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Old_Skeet's Market Barometer Report .. The Fall Investing Season .. September, October & November
Old Skeet, do you believe the purpose of the federal reserve is to keep the stock market on a constant trend up? I Googled the purpose of the federal reserve, and I don't see that one listed.
For Friday November 16, 2018 Old_Skeet's market barometer which follows the S&P 500 Index closed the week with a reading of 153 which is down 1 point from last weeks close. With this, the barometer based upon its metrics scores the Index currently as being in fair value. The Index closed the week with a reading of 2736 which is down 45 points or 1.6% for the week. Short interest in the Index declined to 1.3 days to cover while the yield on the US 10 Yr fell to about 3.1% as investors bought bonds and sold stocks. Generally, bond yields and their prices move in opposite direction of one another.
Linked below is Morningstar's Market Valuation Graph and by viewing you can see how they currently score the market. By clicking on the market capitalization tab you can view how the large caps, mid caps and small caps are scored. In addition, you can also view how the sectors are scored by clicking on the sector tab.
Currently, Morningstar is showing that their barometer reflects more value in stocks than Old_Skeet's. If I was to convert their barometer reading to my scale theirs would currently be scored at 159 (undervalue) while mine scores 153 (fair value). My barometer's main feeds center around a blended P/E Ratio reading, a breadth feed reading along with a technical score feed that follows money flow. Plus a few other minor inputs.
For the week Old_Skeet bought a CD (as @Derf suggested last week) to replace one that recently matured, bought a little in my income sleeve and also some in my hybrid income sleeve along with reducing a little on the equity side of the portfolio. I'm still with my movement to rebalance my portfolio by reducing my equity allocation by about 10% and raising my cash and income allocations by about 5% each. When complete my portfolio will bubble somewhere around 20% cash, 40% bonds and 40% stocks. Within stocks I'll overweight the traditional defensive sectors plus a few others. I consider this, for me, an all weather asset allocation with some defensive posturing.
Have a great weekend as we approach Thanksgiving Holiday and the Christmas shopping season begins. Let's see if stocks can now begin their traditional fall rally as there will be coming news on consumer spending and trade issues with China along with Brexit. Also, the FOMC is scheduled to possibly bump rates again at their December meeting. I'm thinking they will bump along with saying they are going to be more data dependant going forward.
Thanks for stopping by and reading. I wish all ... "Good Investing."
For Friday November 23, 2018 Old_Skeet's market barometer which follows the S&P 500 Index closed the week with a reading of 157 which is up 4 points from last weeks close. With this, the barometer based upon its metrics scores the Index currently as being undervalued. The Index closed the week with a reading of 2632 which is down 104 points or 3.8% for the week. Short interest for the Index remains at 1.3 days to cover while the yield on the US 10 Yr fell to about 3.05% as investors bought bonds and sold stocks. Generally, bond yields and their prices move in opposite direction of one another. Also, a higher barometer reading indicates there is more investment value in the Index over a lower reading.
The Christmas shopping season has now begun. Let's see if stocks can now begin their traditional rally as there will be coming news on consumer spending and trade issues with China along with Brexit. Also, the FOMC is scheduled to possibly bump rates again at their December meeting. I'm thinking they will bump along with saying they are going to be more data dependant going forward. But, this is just my thinking as it will be up to the FOMC wizards to decide their rate strategy and posture going forward. However, should they kill the goose that lays golden eggs (the stock market) then they will stifle consumer spending. And, after all, consumer spending is the lion's share of the economy. This leads to the question ... yet to be answered. Will Santa bring goodies to the stock market this year? And, will the consumer continue to spend? After all, new home sales along with auto sales are trending downward. Will this trend now move into the retail sector? Perhaps.
I'm still with the rebalance of my portfolio and moving towards my target asset allocation of 20% cash, 40% fixed and 40% equity by reducing equities by about 10% and raising both cash and bonds by about 5% each. Within cash I'm adding to my cd ladder, within bonds I'm staying on the short end and within stocks I'm taking a defensive posture and overweighting health care, consumer staples, real estate and utility sectors plus a few others. In addition, commodities are a place I might do some nibbling as I'm thinking they are oversold and might add to my current position through a position cost average approach (in baby steps).
