MFOHome About Commentary Discussions Funds The Best Resources Support Us!

Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

Sign In Register

Categories

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Fed Budget and Market Reward CXO Study

MJG
edited August 2011 in Fund Discussions
Hi Guys,

Today, CXO Advisory Group issued a short study on the correlation between the Federal balance sheet and equity market returns.

The Link to the study follows:

http://www.cxoadvisory.com/4225/economic-indicators/federal-deficit-and-stock-returns/#more-4225

In general, CXO finds a weak, unreliable correlation that excessive government spending marginally enhances equity market returns, not a very compelling conclusion and subject to statistical challenges. Enjoy.

Best Regards.

Comments

  • johnNjohnN
    Hello MFOs colleagues:

    What does this all mean? should we keep ignore all the noise and keep buying for a slow sustained recovery? I feel very nervous right now w/ 80s% in equities and 20%s in fixed income...

    thanks
  • [Deleted User][Deleted User]
    Hi John,

    In response to your concern ... 80% equity & 20% Fixed Income Allocation.

    I have been buying during the recent pull back when the S&P 500 Index is back of 1300.
    My portfolio's allocation is now about 13% cash, 25% income, 57% equity and 5% other. I probally will hold at 60% equity and not get as aggressive as you. As a tail wind, I do catch better than a 5% yield on my portfolio so I can wait while the market comes to me.

    With corporate earnings coming in stronger than anticipated and knowing that earnings drive stock prices in the long run ... I am somewhat at ease with my recent move to load equity ballast within my portfolio. Sure, the news and current events can push stock prices around as we have recently been seeing; and, I have been taking advantage of this and buying equities while reducing cash.

    I have recently seen a S&P Report that had forward earnings estimates for the S&P 500 Index in the 104 range. Divide this into todays closing valuation of 1287 and I compute a forward P/E Ratio of about 12.4. With this, I am leaning towards equities as I feel Corporate America is in better shape than Government America.

    It is for sure ... In time, it will be for "Kicks or Grins" for me.

    Good Investing,
    Skeeter
Sign In or Register to comment.