Priced for Perfection

Immediately below are a series of stock market index returns for the year-to-date period ended February 23, 2024. The S&P and NASDAQ are in a dead heat lead while other indexes lag. Here are the big takeaways from the chart below. 1) The equally weighted S&P 500 Index lags the S&P by 4.5%. This is…

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Inflation Progress has Stalled – WHY?

There were two inflation readings released this week (CPI and PPI) that threw cold water on the idea the inflation fight is all but over and that the Fed would soon be lowering interest rates. In response, bond yields spiked and stocks retreated for the first time in five weeks. Below is a graph of…

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Curb Your Enthusiasm

The stock market is on fire and the Mag Seven are rising in anticipation of strong AI induced earnings gains. Nowhere is this more apparent than in the PE valuations of large cap technology stocks like META, Alphabet, Nvidia, Amazon, Apple, and Microsoft. With all the hype and stratospheric expectations, sometimes it is important to…

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“The Dude Abides.”

In the 1998 cult classic film “The Big Lebowski,” Jeff Bridges’s iconic character “The Dude” frequently quips “The Dude Abides.” What is meant by this phrase? Succinctly, it means as chaos swirls around him, the Dude remains steadfast and constant in his approach to life and living. It seems to us that the same thing…

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The Magnificent Seven – is it justified?

If you’ve been paying attention to the stock market and financial media, you have very likely heard of the Magnificent Seven (also known as the Mag7). Before going further, let’s itemize the companies that comprise the Mag7 stocks. They are: 1. Meta, 2. Nvidia, 3. Microsoft, 4. Amazon, 5. Apple, 6. Alphabet, and 7. Tesla.…

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What is Risk?

With the advent of “Modern Portfolio Theory” (MPT) introduced by Nobel Laureat Harry Markowitz in 1952, the investment industry has dedicated a MASSIVE amount of resources to managing risk over the past seventy-five years. Academic discussions about risk, including the sometimes esoteric statistical “language” used to describe risk, is most often inaccessible to the general…

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More Confounding Mixed Signals

We concluded 2023 on a hopeful note, seeing a fourth quarter broadening of equity market participation with solid returns to former laggards: Namely, small/mid cap stocks and dividend growers broadly participated in the fourth quarter market rally. The markets were trading on the view that inflation was conquered, the soft landing was a done deal,…

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Burning questions Into the New Year

As we enter 2024, here are the predominant questions related to the economy and capital markets: Will the economy avoid recession as presently expected? Will the Fed cut interest rates as presently expected? Will corporate earnings grow 10% as presently expected? Will equity market participation broaden away from the “Magnificent 7”? We could list more,…

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This is not an economic or stock market crisis

With November election political campaigning in full swing, it seems like EVERYTHING is being characterized as a crisis these days. Border Crisis. Ukraine Crisis. Covid Crisis. Climate Crisis. Crime Crisis. Homelessness Crisis. Fentanyl Crisis. Inflation Crisis.  Economic Crisis. These are a few of the things being characterized as a crisis in the current climate.  Some…

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A New Week

Below are US stock market returns for the week just past. The Dow managed to make a gain for the week while the S&P 500 and Nasdaq Indexes headed further into bear market territory. As we head into the second week of quarterly earnings season, it is clear the market is processing two dominant factors…

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The Waiting Game

Equity Markets were up last week with a strong rally after a period of selling pressure. Nonetheless, there is still considerable uncertainty with respect to inflation, interest rates, and corporate earnings. Relative to market drawdowns of the more recent past, we have been saying this one has the potential to be much more protracted. Consequently,…

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Investor Mailbag: Hot topics

Why was the market down at the end of June? It seemed like it was going to rally back up. Markets ended their two-week rally in June after the Bureau of Economic Analysis released their March 3 estimate of the US real GDP growth for Q1, updating the estimate to -1.6% annually (-0.4% growth for…

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