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Wednesday, 01 November 2017

Tax Plan(s) and Earnings

With so much debate and speculation regarding the likelihood and potential effects of various tax plans, it’s easy to miss the point that any and all tax reductions are unambiguously positive for corporate earnings.  To read the entire report: The Investment House Quarterly Q3 17

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Monday, 28 August 2017

A Parting Of Ways?

As the table above and the chart below indicate, until quite recently, the path of equity and bond markets has been quite similar over the last three years – broadly higher. Only recently have bond prices moderated somewhat, even as stocks have surged ahead. To read the entire report: The Investment House Quarterly Q2 17

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Thursday, 04 February 2016

A Picture Is Worth A Thousand Words
As the New Year has begun, the return of normal asset volatility which we have long expected continued and became more visible. However, as the graph below makes clear, the bumpiness in all asset classes – not just stocks – may well continue. Even after the increased volatility of 2015, major asset classes have yet to reach their 10-year averages.  To read the entire report: The Investment House Quarterly Q4 2015

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Thursday, 04 February 2016

El Nino and La Nina
Recent weather patterns in the Northern and Western Hemispheres have given rise to discussions about El Nino, and how the periodic warming of the ocean’s surface can produce extreme climactic conditions thousands of miles away. Its companion effect, La Nina, likewise causes climactic changes with corresponding cooling of the ocean’s surface temperature.

 
In the past quarter, the violent movement of asset markets – commodities, foreign currencies, and equities, have likewise provoked great discussion as to their sources – Fed policy, China’s slowing growth, what could it possibly be?

 
While there is no way to answer such questions definitely, it is certainly worth noting that forward profit expectations for the next 12 months have turned down for the first time in 6 years.  To read the entire report: The Investment House Quarterly Q3 2015

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Friday, 07 August 2015

The Price Is Right.  Isn’t It?

Long time investors know well the old saw that the equity market has risen, on average, about 9% per annum over a number of years (8.91% over the last 20 years, to be exact, according to Morningstar). But as we have often pointed out, such a ride is not necessarily a smooth one. Many wide fluctuations of 30% and more in either direction are contained within that quiet, well-behaved term “average.”

So too with individual stocks, even over as short a period as one year. This week’s reaction to Google’s earnings announcement is a case in point. As the chart below shows, over most of the last year, Google stock hovered quietly between $500 and $600 per share – a range of about 20% – and for much of the time, traded right in the middle of that range, around $550. Until last week. Then, suddenly, in one day, a company with over $400 billion in market cap gained over 16%, and in only one trading week, gained over 25%!  To read the entire report: The Investment House Quarterly Q2 2015