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Bottoms in Oil and Sector Leadership in Energy Equities
Posted by Tim Hope on 11/19/08 1:07 pm

According to Ned Davis Research (NDR), the 60% drop in the price of crude oil from July 14 through November 12th was the second largest decline in a…

Bank Exposure to Emerging Markets
Posted by Tim Hope on 10/27/08 12:51 pm

Some analysts are raising concerns regarding the exposure of European banks to the emerging markets.  The fear is that should emerging economies falter, the result could be another…

Incredible rarity of the current financial crisis
Posted by Tim Hope on 10/24/08 10:59 am

With the recent movements of the Dow Jones Industrial Average making headlines on the nightly news, gaining perspective as to the breadth and true rarity of multiple market…

The Dow and Financial Crisis Periods
Posted by Tim Hope on 10/10/08 11:09 am

Over the past century, during periods of major financial crisis events, investors who had the courage to look past the headlines would have been provided with an opportunity…

Risk Models and the Credit Crisis
Posted by Tim Hope on 10/2/08 10:08 am

Pundits and politicians are spending much time and energy looking for scapegoats and policy solutions to the current credit crisis.  Little has been said, however, as to one…

October to be a test of the credit default swap market
Posted by Tim Hope on 9/30/08 12:58 pm

Given the recent failures and takeovers within the financial sector, October may prove to be a significant test for the multi-trillion dollar credit default swap (CDS) market.  Insurance…

Financial Sector an Earnings “Boat Anchor”
Posted by Tim Hope on 9/22/08 12:11 pm

With the disarray in the financial sector, excluding the sector can offer an insightful look at the earnings outlook for the rest of the market.  Interestingly, when the…

Derivatives:  How much is too much?
Posted by Tim Hope on 9/17/08 11:56 am

With the derivative market tripling in size in the past five years to over $180 trillion in total notional dollar amount, it is possible that recent upheavals in…

Broken Irrational Market
Posted by Tim Hope on 9/9/08 11:31 am

Even though September is but a few days old, it is already delivering significant extremes in the performance behavior of stocks.  Stocks with strong, attractive, fundamentals are being…

Energy and Financial Sector PEG Ratio Comparison
Posted by Tim Hope on 9/8/08 11:26 am

The PEG ratio (a ratio of P/E divided by expected earnings growth) is a popular valuation measure as it allows for a convenient method of comparing stocks with…

Is Cash Signaling an Opportunity?
Posted by Tim Hope on 9/4/08 10:17 am

With the stock market currently struggling through a rough patch, it can be instructive to examine a ratio of cash levels (as measured with money market assets) relative…

The Dow Jones Industrial Average and Record Highs
Posted by Tim Hope on 8/28/08 12:37 pm

Interestingly, since 1904 there have been 61 years in which the Dow Jones Industrial Average did not make a new high.  However, of greater interest for investors is…

Hurricane Season and the Market
Posted by Tim Hope on 8/25/08 12:13 pm

As the 2008 hurricane season continues to unfold, it is instructive to examine market behavior in the months following major storms that battered the United States (seven category…

A tale of two PPI inflation stories.
Posted by Tim Hope on 8/22/08 10:10 am

Each month the U.S. Bureau of Labor Statistics publishes the Producer Price Index (PPI) which is an index measuring changes in wholesale prices.  Despite the fact that food…

Oversold Energy Stocks Present Opportunity?
Posted by Tim Hope on 8/5/08 11:55 am

Over the past quarter century there have been only three other occasions where the S&P 500 Energy Sector was oversold to the degree that it is today.  In…

Housing Mortgage Rate Headwind
Posted by Tim Hope on 8/1/08 10:42 am

While policy makers struggle to bring financial solutions to the problems in the housing market, the cold reality is that home inventories are at multi-decade highs.  In addition,…

Stocks versus Bonds: A Historical Performance Anomaly
Posted by Tim Hope on 7/23/08 10:40 am

Ned Davis Research recently pointed out that over the past ten years stocks have underperformed bonds by the widest margin in nearly seven decades.  Should mean reversion begin…

The collapse in banking and retailing.
Posted by Tim Hope on 7/16/08 9:50 am

Banking and retailing are critical industries to the health of the U.S. economy.  Both sectors have been hit hard and it could be that additional troubles may lie…

How do stocks perform following a bear market?
Posted by Tim Hope on 7/15/08 10:49 am

With stocks recently falling into a bear market range, investors would be well served to consider the performance of stocks following the end of a bear market.  Historically,…

Adjusting Energy Dependence for Population and GDP
Posted by Tim Hope on 7/11/08 11:28 am

Past dramatic increases in oil prices resulted in significant U.S. economic dislocations as the economy tried to adapt to higher energy inputs and government policy responses.  However, aside…

I didn’t know that the “American Dream” is over!
Posted by Tim Hope on 7/9/08 10:47 am

The following headline was posted on the news section of Yahoo Finance: “Why This Housing Bust Is Worst Ever: The American Dream Ends.” Such sweeping proclamations are often…

It could be worse!
Posted by Tim Hope on 7/1/08 11:25 am

Yes.  Gasoline prices are indeed high.  However, the lens of history offers some perspective.  When viewed as a percentage of total personal consumption expenditures, American consumers were spending…

