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Disciplined Investing

Investor Sentiment Has Improved But Not To An Extreme Level

 February 7 2019     David Templeton
Several recent releases of various investor sentiment reports show an improvement in overall investor sentiment. In late December I noted a number of the sentiment measures were indicating extreme fear on the part of investors. Since my December post both sentiment and the equity market have experienced a marked improvement. One example is this week's release of the AAII Sentiment Survey. Individu...

Higher U.S. Stock Prices Not Driven By Higher Domestic Equity Inflows

 February 6 2019     David Templeton
The end of 2018 saw the S&P 500 Index return decline over 13% as seen in the first chart below. The second chart shows the snap back in the market that has rewarded investors at the start of 2019 with the price only return of the S&P 500 Index up nearly 9%.In spite of the strong returns so far this year, investor fund flows into mutual funds and exchange traded funds has been decidedly negative. T...

Winter 2018 Investor Letter: A Tough Year For Most Asset Classes

 January 22 2019     David Templeton
As noted in our Winter 2018 Investor Letter, following passage of the Tax Cut and Jobs Act, the reduction in corporate tax rates caused analysts to revise their earnings growth expectations higher to nearly 24% for 2018. Given a number of positives, further upside in equity markets was anticipated in 2018. As fate would have it, not only were equity returns weak, most asset class returns were nega...

Dogs Of The Dow A Winning Strategy In 2018

 January 1 2019     David Templeton
With the 2018 investing year now closed, one strategy that turned out to be a winning one was the Dogs of the Dow strategy. 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 Average Index (DJIA) after the close of business on the last trading day of the year. Once the ten stocks are determined,...

Stock Buybacks Up 57.8% In Third Quarter

 December 23 2018     David Templeton
S&P Dow Jones Indices recently reported preliminary dividend and buyback information for the third quarter ending 9/30/2018. On a year over year basis stock buybacks for S&P 500 companies are collectively up 57.8% for Q3 2018. For the 12-months ending 9/30/2018 total buybacks increased 39.1%. Relative to buybacks, dividends increased a much smaller 9.7% resulting in combined dividends plus buyback...

With Abysmal Investor Sentiment A Market Bottom Might Be Near

 December 21 2018     David Templeton
Simply noting that the S&P 500 Index is down 12.45% month to date through the close on 12/21/2018, this pretty much sums up the damage inflicted on investors by the market. After a strong start to the year, and following a rewarding 2017, the S&P 500 index had a return of 9.62% through late September. In nearly three short months thereafter, the S&P 500 Index has declined 19.23% from its high, lea...

Trend In Index Earnings More Important Then A Slowing Rate Of Earnings Growth

 December 13 2018     David Templeton
One issue strategists are highlighting of late is the fact the earnings growth rate for the S&P 500 Index in 2019 is expected to decelerate from the mid to high 20+% level this year to the mid single digit percentage level in 2019. Some have indicated this slowing earnings growth rate may negatively impact U.S. equity returns next year. Of course the strong rate of earnings growth this year is due...

Steep Decline In Bullish Investor Sentiment

 December 13 2018     David Templeton
The American Association of Individual Investors reported sentiment data for the week ending December 12, 2018. The sentiment survey reported the largest change in the difference between bullish and bearish sentiment since April 11, 2013. The swing in the current week equaled -35.4 percentage points.In terms of bullish sentiment, the level of 20.9% is the lowest bullish sentiment level since May 2...

Tight Labor Market A Headwind For Business Sentiment

 December 11 2018     David Templeton
Although the November NFIB Small Business Optimism Index remains at a high level of 104.8, today's report is the third consecutive decline in the optimism index. The index high of 108.8 was reached in August of this year.A constraint on growth and optimism seems to be related to the tight labor market. The category cited most frequently as the single most important problem facing business was the ...

Investment Fund Outflows Dominate

 December 9 2018     David Templeton
The most recent flow data for ETF's and mutual funds reported by ICI last week notes outflows occurred in nearly all of the broad asset categories. One exception was a small positive flow into commodity oriented investments. Source: ICIFollowing the large $18.6 billion bond investment outflow for the week ending 10/31/2018, bond investments continued to be sold by investors. Below investment grade...
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