Salient to Investors: Angus Campbell at Capital Spreads said earnings have come back a little, but that is to be expected given the overall growth environment – it’s natural to see profit taking near highs for the year. 80 of 116 S&P 500 companies have posted earnings that exceeded analyst estimates, 33 missed. Investors have pulled $440
READ MORE... →Salient to Investors: Dollar cost averaging works in theory but not in real life. Brokers use DCA to increase their commissions and appease clients facing losses. DCA carries an opportunity cost. Indexes regularly change their stock makeup, removing underperforming stocks with better performers. Read the full article at http://lessons.tradingacademy.com/article/to-average-or-not-to-average/
READ MORE... →Salient to Investors: The cyclically adjusted price-to-earnings ratio – CAPE – correctly signaled frothy markets in 1929, 1999 and 2008. CAPE looks at 10 years of averaged profits so is considered a more conservative gauge. S&P 500 has a trailing P/E of around 15, which makes the market attractive based on historical levels, and
READ MORE... →Salient to Investors: The ratio of companies saying profits will trail estimates versus those saying they will exceed them is at 4.3, levels of February 2009 and October 2001. William Frels at Mairs & Power says the economy is weaker than most people realized. The S&P 500 P/E is 14.6 versus an average of 16.4
READ MORE... →Salient to Investors: Randy Bateman at Huntington Asset Mgmt said everybody is in a wait-and-see mode. The IMF said global growth will rise 3.3 percent in 2012, the slowest since 2009, and 3.6 percent in 2013, sees alarmingly high risks of a steeper slowdown, with a 1-in-6 chance of below 2 percent. US stocks
READ MORE... →Salient to Investors: David Gaud at Edmond de Rothschild Asset Mgmt said more and more central banks are easing monetary policy, and since bonds have been mostly held by global investors, it makes sense to start seeing spill-over into the equity side which as an asset class is very cheap on a relative basis – there is
READ MORE... →Salient to Investors: Thomson Reuters says analysts expecting a 2.3% profit decline in the S&P 500 in Q3 versus 8.4% year-over-year growth in Q2. More than 20% of S&P 500 companies have pre-announced results – of which the vast majority offer negative outlooks. Bank of America Merrill Lynch is cautious on equities near term due to
READ MORE... →Salient to Investors: Lower implied volatility among major currencies makes investments in currencies with higher key lending rates more attractive because the risk in such trades is that market moves will erase profit. Peter Rosenstreich at Swissquote Bank said the ECB’s planned purchases of government bonds to curb the debt crisis will
READ MORE... →Salient to Investors: Bruce McCain at KeyCorp said we’re back to a period where investors become less enthusiastic as they realize the problems of the world have not gone away. Bloomberg poll estimates S&P 500 earnings will fall 1.7 percent in Q3, the first decline since 2009. Gina Martin Adams at Wells Fargo said earnings are weakening fairly quickly –
READ MORE... →Salient to Investors: A fund is highly correlated to its benchmark index if its R-squared reaches 90: at 95, it is considered a ”closet” index fund. The steady rise in correlations among all stocks is making it more difficult than ever for actively managed funds to differentiate themselves from their benchmarks. Morningstar
READ MORE... →