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DowDupont Will Be Included In Dow Jones Industrial Average Index 

Large Decline In Bullish Investor Sentiment 
Posted by David Templeton, CFA at 11:07 AM 0 comments 

Dr. KOSPI's Protocol For Global Growth Diagnosis 
Posted by David Templeton, CFA at 4:39 PM 0 comments 

No Slowdown In Growth Of e-Commerce Sales 
Posted by David Templeton, CFA at 7:17 PM 0 comments Labels: Economy , Equities , General Market

The Economy May Not Be At Full Employment 
Posted by David Templeton, CFA at 3:42 PM 0 comments 

Investor Fund Flows Favoring Bonds And Not Equities

The equity market has gone over a year without a pullback of at least 5% or more. The last 5% decline occurred in mid-June 2016 when, over a two week period, the market fell 5.5%. Even in the run up to the election last year, the equity market did not close down over 5%. This lack of volatility is showing up in popular volatility measures like the VIX, but the VIX may not be a good measure of expected future volatility.  Also, this lower level of volatility has some strategists suggesting investor's have become to complacent about the equity market and have willingly taken on more equity exposure as a result.

A recent post by Dr. Ed Yardeni, Ph.D., and he puts out some great research, noted individual investors may have become too optimistic as well. In that post, Investors Hearing Call of the Wild, he included the below chart of U.S. equity ETF flows. 
Posted by David Templeton, CFA at 10:00 AM 0 comments Labels: Bond Market , Equities


One can cite any number of stock valuation measures and conclude U.S. equities look expensive or are at least trading above their long term average valuation measures. In this environment one might conclude stocks are priced for perfection with little margin for error. Of course this might certainly be the case, but is this an uncommon position for the equity market? As the shaded areas in the below chart show, investors would have had a difficult time buying or holding onto stocks at valuation levels that were below their long term average valuation since the early 1990s. 
Posted by David Templeton, CFA at 11:47 AM 0 comments Labels: Bond Market , General Market , Technicals


Dividend Payers Are Underperforming

A year ago dividend paying stocks were significantly outperforming the non payers in the S&P 500 Index and the S&P 500 Index itself. If investors were chasing performance back then and loading up on the payers, today they would be disappointed. Below is a chart of the year to date performance of two dividend paying exchange traded funds, SPDR Dividend ETF (SDY) and iShares Select Dividend ETF (DVY). The return of the dividend focused ETFs is nearly half that of the S&P 500 Index.  The return difference is similar for one year. My year ago post contains some details on both ETFs.