Current Outlook If 2015 was flat and boring for investors, then 2016 has ushered in an unwelcome change to volatility and losses. We thought it might be helpful if our friends and clients could see the stock market through our eyes. While predicting the future is impossible, it is possible to calculate the preponderance of the evidence in order to stack the odds of success in our favor. Our primary interest is in the dominant trend of the stock market with a secondary inte

It’s been well publicized that the month of January 2016 was not the worst January in history for US equities - it was the second worst. The interesting thing though, is how vocal the perma bear community has become - after the fact. There are many bloggers out there who have been ‘telling us so’ since 2009 and they seem to be getting louder after the recent markdown. Some of the prognostications that we have read lately call for a bear market that will dwarf the 2007 to 2

At Emerald Asset Management we believe that most investors would avoid many investing pitfalls if they would follow three primary rules. To paraphrase Ned Davis Research: Don’t fight the trend, Don’t fight the Fed, and Beware the Crowd at Extremes While the Trend and the Fed appear to be questionable, our favorite sentiment indicator shows that the crowd might be getting overly pessimistic which could set the markets up for the next leg up of the secular bull market that sta

Nobody can predict the future with absolute certainty – nobody. However, in this business, we deal in probabilities, then we monitor and adjust. Therefore the astute analyst should be able to explain the situation on the ground and form an educated opinion about the future. The chart above shows the return of the Dow Jones US Value Index relative to the return of the Dow Jones US Growth Index. When the line in the top pane is rising then the value index is outperforming t

Note: The comments below were sent to our clients on August 27th. Over the course of five trading days U.S. Equities as measured by the S&P 500 Index have dropped by over 11%. From the all-time high on May 21st the same index has dropped by 12.55%, not counting dividends. The Value Line Geometric Index was down from its all-time high by just over 16%. The VLG Index is important because it gives us a better gauge of how the 'average' stock is behaving than the better known

If you think dividends are boring, think again. According to Stocks for the Long Run, by Jeremy Siegel, about two thirds of the real (inflation-adjusted) returns from U.S. Stocks from 1871 to 1996 were attributable to dividends, and about one third of the (real) gains were attributable to capital appreciation. Please reread that last sentence. Dividends have historically provided more profit to investors than capital gains. Now don’t get me wrong, I want my stocks to go u

by James B. Tharin, CFA Over the years we’ve learned that there is no silver bullet to investing. If you are in this business long enough and have any courage at all, you absolutely will make market calls that turn out to be incorrect. It’s okay to be wrong, but it’s not okay to stay wrong. That’s why we have stringent risk management procedures in place. The general idea in investing, in our opinion, is to identify the long term market trends and stay with them while igno

by James B. Tharin, CFA There is a relatively new investment industry buzzword that you might want to learn before your next cocktail party or investment club meeting. The term ‘Active Share’ is still unfamiliar enough to most lay people that if you can work it into a conversation you might be able impress a few friends with your command of modern investment jargon. Active Share is a statistic that measures the difference between a portfolio’s holdings and the portfolio man

by James B. Tharin, CFA On March 10, 2000, the Nasdaq Composite Index set an all-time record high at 5048.60. What followed was an unbelievable two year and seven month drop of 78% known today as the tech wreck. Almost fifteen years later after that Y2K example of Irrational Exuberance and about twelve years and seven months after bottoming at 1108.49 on October 10th, 2002, the index appears to be making a run at its old record. Old highs out of an index can often be areas