Monthly ArchivesAugust 2016

The Best Days Propaganda (Part Deux) image

A few months ago, we highlighted the 10 best days myth in a blog post.  This myth as I call it is perpetuated by large money-center institutions as a way to show investors a) why they need them and b) why they should stay invested throughout market cycles in zombie-like portfolios for fear of missing a few large up days.  I came across a similar chart (but different enough) by Gary Shilling which looks at this myth slightly differently.  I won't bore you again with all of  the  details of the myth since you can read about it on our blog here.         Lines 1 & 2 They say timing the market is difficult and trying to can destroy returns.   From 1926 ...

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Guide To The Markets (Dissected) image

Each quarter, JP Morgan Asset Management updates it's Guide to the Markets report which is filled with charts and statistics.  In this post, we isolate 11 out of the 71 pages of information in the guide and provide some context.  I tend to do this every year as new information is added and as things change materially.   Slide #4 The current forward P/E of the market is 17.1, which is higher than in 2007, although not close to the bubble high in 2000 of 27.2.  The thing with forward earnings estimates is that analysts and companies are notoriously optimistic.  I don't think any analysts forecasted in 2011 that today's earnings would be the same level, but they are.  And yet the market has continued ...

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July 2016 Update image

Market Scorecard   The markets continued to trek higher following the Brexit bounce in late June. All of the major indices posted solid gains during the month, with the S&P posting a 3.52% positive gain.  US Q2 GDP was released at month-end and posted a meager +1.20%.  We were very surprised since we actually expected a strong GDP report powered by consumer spending which makes up roughly 70% of the economy.  While consumption was strong, investment fell -1.20% and government expenditures fell for the first time since Q4 2014.  The biggest surprise was the GDP deflator which went from +.50% to +2.20% (a delta of +1.70%) which caused GDP to fall to 1.20% instead of being 2.90%.  The GDP deflator is ...

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