2023 Mid-Year: A Poster Child for Index-Aware Investing & Eschewing Market Timing
July 10, 2023 At the beginning of 2023, there was a lot of pessimism included in market expectations on the heels of a bad 2022 for investors, which included the worst rout on record for bonds and a steep drawdown in equities. This pessimism was not unwarranted: inflation was still a major problem, corporate earnings…
A Macroeconomic Check-In
June 26, 2023 Macroeconomic conditions usually provide excellent context for understanding the earnings picture for stocks. However, lately, there has been a lot of uncertainty about how the macro-economic picture is likely to unfold and how it is affecting the corporate earnings outlook. Mixed messages with maximum uncertainty is a decent way to describe…
An Extremely Narrow Market
June 19, 2023 There has been a great deal of attention paid to the so-called narrow market in 2023 by market observers, and for good reason. Before showing you our take on the degree of narrowness present in the equity market, we think it’s important to describe what it is, and why it…
A New Bull Market?
June 12, 2023 There have been several high-profile pronouncements that the stock market has begun a new bull market. Our view is that while this may be true, it is yet too soon to draw that conclusion with high conviction. First let’s look at the chart below. There are some positives, no doubt. But…
Buy and Hold Investing: The Why and The How
June 5, 2023 Great Companies and the Power of Doing Nothing! Over 30 years ago, I entered the investment business after a two-year stint in graduate school. During these formative years, I developed a list of companies I thought were great growth opportunities based on their business models, brands, and competitive advantages. What follows is…
Risk and Return: Is the Juice Worth the Squeeze?
May 22, 2023 Below is a series of plots for the S&P 500 Index relating risk and return over three year “look back” periods beginning in 1990. Each dot represents the relationship between risk (the x axis) and return (the y axis) over a three-year period. As we roll through time, we add…
The Inflation Threat is Receding
May 15, 2023 We had two important inflation releases last week for inflation data through April. Looking at inflation expressed as a percentage change from a year ago, we can see inflation readings receding. The red line depicts the Consumer Price Index, and the blue line shows the Producer Price Index (commodities).…
Inflation Readings This Week
May 8, 2023 The stock market has been range-bound for the better part of two years. Here’s a picture below of the index going back three years. The S&P 500 Index today is trading at a level achieved about two years ago on its way to its all-time high. But, since reaching that high,…
Another Bank Seizure While Markets Yawn
May 1, 2023 First Republic Bank was seized by the Fed and taken over by JP Morgan this past weekend. JP Morgan CEO Jamie Dimon made a statement stating, “this part of the cycle is behind us.” While Dimon’s remarks were meant to sooth, and the market is up today, it is hard…
A Big Week for Corporate Earnings
April 24, 2023 This week, approximately 2,500 publicly traded companies will report Q1 earnings, and some will provide forward guidance. Given the heightened concerns about the potential for an economic recession, this is a pivotal time for earnings because this quarter, more than any other in recent memory, will indicate the likely depth…
ChatGPT: The Future is Upon Us NOW!
April 17, 2023 Author’s note: everything below that appears in italics in this research note was generated by ChatGPT. This entire exercise was completed in about one minute! It seems fair to say this part of my job (writing commentary) could be replaced by ChatGPT. ChatGPT, as a large language model based on the…
It’s Now Really All About Earnings
Below is a graph of two data series going back thirty years. The first series in blue is the S&P 500 Index level valued on the left-hand axis. The second series in orange is the S&P 500 Index earnings valued on the right-hand axis. The relationship between stock prices and their earnings is well…