Also, someone recently emailed me wanting to know if I was going to open a spiff position anytime soon? The answer is perhaps. However, I have for the past couple of years been raising my position in CTFAX (Columbia Thermostat Fund) which loads equities in stock market pullbacks and then reduces the equity position during the stock market recovery. For a large part, this fund has now taken the place of the spiff position(s) that I use to manually engage in.
My next report will conclude my fall investing season post ... and, hopefully announce that Santa is on his way.
Thanks for stopping by and reading. I wish all "Good Investing."
@Old_Skeet: (After all, new home sales along with auto sales are trending downward. Will this trend now move into the retail sector? Perhaps.) Rates go up, fewer people qualify for a loan ! As for retail , one still needs to eat. Other areas may suffer once part-time Xmas help is sent packing. Good investing to all, Derf
Perhaps an unrelated thought : A lot of funds’ “trajectories” during 2018 are beginning to resemble that of an errant missile launch. Off the pad in January they soared to record heights by September. But over the past month or two they’ve fallen back to near where the year began.
Two cases (out of hundreds I’’m certain) come to mind from among the few I watch: PRWCX, once up by double digits, is now barely above water at +2.48%. And, if memory is correct, DSENX is another that was up near double-digits at one time this year. Now it’s nearly flat YTD. No intention here to critique / criticize these excellent funds. Just a glimpse into how the year seems to be unfolding.
Hello, I received a recent email that I thought I'd comment on. Their inquiry centered around why the allocation of 20% cash, 40% fixed income and 40% stocks. Well, it really quite simple. For me being in retirement and having a large enough portfolio the 20% cash position equals about 5 years of cash needs based upon a 4% withdraw rate plus cash is now starting to become an investment producer (through yield generaton) and it is not just a median of exchange to buy services and goods. The 40% of fixed income and hybrid income investment allocation generates another good size chunck of the targeted 4% annual distribution. And, the remaing 40% in equities generates a reasonable amount of income as well through dividends along with (over time) equities have shown that they have organic growth that offsets inflation. Plus a good number of companies have increased their dividends over time as well. Now, I don't need the full 4% taken from my portfolio each year so this leaves me some money to reinvest where I might be finding good opportunity. For me, the 20/40/40 is an all weather asset allocation for the reasons stated above. And, for me and my family (which includes my late mother and father in their retirement years) it has been a contributor to our financial stability through several market cycles. For me to get really conserative I'd consider going to a 30/35/35 allocation should interest rates rise to where the 4% portfolio distribution rate could continued to be supported.
For Friday November 30, 2018 Old_Skeet's market barometer which follows the S&P 500 Index closed the week with a reading of 152 which is down 5 points from last weeks close. With this, the barometer based upon its metrics scores the Index currently as being fair value. The Index closed the week with a reading of 2760 which is up 128 points or 4.8% for the week. Short interest for the Index has increased from 1.3 days to 1.7 days to cover while the yield on the US 10 Yr fell to about 3.0% from 3.05% as investors bought both stocks and bonds. Generally, bond yields and their prices move in opposite direction of one another. Also, a lower barometer reading indicates there is less investment value in the Index over a higher reading. From the current reading of 152 there is room for some metric expansion for the Index to remain scored as fair value. It is interesting that short interest in the Index has now increased. With the increase in short interest it seems, to me, some investors are doubtful that this rally has legs.
The Christmas shopping season has now begun. Let's see if stocks can continue the traditional December rally that starts around Thanksgiving and continues on through a few weeks following Christmas. Seems the head FOMC wizard spoke saying that interest rates were a little below neutral; and, with this, many took this to mean that the FOMC's interest rate camaign might be moderating and stocks moved upward based upon this news. In addition, it is, thus far, believed during the recent G20 meeting that trade talks taking place between the US / China continued with prospects that some sort of a deal might soon be reached. Thus far, this news has been positive for the markets. This now leaves us with the third issue that I raised last week and that is Brexit. Hopefully, a deal will be done on this in the coming weeks providing additional fuel for the markets to continue to rally as next years earning estimates currently look to be up by about 8% year over year. Should any of these things not carry through as first believed then I look for increased stock market volatility.
