Category Archives: Daily Top Ten

Topley’s Top Ten – November 27, 207

1.Tech and Financials are Half the Weighting of Emerging Markets.

Sector Weightings: S&P 500 vs Emerging Markets

Nov 22, 2017

If we had a bitcoin for every time we heard someone say that the S&P 500 has been too reliant on the performance of tech stocks for its gains this year, we would be very rich.  But if you think the S&P 500 is dangerously overweighted towards the Technology sector, beware of emerging markets.  While the Technology sector’s 23% weighting in the S&P 500 makes it by far the largest sector in the index, the ETF tracking Emerging Markets (EEM) is even more heavily weighted towards technology.  The chart below compares sector weightings in the ETFs that track the S&P 500 (SPY) and Emerging Markets (EEM).  As you can see, Technology has a 26.5% weighting in EEM.  So if you think the S&P 500 is too top heavy with tech, EEM is even more exposed.

In addition to the large weighting in tech, EEM also has a lot of exposure to Financials.  That sector’s weighting is nearly 60% larger in EEM (23.1%) than it is in SPY (14.6%).  With such large weightings in both sectors, just under half of EEM’s weighting is in Technology and Financials.  So where is EEM underweighted relative to SPY?  That would be in the Health Care sector.  As shown below, Health Care accounts for 14.5% of SPY, but the sector’s weighting in EEM is a puny 1.95%.

 

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Topley’s Top Ten – November 20, 2017

1.The 3rd Longest Bull Market Ever is Still Lacking IPOs

Barron’s

The dearth of companies making their trading debuts is an unusual feature of what has been a record run for the stock market. In the heady 1990s, there were an average of 436 IPOs per year in the U.S., based on Ritter’s data. Last year, there were just 74. A number of reasons have been cited, including increased regulations and scrutiny for public companies, as well as the deluge of private capital.

The flood of private money is overwhelming ..Stat of week

FOR NOW, IT’S HARD to blame entrepreneurs for holding back on IPOs. The flood of private capital has changed the calculus. In one example, Japanese conglomerate SoftBank Group has raised over $93 billion for a technology investment fund. Those dollars alone exceed the $84 billion in total proceeds raised in U.S. IPOs since the start of 2015.

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https://www.barrons.com/articles/unicorns-what-are-they-really-worth-1510974129

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Topley’s Top Ten – November 15, 2017

1.Investors Starting to Go “All In”

From Dave Lutz at Jones.

Investors around the globe are increasingly showing signs of “irrational exuberance”, putting more chips on the table even as they worry equities markets have become “overvalued”, according a closely watched survey by Bank of America Merrill Lynch – Forty-eight per cent of investors in BofA Merrill’s November survey said that equities are “overvalued”, a record proportion that has sent the three-month moving average above the level that came at the turn of the millennium ahead of the bursting of the dot com bubble.

At the same time, average cash balance among the 178 fund managers with $610bn in combined assets under management that BofA Merrill surveyed slipped to 4.4 per cent from 4.7 per cent. It marked the lowest level in more than four years and was below the 10-year average of 4.5 per cent, FT reports.

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