Topley’s Top Ten – October 2, 2019

1.You Call This A Bull Market?-Bespoke Investment Group

By just about all accounts, investors have been spoiled over the last ten years as the S&P 500 has rallied more than 13% on an annualized basis.  However, when you compare returns for the market over the last one, two, five, ten, and twenty years, current returns are hardly at any sort of historical extreme.  The chart below compares the S&P 500’s annualized performance on a total return basis to the average annualized return for all similar time frames.  Looking just at the last year (through 9/30), the S&P 500’s total return is 4.3%, which is less than half of the historical average one year total return of 11.7%.  Looking at two and five-year annualized performance figures, current returns are just modestly above their historical average.  While the ten-year annualized return is almost three percentage points above the historical average, the current 20-year annualized gain of 6.3% is well below the S&P 500’s historical average of 11.0%.

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Topley’s Top Ten – October 1, 2019

1.Eurozone Stocks -20% in U.S. Dollar Terms Over 18 Months.

The JPMorgan analysts point out the eurozone stocks are underowned, after stocks have dropped 20% in U.S. dollar terms over the past 18 months.

Why JPMorgan says it’s time to switch to Europe stocks from U.S.By Steve Goldstein

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Topley’s Top Ten – September 30, 2019

1.IPO’s 2019-114 U.S. IPO Pricings-63 Positive Returns.

Follow up to my IPO comments from last week


Amid the headlines about IPO disappointments, there is a broader takeaway: Investors have become more discriminating, and that’s good for everyone. “Everything has changed, and nothing has changed,” says Lise Buyer, founder of Class V Group, an IPO consulting firm. “Lately, there’s been lots of noise and fireworks, and hullabaloo about direct listings. But the No. 1 thing is that fundamentals have not changed. Institutional investors are pretty darned smart when looking at IPOs, regardless of structure and buzz. Investors will analyze the company, the prospects for the future, and the price at which they’re being offered the chance to invest. That has not changed as long as I’ve been in the business.”

IPO tracker counts 114 U.S. IPO pricings in 2019—63 have had positive returns.

IPOs Have Been Crushed in 2019. Why That’s Actually Good News for Stocks.

By Eric J. Savitz

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Topley’s Top Ten – September 23, 2019

1.Bespoke’s S&P 500 Sector Weightings—

Energy 2019 Less Than 5%

Fri, Sep 20, 2019

S&P 500 sector weightings are important to monitor.  Over the years when weightings have gotten extremely lopsided for one or two sectors, it hasn’t ended well.  Below is a table showing S&P 500 sector weightings from the mid-1990s through 2016.  In the early 1990s before the Dot Com bubble, the US economy was much more evenly weighted between manufacturing sectors and service sectors.  Sector weightings were bunched together between 6% and 14% across the board.  In 1990, Tech was tied for the smallest sector of the market at 6.3%, while Industrials was the largest at 14.7%.  The spread between the largest and smallest sectors back then was just over 8 percentage points.

The Dot Com bubble completely blew up the balanced economy, and looking back you can clearly see how lopsided things had become.  Once the Tech bubble burst, it was the Financial sector that began its charge towards dominance.  The Financial sector’s sole purpose is to service the economy, so in our view you never want to see the Financial sector make up the largest portion of the economy.  That was the case from 2002 to 2007, though, and we all know how that ended.

Unfortunately we’ve begun to see sector weightings get extremely out of whack once again.

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