The carry over question(s) from last week were 1) Will Santa bring goodies to the stock market this year? And, (2) Will the consumer continue to spend? It looks like the answer to both of these two questions are yes as thus far the stock market has begun its seasonal December rally; and, consumer spending seems to be tracking upward as the Christmas shopping season continues.
For those wanting a published market valuation tool Morningstar offers one. It is linked below for those that might wish to bookmark it for their viewing and future reference.
As we start the week with most of the stock futures indicating a strong market opening this morning I noticed early this morning that there was a crescent moon rising. Looks to be a good day indeed for investors.
Comments
Good investing, Derf
Plunge Protection Team link ... https://www.investopedia.com/terms/p/plunge-protection-team.asp
For Friday November 16, 2018 Old_Skeet's market barometer which follows the S&P 500 Index closed the week with a reading of 153 which is down 1 point from last weeks close. With this, the barometer based upon its metrics scores the Index currently as being in fair value. The Index closed the week with a reading of 2736 which is down 45 points or 1.6% for the week. Short interest in the Index declined to 1.3 days to cover while the yield on the US 10 Yr fell to about 3.1% as investors bought bonds and sold stocks. Generally, bond yields and their prices move in opposite direction of one another.
Linked below is Morningstar's Market Valuation Graph and by viewing you can see how they currently score the market. By clicking on the market capitalization tab you can view how the large caps, mid caps and small caps are scored. In addition, you can also view how the sectors are scored by clicking on the sector tab.
https://www.morningstar.com/tools/market-fair-value-graph.html
Currently, Morningstar is showing that their barometer reflects more value in stocks than Old_Skeet's. If I was to convert their barometer reading to my scale theirs would currently be scored at 159 (undervalue) while mine scores 153 (fair value). My barometer's main feeds center around a blended P/E Ratio reading, a breadth feed reading along with a technical score feed that follows money flow. Plus a few other minor inputs.
For the week Old_Skeet bought a CD (as @Derf suggested last week) to replace one that recently matured, bought a little in my income sleeve and also some in my hybrid income sleeve along with reducing a little on the equity side of the portfolio. I'm still with my movement to rebalance my portfolio by reducing my equity allocation by about 10% and raising my cash and income allocations by about 5% each. When complete my portfolio will bubble somewhere around 20% cash, 40% bonds and 40% stocks. Within stocks I'll overweight the traditional defensive sectors plus a few others. I consider this, for me, an all weather asset allocation with some defensive posturing.
Have a great weekend as we approach Thanksgiving Holiday and the Christmas shopping season begins. Let's see if stocks can now begin their traditional fall rally as there will be coming news on consumer spending and trade issues with China along with Brexit. Also, the FOMC is scheduled to possibly bump rates again at their December meeting. I'm thinking they will bump along with saying they are going to be more data dependant going forward.
Thanks for stopping by and reading. I wish all ... "Good Investing."
Old_Skeet
For Friday November 23, 2018 Old_Skeet's market barometer which follows the S&P 500 Index closed the week with a reading of 157 which is up 4 points from last weeks close. With this, the barometer based upon its metrics scores the Index currently as being undervalued. The Index closed the week with a reading of 2632 which is down 104 points or 3.8% for the week. Short interest for the Index remains at 1.3 days to cover while the yield on the US 10 Yr fell to about 3.05% as investors bought bonds and sold stocks. Generally, bond yields and their prices move in opposite direction of one another. Also, a higher barometer reading indicates there is more investment value in the Index over a lower reading.
The Christmas shopping season has now begun. Let's see if stocks can now begin their traditional rally as there will be coming news on consumer spending and trade issues with China along with Brexit. Also, the FOMC is scheduled to possibly bump rates again at their December meeting. I'm thinking they will bump along with saying they are going to be more data dependant going forward. But, this is just my thinking as it will be up to the FOMC wizards to decide their rate strategy and posture going forward. However, should they kill the goose that lays golden eggs (the stock market) then they will stifle consumer spending. And, after all, consumer spending is the lion's share of the economy. This leads to the question ... yet to be answered. Will Santa bring goodies to the stock market this year? And, will the consumer continue to spend? After all, new home sales along with auto sales are trending downward. Will this trend now move into the retail sector? Perhaps.
