HORAN Capital Advisors

Spring 2019 Investor Letter: Markets Rebound To Begin The Year

 April 10 2019     David Templeton
Stocks bounced back in the first quarter with the best quarterly start for the S&P 500 Index since 2009, up 13.5%, after a weak showing at the end of last year. We have said in the past that strength tends to beget more strength. LPL Research noted in a recent report that there have been ten other times since 1950 where the S&P 500 Index was up greater than 10% in the first quarter. In 9 out of 10...

JOLTS Weakness, But A Month Is Not A Trend

 April 9 2019     David Templeton
The February Job Openings and Labor Turnover Survey showed a drop in openings of 538,000. Commentary on the February report used terms like plunged and disaster. Admittedly, the decline in openings should not be dismissed out of hand; however, it has not been an unusual occurrence for openings to fall as seen in the below chart.Importantly, openings continue to exceed the number of unemployed by 8...

Tactical Asset Allocation Can Add Value To Portfolio Return

 April 8 2019     David Templeton
A potential downside for investors employing a strict longer term strategic investment allocation based on a specific benchmark or index is that the strategy fails to incorporate shorter term tactical changes. It certainly can go without saying but indexing strategies are popular ones for investors. In fact we utilize some index products in our investment approach with our clients. The downside fo...

Economic Expansions Don't Die Of Old Age

 April 7 2019     David Templeton
As the end of March neared, the 3-month Treasury interest rate surpassed the 10-year Treasury interest rate and this resulted in a 3-month/10-year inversion of the yield curve, the first since 2007. This inversion has unwound as the curve has started to steepen with a move higher in the 10-year yield. At HORAN we focus more on the 2-year rate versus 10-year rate and this portion of the curve has y...

Stock Buyback Boom In 2018

 March 26 2019     David Templeton
Yesterday S&P Dow Jones Indices reported stock buyback activity for the S&P 500 Index as of the end of the fourth quarter 2018. Highlights from S&P DJI report:Q4 share repurchases increased 62.8% year-over-year to a record $223.0 billionTotal 2018 buybacks set record $806.4 billion, up 55.3% year-over-year, and up 36.9% from the record $589.1 billion set in 2007Almost every S&P 500 constituent – 4...

Equity Inflows Now Turning More Positive As Equity Returns Near A Peak?

 March 21 2019     David Templeton
The Investment Company Institute releases fund flow and ETF net issuance data on Wednesday's with a one week lag. In Wednesday's report for the week ending March 13, 2019, ICI reports domestic equity inflows spiked to $12.8 billion. This represents the largest weekly inflow since March 20, 2018 when domestic equity inflows totaled $19.1 billion.On a cumulative basis over the last one year period, ...

The FAANG Trade In Focus Again

 March 17 2019     David Templeton
Since the equity market peak in the third quarter of 2018, the average return of the FAANG basket of stocks, i.e., Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Alphabet f/k/a Google (GOOGL), has underperformed the broader S&P 500 Index as seen below. I have highlighted the significant contribution the FAANG's have had to overall market returns in prior posts like the Growth verse...

Record Job Openings In A Tight Labor Market

 March 15 2019     David Templeton
With today's release of the January Job Openings and Labor Turnover Survey (JOLTS), there is further confirmation that the job market remains tilted in favor of job seekers. As Econoday noted in their report, "employers are increasingly scrambling to fill [openings]." Even with new hires increasing by 1.5%, openings exceed hires by a record 1.78 million individuals.A year ago with the  March 2018 ...

Investors Have Missed Out On The Equity Rally

 March 9 2019     David Templeton
From 2014 to mid-2015, investors seemed to have a favorable view on stocks if one bases the observation on ETF and mutual fund flows. As the below chart shows, the increase in S&P 500 Index until mid-2015 coincided with positive flows into domestic equity focused mutual funds and ETF's. Beginning in mid 2015 though, investor flows turned negative (maroon line.) During late 2016 and early 2017 the ...

Cyclical Stocks Outperforming Defensive Stocks An Indication Of A Strengthening Economy?

 February 24 2019     David Templeton
Since the beginning of 2018, investors have encountered a stock market that is more volatile, yet at a level of volatility that is more normal. The below chart shows the return pattern for the S&P 500 Index since 1/2/2018 and the steep decline that began at the end of last September has been followed by a sharp recovery in 2019.Leading the recovery has been small cap stocks that are up 18.1% year ...
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