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Dollar Strength Leads To Large Cap Stock Outperformance

 May 20 2018     David Templeton
A recent strengthening of the US Dollar has some investment commentary now favoring small cap stocks over large cap stocks. This is partly due to the earnings headwind that can negatively impact multinational companies as they convert foreign earnings back into the Dollar. One recent report titled, Rising Treasury Yields And Dollar Completely Change Investment Themes, noted:"The resumption of the ...

Investor Sentiment Continues To Be Less Bullish

 May 3 2018     David Templeton
This week's Sentiment Survey report from the American Association of Individual Investors continues to show a falling trend in the level of bullishness of individual investors. This week's bullishness reading was reported at 28.4% and down from 36.9% in the prior week. The current bullishness reading is near the minus 1 standard deviation level and these sentiment measures are most useful as a con...

Heightened Volatility A Result Of The Change In The Earnings Growth Rate

 May 3 2018     David Templeton
Investors are experiencing a market exhibiting a higher level of volatility. This heightened volatility is more normal than the lack of volatility experienced in the few years leading up to 2018 and yet the S&P 500 Index is down less than 2% this year.Including the last two months of 2017 (November and December) the S&P 500 Index is up just less than 2%. Given some of the financial commentary one ...

Consumer In Decent Shape, A Positive For Continued Economic Growth

 April 25 2018     David Templeton
In spite of the market's negative reaction to some of the recent earnings reports issued by credit card companies, one might think the individual consumer is in pretty bad shape. To the contrary though. About a year ago I evaluated the consumer as a result of issues surrounding some of the credit card firms. As was the case in the earlier blog post, the consumer data today is indicative of a consu...

Dividend And Stock Buyback Growth Potentially Accelerate In 2018

 April 15 2018     David Templeton
Near the end of last month S&P Dow Jones Indices reported preliminary dividend and buyback activity for the S&P 500 Index for the fourth quarter of last year. For the quarter the dollar amount of dividends paid increased 5.4% versus the same quarter in the prior year. Additionally, for the quarter, dividends combined with buybacks increased 3.1% year over year. It is not uncommon for the combined ...

Sentiment Now Broadly Bearish

 April 12 2018     David Templeton
In prior posts highlighting investor sentiment data it has been noted that sentiment data is more actionable at market bottoms than at market tops. Knowing this, the American Association of Individual Investors reported bullish investors sentiment at 26.1%, which is below the minus 1 standard deviation level of the average bullish sentiment level.Additionally, bearish sentiment jumped 6.1 percenta...

US Dollar Influencing Oil Prices

 April 11 2018     David Templeton
Nearly two years ago four factors were influencing the energy market and specifically the price of oil. Oil inventory in the U.S. hit a record highThe price of crude (West Texas Intermediate or WTI) reached a post financial crisis lowRotary oil rig count hit a record low of 404The trade weighted value US Dollar hit a post financial crisis highThe fact oil inventory spiked is partially attributable...

Spring 2018 Investor Letter: Noise Versus Fundamentals

 April 10 2018     David Templeton
In one brief quarter, the equity market goes from experiencing virtually no volatility to seemingly +/- 2% swings on a daily basis. Last year was a bit abnormal and more a year of consistent returns and minimal drawdowns. In fact, the largest drawdown was just 3%. The market has already experienced a 10% drawdown in 2018. In our Spring 2018 Investor Letter we note the fact the first quarter broke ...

Tariffs, Stocks And Recessions

 April 9 2018     David Templeton
One truism investors know well is the fact the stock market does not perform well in a recession. The recent focus on implementation of tariffs on the U.S.'s largest trading country, China, have some concerned about escalation into an all out trade war and leading to an economic slowdown or recession. Google web search on the term 'Tariffs' has moved higher with the March 1 peak coinciding with th...

Not A Unique Equity Market: Higher Prices Ahead?

 April 5 2018     David Templeton
About a year and a half ago I wrote a post on the current equity market that broke out of a thirteen year trading range in 2013 and compared it to the bull markets of the 1950s and 1980s. A number of policy issues being pursued today have similarities to ones in those two decades and below is a brief summary of what I wrote then:"...potential commonality to the current market compared to those pri...
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