Research Reports

Prior to the beginning of a new calendar year, I try to get my ducks in a row for what might happen in the coming year. I find it helpful to review the current years performance and trends, as that is usually helpful in finding opportunities. And I also like to look at the indicators I follow, to get grip on the “mood of the market” and the fundamental and quantitative underpinnings of the market. And finally, I try to piece all of the clues together to try to come to some conclusion on how the market’s movements might play out by year’s end.

Read the full report: 2016 – The Year Ahead

Whew!!! That last few months have seen some crazy market movements…but yet, WE’VE GONE NOWHERE!

Read the full report: The Whipsaw

In my opinion, “The Powers That Be” took actions to save the banking system. If any other benefits trickled down to the broader economy, including individuals, that was fine…but the banking system had to be saved. And I feel that this modus operandi has continued to dominate the financial landscape; UNTIL NOW!

Read the full report: Transition

I have a macro-model that I use to gauge where the market is in relation to where is should be. One of the first steps in the process of understanding where we “should” be is to look at a long-term chart of the S&P 500. I was a bit flabbergasted when I recently took a peek at this chart. The chart is pictured below, tell me if you feel the same way I did.

Read the full report: Market Outlook 11/24/2014

I’m sure everyone reading this report is familiar with the old market saying, “Don’t fight the Fed.” It simply means that whatever the Fed wants to make happen in the markets, it will. It raises rates when it wants to slow the economy down and, if you believe the saying, the economy then slows down. Of course, the inverse of that is true as well. If the Fed wants to spark the economy, it can. In fact, we’ve been living through a Fed-induced boom since the financial debacle of 2008.

Read the full report: Don’t Fight The Fed

As I noted in my last research report, the stock market has appreciated significantly over the last 5 years. In fact, the S&P 500 is up over 100% since 2009 and the biggest year of this run was the 29.6% appreciation that occurred in 2013. According to my work, we have been in a secular Bull Market since 2009. Obviously, these gains solidify that claim that this is, indeed, a long-term Bull Market. However studying past Bull Markets shows that during times of long-term upwards moves the market does experience short-term pullbacks.

Since all of my client’s goals center around long-term asset growth and capital preservation, I must remain ever wary of the next Bear Market; even if it is short-term in nature. With this in mind, I’ve gone through every market cycle since 1871 and analyzed every Bull Market pull back of 10% or more in an effort to identify the characteristics that have set the table for those pullbacks.

My hope is that by knowing the market conditions that led to previous pullbacks, we can stay a step ahead of this market. I view this as hunting down these Bear Markets and being prepped and ready before they can hurt us.

Read the full report: A Bear Hunt

Over the last 5 years, we’ve seen an incredible rise in the value of stock market assets. Below is a table showing the year by year returns of the S&P 500.

2009………26.46%

2010………15.06%

2011……….2.11%

2012………16.00%

2013………25.62% (through 11/18/2013)

If you compound the returns listed above, you get a 116.50% return!!!

Read the full report: Where Are We Now

I put out a report a few months ago entitled “Reflexivity.” I know most people don’t know what the heck that terms means, so here is a brief description of what I mean when I use that term.

It is a term that I first ran across while reading George Soros’ book “The Alchemy of Finance.” It is essentially a human behavioral phenomena where by people’s actions are influenced by their beliefs and their actions build off of each other to influence the markets. It has the impact of extending trends and taking things to extremes within markets. The results of Reflexive Markets could be seen at the end of the Tech Boom of the 1990s and the market’s collapse at the end of 2008.

Read the full report: Path to Reflexivity

A client actually sent a cartoon to me and I thought it was so appropriate, I had to send it out to all clients. You see, the actions depicted in the cartoon precisely identified “The Rescue Plan” instituted by the Feds. And it was at that time, that I realized how important the banks are to our economy.

Now, 4 years later, the banks have reported their largest profits EVER!! There is no question that the path to these profits was paved by bailouts, low interest rates, and extraordinarily accommodative monetary policy. Furthermore, I believe the actions taken by the Feds over the last several years were solely aimed at savings the banks. And now that the banks are saved, as evidenced by the massive profits and rising real estate prices (the main collateral for bank assets), the Feds will begin to “normalize” the business operating environment.

I believe this process of normalization will take the markets to amazing new highs.

Read the full report:  Growth Spurt

The other day, I’m having a conversation with a group of savvy and active investors and the topic of “What are you buying now?” comes up. I mentioned I liked insurance companies. It was then brought up from our past conversations that I bought shares of a specific life insurance company less than a year ago that had appreciated over 30%. A few days later I got an email from one of the gentlemen that was in the aforementioned conversation. In that email he said, “Yeah, that thing might really begin to take off when they start buying back stock.”

Frankly, I think he was spot on and absolutely correct regarding this statement. However, I’d never considered that. I just thought the stock was really cheap when I began buying it. Nevertheless, right then and there it hits me like a brick…

REFLEXIVITY!!!!!!!!!!!!!

Read the full report: Reflexivity