Archive | March, 2016

Investment In Knowledge Is More Consistent Than Investment In Physical Capital

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Investors are familiar with the how the economy affects business investment. When the economic outlook looks the most dire, as in at an inflection point from recession to expansion, corporations slash business investment and focus on improving cash flows and liquidating inventories.  As the economy begins to improve corporations begin to invest again. Sometimes they slowly begin to invest […]

Momentum Finally Reaches Extreme Lows– When’s the Rally?

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Stocks in pretty much every region and sector are stuck in persistently negative momentum configurations, as defined by the low percent of issues with a 50-day moving average above that of the 200-day moving average. Typically, when this indicator reaches an extreme where just 20% of issues in a group exhibit constructive momentum tendencies, we […]

Copper, Oil and Cyclicals All Turning Lower Right on Cue

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The impressive rallies of late in the industrial commodities could be nearing their end. Both copper and oil are bumping up against substantial resistance at their own 200-day moving averages that have acted to put a lid on previous rallies. Meanwhile, and not coincidentally, the relative underperformance of counter-cyclicals vs cyclicals since mid-February also appears […]

Stock Buybacks Look Like A Non-Story To Us

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Much has been made about the stock buyback “craze” over the past several years. There is a common argument that says companies have been massively levering up in order to buyback their own stock which in turn boosts EPS at the detriment of investing in the future or returning money to shareholders via dividends. However, when we […]

NTM Sales Estimates Are On The Rise, Longer Outlook Not As Positive

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Analysts have become more optimistic regarding sales growth over the next year while tampering their excitement for sales growth in the period 12-24 months from now. Median next 12 month (NTM) sales growth estimates have nearly doubled since the beginning of the year. For developed market equities, the median NTM sales growth estimate has increased from 3% […]

Fishing In A Stocked Pond

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A former mentor of ours used to say “if you want to outperform your benchmark, you must have a portfolio of stocks that are outperforming the benchmark”. This of course is very obvious but very true at the same time. It is very hard to outperform (or make money in an absolute sense) if the majority […]