Gold and Inflation
Posted by Tim Hope on 6/25/08 10:15 am

Gold has experienced a recent run up in price similar in nature to other commodities.  While it can be argued that inflationary dangers are very real, and thus…

Housing Price Extremes
Posted by Tim Hope on 6/24/08 12:12 pm

The decline in housing prices is dramatic to say the least.  While prices are falling after coming off record increases, over the past four decades the current decline…

Inflation Brewing In China
Posted by Tim Hope on 6/23/08 11:16 am

As of June 18th the Chinese stock market is down over 40% year-to-date in dollar terms compared to about a 9% drop in the S&P 500.  While there…

A look at refineries
Posted by Tim Hope on 6/19/08 2:52 pm

Since 1950, the most recent peak in the number of U.S. oil refineries occurred over a quarter of a century ago then the number stood at 324.  The…

New Environment for Airlines
Posted by Tim Hope on 6/13/08 2:20 pm

The airline industry is struggling to perform in the face of escalating fuel costs.  As shown below, the price of fuel is running at over three times its…

Growth and Value Earnings Turnaround
Posted by Tim Hope on 6/12/08 11:22 am

Positioning a portfolio to take advantage of a performance shift between the growth and value styles can be beneficial in terms of returns.  Earnings expectations in the growth…

Who’s right about oil supply and demand?
Posted by Tim Hope on 6/10/08 2:32 pm

In reviewing various charts of global oil supply and demand from a number of different sources, it was clear that something was amiss.  While some sources point to…

Where is the recession?
Posted by Tim Hope on 6/6/08 12:08 pm

To anyone following the news, it appears that we are already in a recession and we are facing “economic woes.” While “sky is falling” headlines is one way…

Signs of a Top?
Posted by Tim Hope on 6/3/08 8:55 am

Over the years many Wall Street veterans have made the case that popular magazine covers can act as a signal of peaks and valleys in market behavior.  With…

“Greedy” Oil Companies
Posted by Tim Hope on 6/2/08 10:14 am

Out of frustration with rising gasoline prices, some in Congress have actually threatened to try and nationalize oil companies.  While “big oil” can be an easy target for…

Financials are obscuring the view of forward S&P 500 earnings estimates
Posted by Tim Hope on 5/30/08 12:34 pm

In looking at the projected 12 month forward earnings consensus estimates for the S&P 500, one is almost forced to exclude the financial sector in order to get…

Impact of Stocks with Growing Dividends
Posted by Tim Hope on 5/29/08 2:39 pm

As referenced on the Navellier All Cap blog site, dividend paying stocks have a roughly a 5 to 1 annualized performance advantage over stocks that do not pay…

Is the surge in oil demand behind us?
Posted by Tim Hope on 5/28/08 12:51 pm

About ten years ago there was another spike in global oil demand, particularly from non-OECD countries yet oil prices changed little and global demand subsequently cooled over the…

Home Prices and Personal Income
Posted by Tim Hope on 5/20/08 11:43 am

Could it be that the worst is over with respect to the decline in home prices?  In plotting the ratio of home prices relative to national income over…

Low In Consumer Optimism May Spell Opportunity
Posted by Tim Hope on 5/19/08 10:32 am

Consumer optimism is presently at a 10 year low.  Interestingly, the prior low occurred during the first quarter of 2003 which very closely coincided with the low in…

Imposing Tracking Error Limits May Reduce Excess Return and Diversification Part 3
Posted by Tim Hope on 5/9/08 10:43 am

Impacts on diversification As tracking error falls it stands to reason that correlation to the benchmark also rises.  Using the same data set as in part 2 of…

Imposing Tracking Error Limits May Reduce Excess Return and Diversification Part 2
Posted by Tim Hope on 5/8/08 2:06 pm

Interestingly, empirical data can be shown to vividly illustrate the theoretical concept the opportunity cost of arbitrary tracking error limits as referenced in “Part 1.” Using the Zephyr…

Imposing Tracking Error Limits May Reduce Excess Return and Diversification Part 1
Posted by Tim Hope on 5/5/08 11:50 am

There is significant interest on the part of many investors and consultants in limiting portfolio tracking error.  However, the fixation on a given tracking error “budget” may be…

Waiting for the End of a Recession Can Mean Missed Opportunity
Posted by Tim Hope on 4/30/08 11:50 am

The financial press is filled with stories regarding the possibility of a recession in the United States.  Setting aside the merits of such arguments for the moment, it…

Oil Price Extremes Part 3: Chart of the Day
Posted by Tim Hope on 4/28/08 10:47 am

My prior posts on oil price extremes used nominal prices, the next natural progression in the examination of the data would be to inflation adjust it. Thus, the…

Oil Price Extremes Part 2: Chart of the Day
Posted by Tim Hope on 4/25/08 8:15 am

My prior post referenced the use of standard deviation as a way to get a sense of market extremes. At extreme points in nearly any market environment it…

Oil Price Extremes: Chart of the Day
Posted by Tim Hope on 4/24/08 10:56 am

Extremes in market behavior can point to important inflection points and also great opportunity as historical relationships reassert themselves through the process of mean reversion. Identifying such extremes…