3.2.14: Weekend Linkfest: Must See Weekend Reading

For the first two months of the year, the SP 500 is about 75 – 100 bp’s. A lot of volatility but not much of an overall change in market levels. Here is some fast facts from Bespoke’s weekend newsletter, that we think is a must read every weekend. Bespoke Research is very reasonable too in terms of the cost. If you aren’t a subscriber you should be:

  • Growth is outperforming Value year-to-date: SP 500 Growth is up 2.13% year-to-date, while SP 500 Value is -0.37%, for a performance spread of 250 bp’s. Interesting that in the “mid-cap” and “small-cap” spaces, the performance discrepancy between value and growth is minimal. So large-cap growth is outpacing large-cap value;
  • The Nasdaq 100 is up 2.71% as of February 28th, or 2 months year-to-date while the SP 500 is up 0.87%.
  • The two best-performing sectors year-to-date (ytd) are Health Care at +7.22%, and Utilities at 6.53% as measured by the SPRD sector ETF’s, XLV, and XLU. The worst performing sector ytd is Telco at -3.20%.
  • Per the Global ETF’s, the two worst performing sectors are Russia (RSX) -15.34% and Mexico -11.29%. China and the rest of the BRIC’s are all down as well year-to-date;
  • All the Treasuries sectors have positive year-to-date returns. Commodity ETF’s are on fire, with Natty Gas up 23%.

Sector P.E’s and % of sector stocks above 50-day moving average:

  • Cons Disc: 21(x), 71%
  • Cons Spls: 18(x), 58%
  • Energy: 18(x), 47%
  • Financials: 13(x), 57%
  • Hlth Care: 20(x), 83%
  • Indust: 18(x), 67%
  • Tech: 18(x), 77%
  • Basic Mat: 18(x), 68%
  • Telecom: 16(x), 67%
  • Utilities: 16(x), 90%

Data courtesy of Bespoke

Only Energy has less than half of the stocks in the sector trading below their 50 day m/a’s. What struck me is that with the SP 500 closing at an all-time high on Friday, Feb 28th, I thought the percentages would be higher for each sector. Technology and Financials account for about 1/3rd or 35% of the SP 500’s total market cap, hence the importance of those sectors as market leaders.

Another good article by Jeff Carter of pointsnfigures here in Chicago. Wonder how long it will take Chicago politics to muck this up ?

Barry Ritholz via Josh Brown: focusing on process over outcomes: so important to long-term investors.

Another great article by Josh employing the Callan table of asset-class returns. This is great work for those that like to rotate portfolios, and re-balance.

The 1929 analogy is still floating around: Jeff Kleintop at LPL takes it apart. The October ’13 Crash never happened and the discussion has been pushed into 2014.

Jeff Miller in his weekly “A Dash of Insight” talks about Friday’s Employment Report. One of the best blogs we read week in and week out. Jeff writes it every Saturday. Hard to believe he can pump all this out in a few hours. There is a ton of good info and sources in every one of his blog posts.

JC Parets of AllStar Charts on the USA vs EM in terms of relative performance. Have to start talking to clients about EM exposure.

JC also with his corn chart: has to make a difference for Deere (DE). Small position now in DE, want to increase it.

Our Treasury short has hurt balanced account returns year-to-date, which is why we use the TBF vs the TBT. I expect Treasuries to rally on the Ukraine news Monday morning, 3/3. Might be time to add to the TBT. The TLT or +20-year Treasury ETF is 6.5% ytd as of 2/28/14.

From Norm Conley (@JAG_Norm), the market breadth supports the all-time high for SP 500. Also, from Norm, consistent with our technology overweight, is this chart on tech’s relative strength. Our only tech sale this year has been SNDK, but we are still long INTC and MU, plus a little TXN.

I tell clients regularly that if there is a long-run problem in the stock market, it should show up in the corporate bond markets first: not so far, but AcrosstheCurve.com via Bob Brinker raises a yellow flag here from last Tuesday, 2/25 ? Both the junk bond and the high-grade corporate credit markets here in the US, don’t yet indicate a problem.

Todd Salamone from Schaeffer’s on “3 Supportive Signs for the Bulls”. It is tough to say what happens Monday morning and this week with Ukraine, but the market’s technical underpinnings remain solid.

Per Gary Morrow at Yosemite Asset Management and “This Week on Wall Street” blog, the TLT is trading right where it was about 6 months ago, although the long bond is above its 50 and 200 day m/a’s.

Here is one of the best articles read all week: note the last sentence. I had clients in the late 1990’s with taxable accounts that told me that they didn’t want a lot of taxable gains. The late 1990’s was a very “binary” market, in that you either won bog or did nothing. Narrow leadership screams for rotating accounts and taking gains. Clients didn’t want that. That is not an excuse, but I drank the Kool-Aid too. My opinion today is that you must routinelya nd regularly capture capital gains and limit losses to manage portfolio risk.

Thanks for reading this weekend. There are a lot of blogs and such competing for your eye balls. Thank you for taking a minute to walk through ours.

Trinity Asset Management, Inc. by:

Brian Gilmartin, CFA

Portfolio manager






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