This time of year, we put heavy focus on developing assumptions for future market returns and adjusting our model portfolios. The process is complex, but boiling it down we build a composite view based on a wide range of expert opinions on the economy and markets from experts such as JP Morgan, Fidelity, Vanguard and […] Read the full article…
• US stock market returns for 2020 by sector have ranged from -38% (energy) to +18% (tech). • Sector returns are correlated with estimated earnings growth for 2020 • Current forecasts for earnings are highly uncertain given pandemic and lack of company guidance • For these reasons, we are keenly focused on earnings reports that […] Read the full article…
• We estimate the fair value for the US stock market (S&P 500) using a discounted cash flow model • We assume a negative earnings shock of 20 – 30% in 2020, followed by a 3-year recovery • Using this model, the fair value for the S&P 500 falls in a range 2,542 – 2,905 […] 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…