How does debt affect stock performance?
Debt may not be the root of all evil, but high debt levels definitely appear to be an enemy of growth stock performance. As we show in this chart, low debt growth companies have generated dramatically better cumulative returns than those with the highest debt loads since 1995. Low debt growth stocks have annualized 17.1% […]
What do higher bond yields mean for stocks?
Moody’s BAA rating for corporate bonds is roughly equivalent to S&P’s BBB rating. Bonds with this rating are considered “investment grade,” albeit at the low end of the investment grade range. Since they are neither ultra-high quality (i.e. U.S. Treasuries, or Aaa/AAA rated corporate bonds), or junk (i.e. below investment grade), these types of bonds […]
Our Favorite Hunting Ground for 2018
Although the Technology sector’s strong performance in 2017 got lots of attention, Tech has been exhibiting strong relative performance since way back in 2013. As a group, these companies are growing much faster than the broader market, have defensible and expanding margins, and are disrupting an increasing proportion of consumer and enterprise spending worldwide. We […]
The Mood on Main Street
The mood on Main Street is very bright as we enter 2018. Small business owners are increasingly enthusiastic about the economy and their own business prospects. The NFIB (National Federation of Independent Business) Small Business Optimism Index recently ramped to its highest level since 1983, outstripping the pre-Great Recession high that was set in 2004. […]
Inflation Expectations on the Rise
Although this is not getting much coverage (yet), inflation expectations are rising globally. Although financial markets only expect prices to rise a modest 1.64% per year over the coming decade, it is worth noting that we are very close to seeing these expectations break out to multi-year highs for the developed markets. Drivers include burgeoning […]
4th Quarter 2017: Omnipresent Optimism
Stocks roared into the New Year, with the S&P 500 delivering a 6.64% return in the fourth quarter of 2017. For the full year, the benchmark index returned 21.83% (both figures include the effect of dividends). It is worth noting how surprising last year’s stock market performance was to most of the cognoscenti on Wall […]
2018 Stock Market Predictions
To paraphrase legendary investor Ken Fisher, yearly stock market returns can be divided into four simple categories. Stocks can be up a lot (10%+), up a little (between 0% and 10%), down a little (between 0% and -10%), or down a lot (fall by more than 10%). Thankfully for long-term investors, “up a lot” years […]
Is the Stock Market Overpriced?
Using multiple metrics, JAG assesses current stock market valuation. After a long bull market and a great 2017, there are lots of smart people who think the stock market is expensive. However, as experienced investors know, securities valuation is always a tricky business. A popular valuation metric is the P/E ratio, which simply divides share […]
Tax Reform Winners and Losers
What companies and sectors stand to benefit most from tax reform? Holy tax reform, Batman! This chart plots the relative performance between stocks of companies with high tax rates and those with low tax rates. When the blue line is moving down, low tax rate companies are outperforming. When the blue line heads north, more […]
Oil Price Rally
Could the recent increase in oil prices be a sign of hope for Energy sector bulls? After peaking at over $107/barrel during the summer of 2014, West Texas Intermediate crude crashed to $26.21 in February 2016. Since then, however, oil prices have firmed, rising to near $60/barrel recently. Given the fact that crude oil prices […]