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Sentiment In An Elevated Market

 February 26 2017     David Templeton
With the weekend nearly over and any research or reading completed, most investors now know the Dow Jones Industrial Average has been on a rare eleven day winning streak. What makes this more amazing is this is occurring as the market hits new highs with each close. One conclusion drawn from this seems to be the market is nearing a correction or consolidation point and I will be the first to admit...

The Significance Of The S&P 500 Yield Falling Below The 10-Year Treasury Yield

 February 20 2017     David Templeton
For most of 2016 the dividend yield on the S&P 500 Index was greater than the yield on the 10-year U.S. Treasury. Historically, this has served as a positive sign for forward stock price returns. With the strong equity market returns in 2016 and the move higher since the election, the S&P 500 yield is now lower than the 10-year Treasury. In addition to the move higher in stocks, bond prices have d...

A Use for Intra-Family Loans

 February 15 2017     Anna Pfaehler
As mentioned in my previous post, borrowing from The Bank of Mom and Dad can be very attractive for a child mostly because of the low interest rates. However, the strategy does benefit the parents too, especially when trying to achieve the nearly universal goal of those with a taxable estate – reduce Uncle Sam’s inheritance as much as possible.  The IDGT The income tax c...

Recent Outperformance Of Low Volatility A Sign Of Risk Off Ahead?

 February 12 2017     David Templeton
Since the election in the U.S. it has been a 'risk on' environment for stock investors. Last week though, the Powershares Low Volatility ETF (SPLV) broke out of a sideways trading range to the upside. At the same time, the Powershares High Beta ETF (SPHB) remains trapped in a sideways range. Might the move higher in the low volatility ETF be a signal there is underlying action by some investors to...

Positive Sentiment And Fundamentals Rests On Positive Political Expectations

 February 11 2017     David Templeton
I believe there are two broad issues at play that are having a positive influence on equity prices. The first issue is a fundamental one and related to a much improved corporate earnings picture. Looking solely at companies in the S&P 500 Index, Thomson Reuters publishes a weekly report summarizing the quarterly earnings reports of companies. Friday's report notes,Q4 '16 earnings are expected to i...

Intra-family Loans

 February 8 2017     Anna Pfaehler
Borrowing from Mom and Dad after a certain age can make you bristle if you’re otherwise independent and accustomed to supporting yourself. However, it can make solid financial sense for both parties in certain cases. Interest Rates An intra-family loan should have an interest rate of at least the Applicable Federal Rate (AFR), which is published monthly by the IRS here (https://app...

Room For More Debt?

 February 6 2017     Matt Woebkenberg
As was mentioned in a previous post, S&P 500 companies have taken advantage of cheap debt to fund continued capex and share buybacks since the recession.  This has driven total debt to new all-time highs.  Though there has been much concern about the "abuse" of low interest rates to create a rally fueled by buybacks, it does not strike me as much of an issue.  In fact, it makes sense for companies...

Dogs Of The Dow 2017: Know The Strategy's Bets

 February 5 2017     David Templeton
The Dogs of the Dow strategy is one where investors select the ten stocks that have the highest dividend yield from the stocks in the Dow Jones Industrial Index (DJIA) after the close of business on the last trading day of the year. Once the ten stocks are determined, an investor invests an equal dollar amount in each of the ten stocks and holds them for the entire next year. The popularity of the...

Millennials, Coffee and Compound Interest

 January 30 2017     Anna Pfaehler
I have a confession – I am a millennial. I like participation awards. I value experiences more than things. And I have a deep love for coffee. Anyone who has ever heard me talk about budgeting knows my “fun money” goes to Starbucks and my husband’s goes to craft beer (he’s also a millennial). A recent survey from Acorns, a microinvesting app that saves spare chan...

YTD Equity Market Declines In 83% Of All Up Years Since 1945

 January 29 2017     David Templeton
CFRA Research, in conjunction with S&P Global, recently published a report on the probabilities of a market pullback. A number of interesting data points are outlined in the report, but a few interesting ones are as follows:"during bull markets since 1945, the S&P 500 experienced a pullback (a decline of 5.0%-9.9%) once a year, on average,""a correction (a 10% to 19.9% decline) every 2.8 years, an...
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