August 2016 Market Review
August was hot outside but the equity markets were only lukewarm. The reversion to longer term performance averages continues which means value beats growth and small cap beats mid cap beats large cap. Year to date the best performing asset class is small cap value up 14.3% but it still lags large cap growth slightly over five years by .7%. Mid cap value comes in second at 13.9% (and is the five year leader at this point, up 16.2%) and large value is third at 10.8% year to date. Large growth is the worst performer year to date at +2%. In January of this year, US large cap growth was up 12.4% over five years annualized and small cap value was up 7.7%. It only took seven months to make up a five year 4.5% gap!
Growth stocks rely on increasing expectations for earnings growth and that is not happening. Instead, earnings for US large companies are declining slowly. The bright spot continues to be mid cap and small cap companies which have grown their revenues and earnings. By one measure, mid cap company revenues have grown over 6% consistently for the past six quarters compared to five consecutive quarters of revenue declines for the S&P 500.
In international markets, emerging markets have not gotten the attention we would expect for a 12.5% year to date gain versus their more developed brethren in Asia and Europe up only 1.9% year to date. There are too many moving parts to explain these two large asset classes except to say that good companies are spread out all over the world and we will maintain our exposure for that reason alone.
The consumer seems to be propping the economy up for now. Jobs are plentiful if not terribly enriching and consumers are spending their paychecks. There seems to be a collar around oil prices keeping that expense in check and as I mentioned earlier, middle market companies are growing while the headlines lament the slow crawl for large company revenues and earnings growth. And if you look out 12 months after a presidential election, there is no significant difference between a Democratic and Republican president as far as the market is concerned. That’s good news, right?
It was a down quarter / year-to-date for almost every asset class. For US equities, only growth stocks held on to their gains with large growth up
- Since 1950 there have been 59 different 10 year periods (rolling periods). The S&P 500 has produced a positive total return
3/15/2018 The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in February on a seasonally adjusted basis after rising 0
1. Returns for 10 year time horizon:
- Global Equities: 3.9% total return (due to
For at least the second January in a row, we can report a strong market, strong economy and good prospects for the new year. Unlike last January,
The second longest bull market in American history continues. In a couple months we will mark the 9th anniversary of the low point for
The US market seems to be excited about corporate tax cuts and is charging ahead. Interestingly, value stocks kept up with growth over the past
US economic growth recorded its second straight quarter of 3% GDP growth, earnings are beating estimates, interest rates and inflation are low. It
It was a great three months for equity markets. International stocks continue to shine. Emerging markets increased 7% for the quarter and are up
The US economy is still strong. Jobs are growing, unemployment is very low partially due to the historically low labor participation rate,
US sectors Financials, Healthcare and Technology continue to drive the returns for US growth stocks. Consumer stocks and energy stocks are lagging
US growth equities continue to rise for the year. US value equities are barely breaking even. The growth equities are up mid-single digits for the
Two groups have done well this year: mega caps (like members of the Dow Jones Industrial Average) and lower profitability growth companies (per
Looking back it’s been a good couple of months and quarter (Dec – Feb). US growth equities are beating their value
The consistent performance of US small cap equities and to a lesser extent value stocks (all sizes) has aligned the returns for the quarter and
The year and the quarter come to a close and if you look at the one year returns it looks very orderly but we know it wasn’t. All the US equity
GDP for the third quarter was revised up from 2.9% to 3.2%. Unemployment is below 5%. Initial jobless claims have been below 300,000 for the
Portfolios allocated across several asset classes held on to their year to date gains and in all but the most conservative case have exceeded the
Value investing continues to lead the way for US equities. Large cap growth is the laggard so far this year and this may be the first year in
August was hot outside but the equity markets were only lukewarm. The reversion to longer term performance averages continues which means value
If you could avoid the daily news and market fluctuations, it was a good quarter. It was good even if you did follow the news. It just may not
Value equities especially US continue to outperform growth equities. Large value is up 6.8% year-to-date vs. -2% for Large growth. Small value
Consumer Price Index – April
The consumer price index for April (released May 17th) showed a .4% increase in
US value equities have now consistently outperformed their growth brethren this
If emerging markets could speak, they might be saying, “I told you so.” MSCI Emerging Markets Index has been at the bottom or next to the bottom
Wednesday, March 16th was a big day for macroeconomic news. The Consumer Price Index (CPI) also called the headline inflation rate was
US value stocks have continued to outperform their growth counterparts this year but it is masked by the fact that all US equity asset classes are
January was a wild month in the equity and bond markets. There are many wild predictions being thrown around both optimistic and pessimistic.
01/22/2016As we write this, the S&P 500 is climbing again. Its price is within a couple points of an all-time high set on February 28,01/04/2016
2015 In Summary
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FYI, 3rd quarter estimated tax payments must be postmarked by tomorrow, 09/15/2015.09/01/2015
Last week’s market volatility offered investors06/01/2015
On a rolling03/06/2015
Stocks are again near record highs after a dismal January, echoing 2014. The U.S. economy remains in growth mode despite a decline in the02/04/2015
January 2015 is now in the books. Let’s reflect on the beginning of the year. For portfolios, it was bad for equity prices and good, not great,01/13/2015
The foundation of personal finance is saving. Specifically, we mean the establishment of an emergency fund. In order to guarantee that this key08/20/2014
Inflation is not dead!
But it isn’t grabbing headlines, either. The Bureau of Labor Statistics of the Department of Labor released the07/30/2014
I had a professor at the University of Georgia who taught business law. We learned enough to be dangerous and know that we needed a lawyer to