Assessing “Real” Returns
Amidst the recent market volatility, it helps to revisit the long-term case for investing in equities. This chart shows the inflation-adjusted (i.e. “real”) total return of the S&P 500 since 1926. The red trendline rises at a rate of 6.9% per year, representing the annualized real return of the S&P 500 over the past 92 […]
Correction Territory
Recent price volatility has kicked many stocks into correction territory (i.e. down 10%+ from recent highs), which is causing some observers to worry that the equity market is discounting future weakness in the broader economy. While anything is possible, we don’t see any tangible signs of a recession on the near-to-intermediate horizon. Note that the […]
At The Ends Of The Days
Ecommerce enables consumers to shop for what they want when they want. Likewise, streaming video services empower consumers to view what they want when they want. Use patterns of these technologies illustrate that consumers are active on different days of the week and different hours of the day than previously imagined. Patterns suggest a broad […]
Sector Valuations – Some (Surprising) Observations
The Consumer Staples sector has been a noticeable laggard for quite some time. As measured by the Sector SPDR ETF (symbol: XLP), the group’s annualized returns over the past five years has fallen more than 500 basis points short of the S&P 500’s. So far in 2018, the Staples sector is taking a -7% shellacking, […]
Data Center Hyper Growth – It’s Not What You Think
Amazon and Microsoft are prominent among corporations building hyperscale data centers to support still expanding public cloud-based web services businesses. Already, there are 171 hyperscale data centers in the US, and expansions in Dallas and Atlanta have recently been announced. Given projects such as those, you might think that data center is a growth business. […]
How has “QT” affected the stock market and the economy?
For most of the post-crisis bull market, many pundits have claimed that “easy money” was the primary factor driving stock prices. But since former Fed Chair Janet Yellen announced the transition from QE (easing) to QT (tightening) in early September of last year, stocks have continued to ramp. Indeed, the S&P 500 has returned more […]
Consumer Staples: Safe Haven No More?
Consumer Staples stocks have lagged the Russell 1000 Growth Index badly since 2016. In fact, the relative performance of the Consumer Staples Sector SPDR ETF has plunged to a 4,179-trading day low. This equates to the sector’s worst relative performance in more than 16 years (!). Staples are plagued by a variety of issues, including […]
Chill on the Content Bubble
Out with the Old: Media consumption, especially in the form of television viewing, is in the midst of significant changes. Box office ticket sales were down 5% in 2017 (The Numbers), down for the fifth year in the last six years. NFL ratings are down high single digits for the second year in a row […]
Does This Car Make Me Look Heavy?
Electric motors have advantages compared to internal combustion engines. They have greater torque at lower speed, they are easily configured for regenerative power technologies (like braking), and they are more efficient users of power. Electric motors are more than twice as energy efficient as internal combustion engines, meaning they produce twice as much motion for […]
Surprise! How do Earnings Surprises impact stock performance?
As growth stock managers, we believe that “price follows earnings” over the long run. That is, stocks that demonstrate superior earnings growth can be more likely to outperform the broader markets. One way to identify these types of earnings winners is to focus on companies which frequently produce positive earnings surprises. These types of companies […]