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Fall 2016 Investor Letter: Time In The Market

 October 17 2016     David Templeton
In our recent published Fall 2016 Investor Letter, our commentary covers recent market related events, U.S. earnings, interest rates and the pending election. Emotions tend to run high during these times creating an environment that can drive investors to reduce their stock market exposure. The newsletter discusses the consequences these decisions can have on long-term returns. In our Summer 2016 ...

Slow Economic Growth Has Led To Weak Job Growth

 October 16 2016     David Templeton
One factor that has turned into 'normal' for this economic recovery is its slow rate of growth. Out of the eleven recoveries since 1949, the current one is the slowest, barely averaging above 2%.Source: The Wall Street JournalThis slow rate of growth has left a gap in potential economic output of nearly $3 billion. In percentage terms the economy's slow rate of growth has expanded 16% below its lo...

Positive Equity Markets In The Year After The Presidential Election

 October 12 2016     David Templeton
Absent an election year, equity markets generally trend higher until the seasonally weak September/October months. However, during an election year, equity market weakness tends to occur during the summer months and subside as the November election draws near. Historically, markets then rally into year-end. The market has followed this pattern so far this election year. As the below chart shows, ...

Investors Rotating Out Of Income Generating Equities

 October 9 2016     David Templeton
Since mid August the S&P 500 Index was down approximately 3% to mid September, but has recovered about 1.3% to Friday's close. The market seems to be having difficulty finding direction, trading mostly sideways since mid July, as can be seen in the below chart that includes the transport index as well.As I noted in a post in early September, transports began outperforming the S&P 500 Index at that...

Why We Sold Tyson Foods In September

 October 8 2016     David Templeton
At the end of September our research led us to sell Tyson Foods (TSN) common stock in our client accounts. Our firm relies heavily on fundamental research in our stock research in order to uncover buy and sell opportunities for our clients' portfolios. What led us to our sell decision was not the direct reason TSN was down nearly 9% on Friday, but an indirect one.As background, our firm added TSN ...

Inspite Of Decline In Buybacks, Aggregate 'As Reported Earnings' Continue To Increase

 October 7 2016     David Templeton
Last week S&P Dow Jones Indices reported preliminary aggregate data on buybacks, dividends and earnings for the quarter ending June 30, 2016. Of note in the second quarter is buybacks declined 21% versus Q1 2016 and down 3.1% versus Q2 2015. Importantly, as reported earnings increased for the third consecutive quarter increasing to $201.79 billion versus $189.37 billion in Q1 2016. Dividends of $9...

Rollover Relief

 October 4 2016     Anna Pfaehler
“To err is human; to forgive, divine.”  - Alexander Pope The IRS has acknowledged that taxpayers are human and sometimes we humans make mistakes. Especially, if it is something we are unaccustomed to doing like executing a rollover of a retirement account.  There are two methods to rollover a retirement account:  A direct rollover or trustee-to-trustee transfer....

More Signs Of An Earnings Recovery Unfolding

 October 2 2016     David Templeton
As I have noted in recent posts, an earnings recovery seems to be unfolding. Increasingly, more data continues to point to this earnings recovery over the course of the next twelve months. On Friday, the Economic Cycle Research Institute released data on its proprietary Weekly Leading Index. A variation of this same index is the Leading Growth Index (WLIg). As the following chart shows, the WLIg t...

The Risk Of Dismissing The Data: The TED Spread And Baltic Dry Index

 September 25 2016     David Templeton
No single variable or statistic provides clear insight into the future direction of the economy or stock market. When a data point does not fit ones narrative though, justification to eliminate it seems to be gaining among some strategists. Recently, the market has seen a fairly significant spike in LIBOR and a resultant increase in the TED Spread, i.e., 3-month LIBOR minus 3-month Treasury.It see...

Sentiment: Investors Not Believing The Rally

 September 22 2016     David Templeton
This morning the American Association of Individual Investors released their Sentiment Survey showing a 3.1 percentage point decline in bullish sentiment to 24.8%. The bullish sentiment reading reported by individual investors remains below the -1 standard deviation level of the sentiment measure which is 28.3%.The 8-period moving average of the bullish reading declined as well to 29.6%. A vast ma...
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