I'm still with the rebalance of my portfolio and moving towards my target asset allocation of 20% cash, 40% fixed and 40% equity by reducing equities by about 10% and raising both cash and bonds by about 5% each. Within cash I'm adding to my cd ladder, within bonds I'm staying on the short end and within stocks I'm taking a defensive posture and overweighting health care, consumer staples, real estate and utility sectors plus a few others. In addition, commodities are a place I might do some nibbling as I'm thinking they are oversold and might add to my current position through a position cost average approach (in baby steps).
Also, someone recently emailed me wanting to know if I was going to open a spiff position anytime soon? The answer is perhaps. However, I have for the past couple of years been raising my position in CTFAX (Columbia Thermostat Fund) which loads equities in stock market pullbacks and then reduces the equity position during the stock market recovery. For a large part, this fund has now taken the place of the spiff position(s) that I use to manually engage in.
My next report will conclude my fall investing season post ... and, hopefully announce that Santa is on his way.
Thanks for stopping by and reading. I wish all "Good Investing."
Old_Skeet
Rates go up, fewer people qualify for a loan ! As for retail , one still needs to eat. Other areas may suffer once part-time Xmas help is sent packing.
Good investing to all, Derf
Two cases (out of hundreds I’’m certain) come to mind from among the few I watch: PRWCX, once up by double digits, is now barely above water at +2.48%. And, if memory is correct, DSENX is another that was up near double-digits at one time this year. Now it’s nearly flat YTD. No intention here to critique / criticize these excellent funds. Just a glimpse into how the year seems to be unfolding.
For Friday November 30, 2018 Old_Skeet's market barometer which follows the S&P 500 Index closed the week with a reading of 152 which is down 5 points from last weeks close. With this, the barometer based upon its metrics scores the Index currently as being fair value. The Index closed the week with a reading of 2760 which is up 128 points or 4.8% for the week. Short interest for the Index has increased from 1.3 days to 1.7 days to cover while the yield on the US 10 Yr fell to about 3.0% from 3.05% as investors bought both stocks and bonds. Generally, bond yields and their prices move in opposite direction of one another. Also, a lower barometer reading indicates there is less investment value in the Index over a higher reading. From the current reading of 152 there is room for some metric expansion for the Index to remain scored as fair value. It is interesting that short interest in the Index has now increased. With the increase in short interest it seems, to me, some investors are doubtful that this rally has legs.
The Christmas shopping season has now begun. Let's see if stocks can continue the traditional December rally that starts around Thanksgiving and continues on through a few weeks following Christmas. Seems the head FOMC wizard spoke saying that interest rates were a little below neutral; and, with this, many took this to mean that the FOMC's interest rate camaign might be moderating and stocks moved upward based upon this news. In addition, it is, thus far, believed during the recent G20 meeting that trade talks taking place between the US / China continued with prospects that some sort of a deal might soon be reached. Thus far, this news has been positive for the markets. This now leaves us with the third issue that I raised last week and that is Brexit. Hopefully, a deal will be done on this in the coming weeks providing additional fuel for the markets to continue to rally as next years earning estimates currently look to be up by about 8% year over year. Should any of these things not carry through as first believed then I look for increased stock market volatility.
The carry over question(s) from last week were 1) Will Santa bring goodies to the stock market this year? And, (2) Will the consumer continue to spend? It looks like the answer to both of these two questions are yes as thus far the stock market has begun its seasonal December rally; and, consumer spending seems to be tracking upward as the Christmas shopping season continues.
For those wanting a published market valuation tool Morningstar offers one. It is linked below for those that might wish to bookmark it for their viewing and future reference.
https://www.morningstar.com/tools/market-fair-value-graph.html
The below news link will provide information about the recent US / China trade talks.
https://www.bbc.com/news/world-latin-america-46413196
News about the FOMC's chief wizard's recent comments are linked below.
https://www.cnbc.com/2018/11/29/bonds-and-fixed-income-fed-remarks-and-data-in-focus.html
I wish all "Good Investing."
Old_Skeet