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Disciplined Investing

Continuing To Favor U.S. Large Cap Stocks Over U.S. Small Cap Stocks

 February 17 2018     David Templeton
With the passage of tax reform, one market segment one might believe experiences an outsized benefit to earnings is U.S small cap stocks. This certainly seems plausible due to the fact smaller companies tend to have less direct exposure to foreign revenue; therefore, likely generating most of their profits in the U.S.Our firm exited completely the U.S. small cap space in late 2013 based on a numbe...

Small Businesses Remain Highly Optimistic

 February 14 2018     David Templeton
Tuesday's report by NFIB on small business optimism for the month of January places the reading in the top five highest coming in at 106.9. According to NFIB the response to "Now Is A Good Time To Expand" was 32% and is the highest level for this category in the Indexes 45-year history. Today's strong NFIB report comes on the heals of a record level of optimism in 2017. NFIB President and CEO, Jua...

Enhancing Investment Results By Utilizing An Investment Mentor

 February 13 2018     David Templeton
In a recent article, Strong Hands - Bridging the Behavior Gap, by Pim van Vliet, PhD, a Managing Director at Robeco Institutional Asset Management, it was noted that,"the average mutual fund investor lags a buy-and-hold strategy by -1.9%. This finding is persistent across different styles, varying from -1.3% for value investors to -3.2% for growth investors. Also 'passive' investors in market fund...

Dow Dogs Struggle Early In 2018

 February 12 2018     David Templeton
The Dogs of the Dow of 2018 include two newcomers, General Electric (GE) and Procter & Gamble (PG). These two stocks made the list of top 10 dividend yielding stocks in the Dow Jones Industrial Average Index for 2018 and replaced Boeing (BA) and Caterpillar (CAT). Unfortunately the new additions are weighing down the performance of the Dow Dogs so far this year as they are the worst performing sto...

Last Week Was The Beginning Of An Equity Market Returning To Normality

 February 11 2018     David Templeton
Some are saying last week's market movement is one for the record books. I have seen descriptions noting the market decline was unprecedented or the market is in turmoil. S&P Dow Jones Indices Indexology Blog titled a post, I'm Exhausted, but outlines data that places the market decline in perspective. One data point in S&P's post,"Keeping perspective, as repeatedly noted, while 1000 point decline...

A Reversal In Bullish Investment Sentiment

 February 8 2018     David Templeton
I have often written that sentiment measures are most valuable at their extremes. Also, they tend to be most representative of potential market turning points when the extreme is at the bearish end of the spectrum. However, in hindsight, it appears recent excessive bullishness for individual investors and institutional investors indicated a cautionary equity market outlook would have been profitab...

Volatility Returns

 February 6 2018     David Templeton
Unwelcome, Unpleasant, Inevitable. The recent spike in volatility has certainly caught the attention of investors over the past several days and as corrections go, the market drop has been quick and sharp. Many market observers have commented that the sell-off has been reasonably orderly but exacerbated by quantitative trading programs and the deleveraging of institutions. As you know, we have be...

Pullbacks Are A Normal Part Of A Bull Market

 January 30 2018     David Templeton
During the Fed's move to increase short term interest rates, some have expressed concerns due to the yield curve's increased flattening, i.e., short rates moving higher versus long term interest rates. This increased flattening move can be seen in the below chart and the concern centers around the fact that every recession since 1960 has been preceded by an inverted yield curve, i.e., short term r...

Will The Stock Market Ever Decline Again?

 January 20 2018     David Templeton
For many investors it may seem difficult to believe since it has been so long ago, but the equity markets do go through negative returning periods. The average intra-year decline for the S&P 500 Index since 1980 is 14% and the last double digit decline was in February 2016, nearly two years ago. So what in the world is going on that has stocks in what seems an uninterrupted climb?The below 'monthl...

A Balancing Oil Market, But Will It Last?

 January 13 2018     David Templeton
In May 2011 crude oil (WTI) hit $113 per barrel and remained elevated at or near that level until the summer of 2014. Given the high price of crude and the expansion of fracking at that time, crude supply continued to grow until peaking in mid 2017. I wrote about the high crude supply level in mid 2017 and its impact on keeping oil prices down, Higher Oil Prices Contend With Too Much Supply And Hi...
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