According to data from Envestnet, many American’s used their stimulus checks to trade stocks. As reported by CNBC, Envestnet estimated that those earning between $35,000 and $75,000 increased stock trades by 90% in the week after they received their stimulus check. Checks went out beginning the April 13. Since April 13, the S&P 500 is […] Read the full article…
• The Market correction last week was the fastest on record • Historically, the average return over the next year from 5% drop is +12% • When the market value is ‘fair’ at the drop, the next year is +17.3% • If history is a guide, selling into the drop my not be prudent; for […] Read the full article…
• We use fundamental analysis to measure relative attractiveness • The US utilities and consumer staples sectors look expensive • US value stocks and the financial sector look relatively cheap • Emerging market equities continue to look like very cheap relative their growth Valuation Method The method used here is based on fundamental analysis. We […] Read the full article…
In the last several months, it would have been hard to miss the flurry of articles discussing the flattening yield curve and likelihood that a recession is near. Here are just a few examples, “The U.S. Yield Curve Is Flattening and Here’s Why It Matters”, “Replace Yield Curve as a Recession Predictor? The Fed Considers […] Read the full article…
In Part 1 I introduced the real earnings yield model (REY) for stocks. The real earnings yield is simply the earnings of the stock(s) divided by the price in real terms (after inflation). As we showed in the last article, 1) the future return for the S&P 500 is significantly related to the current real […] Read the full article…
Today I would like to discuss my favorite ‘simple’ model for determining if the stock market is over- or under- priced, the real earnings yield or REY. If I could only have one piece of information to gauge the market value, this would be it! This model is also favored by a number of well […] Read the full article…
For the ten year period ending in November, the Vanguard Information Technology fund (VGT) and Vanguard Healthcare fund (VHT) generated 11.85% and 11.30% total return, respectively. This compares with 8.3% for the S&P 500 company total return index. (source: Morningstar.com through 11/2017) Going forward, my expectation for both technology and healthcare sectors will be to […] Read the full article…
This is the third and final part of a three part series on Factor Investing. See also part 1 and part 2. We have introduced the concept of Factor Investing (or Strategic Beta). In this article, I will wrap up the series with a discussion on three topics: 1) what are my ‘favorite’ factors, 2) […] Read the full article…
In Part 1 of this three part series, I introduced the concept of factors and discussed how they may be used to help generate higher risk-adjusted returns. Since the early 90’s and the growth in popularity of the Fama and French 3-Factor Model, there have been hundreds of additional factors that have been ‘discovered’ by […] Read the full article…
This is Part 1 of a three part series. The efficient market hypothesis in financial economics holds that prices reflect all available information. An implication of the theory is that it is impossible to beat the market on a risk-adjusted basis. If the theory holds, the best investment strategy would be to buy a low […] Read the full article…