{"id":4422,"date":"2014-12-18T22:49:34","date_gmt":"2014-12-18T22:49:34","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=4422"},"modified":"2014-12-18T22:49:34","modified_gmt":"2014-12-18T22:49:34","slug":"12-18-14-5th-correction-now-in-2014-p-e-expansion-could-get-harder-going-forward","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=4422","title":{"rendered":"12.18.14: 5th Correction now in 2014 &#8211; P.E Expansion Could Get Harder Going Forward"},"content":{"rendered":"<p>Assuming that the Santa Claus rally started in earnest yesterday, we&#8217;ve just finished our 5th correction in the SP 500 in\u00a02014, which is a pretty strong &#8220;change of character&#8221; for the market since the March, 2009 generational low for the SP 500.<\/p>\n<p>Here is the spreadsheet we use to track SP 500 corrections: <a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2014\/12\/SP500corrections.xls\">SP500corrections<\/a><\/p>\n<ul>\n<li>The retail investor hasn&#8217;t seen a 20% correction since 2011.<\/li>\n<li>We&#8217;ve now seen 5 of what I consider to be decent, pit-of-the-stomach-type corrections in 2014, which is a vastly different pattern than 2012, and 2013.\u00a02013 we saw\u00a0one correction of 7.50%.<\/li>\n<li>Remembering, the late 1990&#8217;s and the vicious corrections we saw in 1997, 1998, and then March of 2000,\u00a0I am wondering\u00a0if these little mini sell-off&#8217;s aren&#8217;t unlike tremors before a major earthquake.<\/li>\n<li>I do think the next 20% correction isn&#8217;t earning-related, but the Fed finally\u00a0normalizing short-term\u00a0interest rates. Taxable fixed income is getting harder and harder to find value &#8211; there is trillions of corporate credit money chasing nickels of spread.<\/li>\n<li>Strictly an opinion, but I think it gets harder and harder for the SP 500 to generate &#8220;p.e expansion&#8221; and despite this rally into year-end 2014, I am growing more cautious on 2015.<\/li>\n<\/ul>\n<p>I&#8217;m thinking now if we do 5% &#8211; 10% in the SP 500 next year, it would be a good year.<\/p>\n<p>Very similar to 1994, however I said the same thing in late 2013.<\/p>\n<p>Our favorite sector\u00a0for 2015 is still Financials, with current (or plan to be overweight) Industrials and Technology in 2015, as well.<\/p>\n<p>This could also the incoherent ramblings of an\u00a0old man, that simply writes to clarify my own muddled thinking.<\/p>\n<p>Still, 2014 is now different than the stability of the last few years.<\/p>\n<p>Readers should always be sensitive to a change of character in the SP 500.<\/p>\n<p>Trinity Asset Management, Inc. by:<\/p>\n<p>Brian Gilmartin, CFA<\/p>\n<p>Portfolio manager<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Assuming that the Santa Claus rally started in earnest yesterday, we&#8217;ve just finished our 5th correction in the SP 500&hellip;<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[84,53,120,140,99,93,123],"tags":[],"class_list":["post-4422","post","type-post","status-publish","format-standard","hentry","category-financial-sector","category-financials","category-industrials","category-pe-expansion-contraction","category-sp-500-corrections","category-sp-500-forecasts","category-technology"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/4422","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4422"}],"version-history":[{"count":9,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/4422\/revisions"}],"predecessor-version":[{"id":4432,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/4422\/revisions\/4432"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4422"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4422"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4422"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}