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Bullish Sentiment Reading A Positive Data Point For Stocks

Posted by David Templeton on Thursday, April 10, 2014 in Wealth Management | Comments (0)
This morning the American Association of Individual Investors reported individual bullish investor sentiment decline 6.9 percentage points to 28.5%. This compares to the February 6, 2014 level when bullish sentiment was reported at 27.9%. All of the decline in bullish showed up in the bearishness reading that rose 7.3% to 34.1%. The 8-week moving average of the bullishness reading declined to 36.9% and is the lowest level since this average was reported at 35.8% in mid July of 2013. For investor...  Read more...

Week Ahead Magazine: April 6, 2014

Posted by David Templeton on Monday, April 07, 2014 in Wealth Management | Comments (0)
In spite of the weak finish to the market on Friday, most U.S. equity indices ended higher on the week. The Dow Jones Industrial Average and the S&P 500 Index finished the week up .5% and .4%, respectfully. The NASDAQ though declined 1.2% as many momentum related stocks experienced the brunt of the sell off. Economic data is pretty light this week with FOMC minutes being released on Wednesday, jobless claims on Thursday and PPI and consumer sentiment on Friday. One article in this week's magazin...  Read more...
If there is one seemingly boring economic statistic that is now creating a lot of controversy it is the continuing decline in the labor force participation rate. Much of the debate around this statistic is important because it provides insight into the health of the economy and more importantly the labor market. As can be seen in the below chart, the participation rate (maroon line) is now at a level reached in 1978.From The Blog of HORAN Capital AdvisorsI surmise if we could go back to 2007 a...  Read more...

Dividend Payers Bounce Back In March

Posted by David Templeton on Friday, April 04, 2014 in Wealth Management | Comments (0)
For the month of March the dividend payers in the S&P 500 Index regained their footing and outperformed the non payers by a full 3.75 percentage points. In spite of this outperformance by the payers in March, the payers return continues to significantly trail the non payers return on a year to date and 12-month basis.From The Blog of HORAN Capital AdvisorsFor investors though, is the outperformance by the dividend payers in March another sign the market is shifting to focus more on value oriente...  Read more...

A Low Bar Set For First Quarter 2014 Earnings

Posted by David Templeton on Thursday, April 03, 2014 in Wealth Management | Comments (0)
In a recent report issued by Thomson Reuters' AlphaNow, it is noted analysts have lowered the bar for first quarter earnings. The only sector that saw an increase in earnings expectation for Q1 is the utility sector. The analyst revisions result in year over year first quarter earnings growth of only 2.1% versus the 6.5% in place at the beginning of the quarter. Not surprisingly, weather is being cited as the main culprit for the lowered expectations.From The Blog of HORAN Capital AdvisorsSource...  Read more...

Week Ahead Magazine: March 30, 2014

Posted by David Templeton on Sunday, March 30, 2014 in Wealth Management | Comments (0)
Monday marks the last trading day of the first quarter of 2014. The first three months of market action this year have been anything but similar to the first three months of 2013. In the first quarter last year, the S&P 500 Index returned over 10%. Before trading on Monday, the first quarter return in 2014 equals about .5%. As the below chart shows, January saw some profit taking after strong returns in 2013. The S&P 500 Index recovered the January losses in February and proceeded to generate po...  Read more...

Equity Market Declines, Bullish Investor Sentiment Declines

Posted by David Templeton on Thursday, March 27, 2014 in Wealth Management | Comments (0)
Recently, changes in investor equity market sentiment have followed changes in the S&P 500 Index. As the market declines, bullish investor sentiment has declined as well. True to form, bullish sentiment fell this week as reported by the Association of Individual Investors. Bullish sentiment fell over five percentage points to 31.2% versus the prior weeks level of 36.8%. The long term bullishness level is 39% and one standard deviation below this average is 29%. Consequently, this level of bullis...  Read more...
Quite a bit of discussion has occurred over the past several days regarding the fact value stocks are outperforming growth stocks. This outperformance has taken place since the beginning of March as can be seen in the below chart.From The Blog of HORAN Capital AdvisorsIn looking at a longer view of the value growth cycle, growth had been the outperforming style since April of last year.From The Blog of HORAN Capital AdvisorsThe importance of this fact has to do with the performance of these two ...  Read more...

Further Multiple Expansion Possible

Posted by David Templeton on Tuesday, March 25, 2014 in Wealth Management | Comments (0)
In a recent white paper by Fidelity Investments the authors show that valuation in and of itself is a poor predictor of future short term market returns. The report evaluates a number of valuation indicators, including the Shiller CAPE, and points to some shortcomings with the CAPE calculation. In addition to Fidelity, Jeremy Siegel has highlighted issues with the CAPE calculation. Nonetheless, valuation is certainly important for investors to pay attention to as they allocate investment dollars...  Read more...

Equity Market Continues To Track Like The 1990's

Posted by David Templeton on Monday, March 24, 2014 in Wealth Management | Comments (0)
At HORAN Capital Advisors we have written commentary several times over the past six or so months noting similarities of the current equity market advance to market similarities in the 1990s. Our third quarter 2013 Investor Letter cited multiple or P/E expansion. We also posted a follow-up comment in our January 1, 2014 post, Expectations For The Market In 2014. In the January post we included a chart noting the calendar year returns for the S&P 500 Index in the mid 1990s.Today, Ed Yardeni of Ya...  Read more...
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