other
Have fun
These were all things she could understand given her limited scope of experiences and frame of referen...
The Labor Department's release of the Job Openings and Labor Turnover (JOLTs) report this morning is further confirmation of a strong labor market. The NFIB Small Business Optimism report I highlighted earlier today also noted the difficulty small business are having in filling open job positions. The JOLTs report continues to show the number of job openings exceeding the number of unemployed indi...
The National Federation of Independent Businesses (NFIB) reported that August's Small Business Optimism Index set a new record high at 108.8. The prior high mark for the index was set 45-years ago (July 1983) when the index reached 108. NFIB's President & CEO, Juanita Duggan, stated in the report,"Today’s groundbreaking numbers are demonstrative of what I’m hearing everyday from small business own...
Utilizing sentiment measures in one's analysis is not an exact science. On the other hand, at their extremes, these sentiment measures do provide signals of a potential near term change in market and economic direction. A number of 'investor sentiment' measures are available to evaluate, but I am highlighting only two below, the NAAIM Exposure Index and the American Association of Individual Inve...
There are a few events in investing that have a high likelihood of being good predictors of the equity market's future direction, like, stock prices follow earnings, market breadth leads price, or an inverted yield curve leads economic weakness. One factor I believe the bears have missed in the recent market advance seems to be their discounting of the increasing strength of corporate earnings gro...