Do Strong Returns Follow Strong Returns?

Cliff Asness describes momentum as “the phenomenon that securities which have performed well relative to peers (winners) on average continue to outperform, and securities that have performed relatively poorly (losers) tend to continue to underperform.” Thanks to Asness and others, we know that momentum exists within individual stocks. What I wanted to see is if…

Indecision

Forgive me father, for I have data mined. I wanted to see what happened when the S&P 500 opened down 1.5% one day and closed up 1.5% the next day (which happened yesterday, and is possible today). My suspicion was that this might lead to higher returns in the very short term. This is not…

You Are Owed Nothing

People invest their hard earned dollars to earn a return above and beyond inflation.  At a three percent inflation rate, your purchasing power would get cut in half over twenty years. As the value of your dollar diminishes over time, the goal when investing is to maintain and even grow the value of your money….

Capitulation

“One day it started raining, and it didn’t quit for four months” Forrest Gump What’s especially frustrating right now, besides the fact that the S&P 500 is now in a 13.2% drawdown, is that we’re not seeing any sense of panic. While every bounce attempt is getting smaller in both size and duration, the market…

A Gift From God

The S&P 500 closed at a 52-week low on January 20th for the first time since 2011. Last week I took a look at how stocks did in the year they made a 52-week low. Maybe not surprisingly, they performed significantly worse in the years when a 52-week closing low occurred, returning -10% on average, versus…

History Was Made

What a day… There was crazy strength out of the cyclical names today. XLB rose 3.3%, XLE rose 3.5% and XLI rose 1.6%. Meanwhile, XLK fell 0.1% and XLY fell 0.2%. These five things has never occurred simultaneously. The data for this goes back to 1998. The S&P 500 rose 0.49%, the Dow rose 1.1%…

Bad Markets and 52-Week Lows

The S&P 500 just closed at a 52-week low (January 20) for the first time since October 2011. The 1079 days between 52-week closing lows is the fourth longest streak of all time. I went back and looked at what happened in years that experienced a closing low versus those that didn’t and the results…

Exact Appraisal Impossible

The Intelligent Investor is the first book I ever read on investing and I pay homage to it as the namesake of my blog. Although what I do could not be more dissimilar than the value investing practiced by Benjamin Graham, it’s hard to overstate the impact reading this book had on me. Shortly after…

Exposing the Flaws

Even if I go into a store with the intention of buying something, I get uncomfortable when somebody asks me if I need help. I’m not sure what causes this reaction but I think I’m like most people in the sense that I dislike being sold. I wanted to share an interesting story about selling…

Will This Volatility Continue?

The S&P 500 has been up or down 1% in 7 out the first 11 days (63%) of 2016. We’re only 5% through the year but I feel pretty confident saying this volatility will not persist. However if it does, the good news is that the last time more than 60% of all days was…