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Green Book April 2014

U.S. Markets See Uniform Strength, While The World Seems Fractured

Based on the historical percentages, the bull market should have a minimum of four to six months of life left. But the market has ways of tricking you. All ten of the S&P 500 sectors recorded a sequential increase in four-quarter trailing net profit margins. Eight of ten S&P 500 sectors are recording profit margins well above their long-term medians. Margin debt levels are high, but that’s because stock prices are high. The critical relationship is the comparative rates-of-change in Margin Debt and stock prices. In December, we declared the market was likely entering into a cycle where High Quality stocks would shine. We were wrong. The launch of the Large Cap leadership cycle in April 2011 is receiving no attention whatsoever.

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