Historical Chart Suggests Tough Weeks for Market
Posted by Eddy Elfenbein on September 8th, 2016 at 1:17 pm

Historic Performance by Market Size
Posted by Eddy Elfenbein on September 8th, 2016 at 10:30 am

From the Ibbotson data, here’s the historic market performance by each market cap decline, or 10% slice. As you can see, micro-caps (the smallest decline) have done the best while the largest decile, the mega-caps, has done the worst.

I’ve always been a bit skeptical of the idea of a small-cap premium. For one, you can see that outside the very big and very small, the other deciles are pretty much grouped together. That’s after nine decades. Also, the small-cap premium is highly volatile. In fact, Decline 10 had a run of 55 years when it lagged Decile One.

Here’s the annualized total return over the last 90 years.

Morning News: September 8, 2016
Posted by Eddy Elfenbein on September 8th, 2016 at 7:10 am

Kuroda Deputy Casts Doubt on Commitment to Inflation Time Frame

For Yen Bulls, Kuroda-Yellen Double Bill Is No Show-Stopper

China’s Trade Numbers- Imports Up, Exports Down, But Prices Or Volumes Changing?

As Issues Swirl in Europe, E.C.B. Is Likely to Hold Fire

Oil Rises on U.S. Inventory Data

Slide in Food Prices Pressuring U.S. Grocers and Distributors

Dell Gets Bigger and Hewlett Packard Gets Smaller in Separate Deals

Super Mario’s iPhone Surprise Sends Nintendo Shares Soaring

India’s Mahindra, Ola Team Up as Uber Looms

Apple Updates Key iPhone Line to Try to Reignite Sales Growth

In North Korea, China’s Xiaomi Gets the People’s Pulses Racing

Downfall of ITT Technical Institutes Was a Long Time in the Making

Suspect Sales at Fiat Chrysler Could Be Bad News for Its Rising Star

Cullen Roche: Make Berkshire Hathaway Great Again

Jeff Carter: Customer Retention is Also Everything

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Sector Correlations This Year
Posted by Eddy Elfenbein on September 7th, 2016 at 1:02 pm

Here’s a look at sector correlations. I took the ten sector indexes for this year and divided each one by the S&P 500. (With REITS being spun off, there are now eleven.) I then took the results and calculated the correlation each one has to all the others.

To reiterate, I only used the data for this year, and this is the correlation of the relative strength of the indexes, not the indexes themselves.

Here are the results:

I find this analysis fascinating. For example, you can see that Energy and Materials are closely related as are Utilities and Telecom. Industrials are a close cousin to the Energy/Materials family while Staples aren’t far from the Utes/Telecom family. But Financials are nearly the complete opposite of Utes/Telecom.

Midcaps Hit All-Time High
Posted by Eddy Elfenbein on September 7th, 2016 at 10:18 am

That Crazy Amazon Stat
Posted by Eddy Elfenbein on September 7th, 2016 at 10:16 am

Yesterday, I told Brian Sullivan that Amazon.com has gained 1%, on average, every 11 days for the last 20 years.

A lot of folks have asked me about that stat so I’ll share the details with you.

The key detail is the word “average.”

Amazon went public on May 15, 1997 at $18 per share. Adjusted for three stock splits, that comes to $1.50 per share.

The stock closed yesterday at $788.87. That means Amazon gained 525.91-fold in 7,054 calendar days.

Using a little math, that means Amazon gained an average 0.0889% every calendar day. That works out to 1% every 11.2 days.

Morning News: September 7, 2016
Posted by Eddy Elfenbein on September 7th, 2016 at 7:06 am

August Job Data Muddles Fed Rate Hike Chance: ETFs To Buy

ITT Tech Shutdown Could Cost Taxpayers Nearly $500 Million

Goldman Sachs Bans Employees from Donating to Trump

VW Is Exploring an Electric Car Venture With China’s JAC Motor

Chipotle Options Include More Franchising, Prepping for Sale as Ackman Launches Campaign

Apple, Show Us Your Taxes

Why Lego Wanted People to Stop Buying Its Toys

Can Allergan CEO Brent Saunders Lead Big Pharma To A Better Reputation?

Enbridge May Have Just Touched Off a ‘Supermajor’ Race for Pipes

Amazon Launches Restaurant Delivery for Prime Members in London

EOG Resources – Market Pays For Quality In An Excellent Deal

Samsung Says $38 Million of Goods On Board Two Hanjin Vessels

Dell Posts Modest Revenue Growth on Eve of EMC Merger

Roger Nusbaum: September Is Off The Table!

Howard Lindzon: The Birth of ‘Cheddar’ ….More Death to CNBC

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Amazon hits all-time high
Posted by Eddy Elfenbein on September 6th, 2016 at 4:36 pm

Three months ago, Brian Sullivan asked my opinion of Amazon.com (AMZN), and I said to stay away. The stock is up about 8% since then.

Well…I still think it’s too high:

The Ibbotson Yearbook Is Back
Posted by Eddy Elfenbein on September 6th, 2016 at 11:21 am

For many years, Ibbotson Associates has been known as the leading provider of long-term market data. If you’ve been anywhere near a brokerage office, you’ve probably seen their long-term charts showing how well the market has done.

Every year, Ibbotson (now owned by Morningstar) has released its yearbook which updates all the important data. For some reason, Ibbotson said it was discontinuing its yearbook this year. This prompted mass mourning by us data fiends.

I’m pleased to say that good sense prevailed and Ibbotson released its yearbook for 2015. I just got it in the mail. The data starts at year-end 1925 and runs through year-end 2015.

Here’s what the chart looks like:

This is what $1 looks like if it were invested in the stock market over the last 90 years. The graph is logarithmic.

One dollar in December 1925 became $5,390 by December 2015. Annualized, that works out to 10.02%. That includes dividends.

Over that time, inflation has run at an annualized rate of 2.91%.

In real terms, the stock market has averaged a real return of 6.90%.

That means the market has doubled, in real terms, on average, every 10.4 years.

The Worst Part of the Investing Year
Posted by Eddy Elfenbein on September 6th, 2016 at 10:59 am

Today is September 6 which has historically been the worst time of the year to invest. Let me back up and say that this is based on 120 years of the Dow so using that advice for one particular year is not a good idea.

The bad luck stretches from September 6 to October 29, a total of 53 days. Over that time period, the Dow has lost 2.31%. Of course, that’s not much of a move, but in 120-year averages, that’s a lot. The Dow’s average annual gain is 7.3% so you can see how that 53-day loss cuts into the long-term average.

Why has this pattern existed? I think there’s probably a natural reaction to take back some of the gains accrued over the summer. The data has also been impacted by extreme years such as 1929 and 1987.

Here’s what the Dow’s average year looks like. I smushed 120 years’ worth of data into one year and set it to 100 on January 1.

To be clear, I don’t invest based on these seasonal effects. I merely think they’re interesting for their own sake.