Skip to content

Inside The Stock Market ...trends, cross-currents, and outlook

Jan 07 2022

Beware The Hot Air...

  • Jan 7, 2022

Mask mandates are back in vogue, and it’s investors who should be the first to welcome them: They’ll protect us from January’s blast of “thermal pollution,” when Wall Street prognosticators expel large volumes of hot air with prophesies for the new year. We have no problem with the exercise—so long as full-year forecasts (including one’s own) aren’t taken too seriously. “Forecasts are for show,” Steve Leuthold would always say.

Jan 07 2022

Weigh Those Bags Before Checkout

  • Jan 7, 2022

You’ve likely heard of “shrinkflation,” the practice in which a package of M&M’s is reduced from 40 pieces to 32, while the price per bag is unchanged. Publicly-traded companies have been engaged in similar schemes for awhile.

Jan 07 2022

A Dose Of Hindsight For 2022...

  • Jan 7, 2022

Speaking ill of the NASDAQ is like taunting Tom Brady; it’s hard to remember a good outcome. Still, we must dutifully report a new finding that QQQ owners won’t like.

Jan 07 2022

Carbon-Dating The Recovery

  • Jan 7, 2022

If January is the 21st month of the recovery, then time has elapsed in “dog years.” And that might put this “canine” recovery at around 12 years—just shy of where we might be had COVID never occurred! 

Jan 07 2022

New-Era Profits, New-Era P/E Multiples

  • Jan 7, 2022

The current mania won’t last forever. But our use of the “New Era” label in describing the last-quarter century or so of stock-market dynamics is still useful—in part because it highlights fundamental developments that simply cannot be repeated indefinitely. 

Jan 07 2022

Fat Profit Margins? Thank Your Grandkids!

  • Jan 7, 2022

Future generations are now footing the bill, not only for today’s entitlement recipients, but for record corporate profits as well! (Consider a gift of QQQ shares to help them pay for it all.)

Jan 07 2022

Even “True Believers” Should Read This

  • Jan 7, 2022

Consider it a sign of the times: Here is the most bullishly slanted version of our “Estimating The Downside” exercise we’ve ever put in print (and likely ever will).

Jan 07 2022

Time Cycles Say There’ll Be Better Times Than 2022

  • Jan 7, 2022

Numerologists will be disappointed to learn that longer-term time cycles don’t line up for a prosperous 2022 for stocks. However, the historical “hit rates” aren’t high enough to justify running for cover if you have no other fundamental stock-market worries. 

Jan 07 2022

The “Star” Is Not Aligned For 2022

  • Jan 7, 2022

When we entered the business in 1990, our grandmother mailed us a decades-old clipping from a Minneapolis newspaper featuring a columnist’s cryptic take on a hand-rendered chart. He coyly claimed to have found it in “an old desk”—and it wasn’t until the internet age that we’d learn of its unattributed source.

Jan 07 2022

A Squandered Small-Cap Opportunity?

  • Jan 7, 2022

We know our view on this is controversial, but we like the relative prospects for Small Caps—even though we still believe the broad stock market is currently the most speculative one in U.S. history. 

Jan 06 2022

Asset Allocation: A Rising Tide Lifts Most Boats

  • Jan 6, 2022

Boy, we thought policymakers had thrown the kitchen sink at the economy in 2020. Evidently, the Fed’s Marriner Eccles building has two kitchens, because they were able to do it again in 2021: M2 grew 13%, the Fed’s balance sheet swelled19%, and the 2021 federal deficit will come in at 12% of GDP.

Jan 06 2022

Rewarding “Perfect Foresight”

  • Jan 6, 2022

Remember, the All Asset No Authority Portfolio assumes complete naïveté on the part of the portfolio manager. That’s one extreme of the asset allocation continuum—although few allocators would admit that such an approach might be viable, despite its respectable history.

Jan 06 2022

Momentum: Not Just For Stock Pickers

  • Jan 6, 2022

For those not blessed with clairvoyance, we’ve developed an asset selection strategy that’s done very well, historically, compared to the “naïve” AANA Portfolio and even against the almighty S&P 500. We’re not implying that investors dump their valuation models, economic forecasts, or their intuition. But they should recognize that price momentum tends to persist—not just among stocks and industry groups—but at the asset-class level as well.

Jan 06 2022

Bridesmaid Strategy Risk/Reward

  • Jan 6, 2022

The “risk-adjusted returns” concept faded further into obscurity in 2021, with the year’s largest drawdown in the S&P 500 a mere -5.2%. But for those who still care about risk, the Bridesmaid strategy—though it often holds highly-volatile stuff like Gold, Commodities, and Small Caps—has been only about 1% more volatile than the S&P 500.

Jan 06 2022

Bridesmaid Track Record

  • Jan 6, 2022

Overall, five of the seven assets available for the Bridesmaid strategy have underperformed the S&P 500 over the long-term, and three (Treasury Bonds, Gold, and Commodities) lagged by 390 basis points or more per year.

Jan 06 2022

Bridesmaid Strategy For Equity Managers

  • Jan 6, 2022

Once again, the idea is to dispense with macroeconomic trends, sector fundamentals, comparative valuations, and to base sector selection solely on the prior year’s total returns.

Jan 06 2022

Bridesmaid Sector Track Record

  • Jan 6, 2022

As noted, the Bridesmaid sector strategy has underperformed what has become a more difficult benchmark in five of the last six years. Those poor results have cut the annualized excess return of this approach to just +2.1% since 1991. 

Jan 06 2022

A Good Year For Cheapskates

  • Jan 6, 2022

For our more fundamentally-oriented readers who are repulsed by all this talk of momentum, we have an alternative. Just forget about performance and focus solely on value!

Jan 06 2022

Cheapest Sector Track Record

  • Jan 6, 2022

With the 2020 Bridesmaid Asset Class (Small Caps) and Bridesmaid Sector (Consumer Discretionary) underperforming in 2021, the Cheapest Sector results in 2021 salvaged a bit of pride for the author of this annual evaluation. Even better, owners of the Financials sector won’t need to send the government its share of their long-term capital gains, since they’ll be holding it for another twelve months.

Dec 07 2021

“Peak Insanity” Is Behind Us

  • Dec 7, 2021

We think 2021 has earned its place in the books as the wildest and most speculative year in U.S. stock-market history, eclipsing even 1929 and 1999. That doesn’t mean 2022 will bring a panic or a crash, maybe just a degree of sobriety.