What Happens To Stocks After They Make A Big Comeback?

The S&P 500 is now positive in February, after being down 6.7% earlier in the month. Although this slight gain can quickly evaporate- and has as I’m typing- I wanted to see if a theme emerged when stocks acted this way. Before diving into the data, what I guessed I might find was that this behavior…

The Divergence Of Small Value

When most investors think about different style boxes, whether it’s large cap growth stocks or small cap value stocks, they probably just take the label at face value. However, if you dig a little deeper, you’ll notice that just because funds share the same name, does not mean they are the same thing. In the…

Gratitude

As I roll out my new blog, I want to take a moment to say thank you to my readers. Words won’t do this justice, but I’d like to try and express my gratitude. Like everybody else, I’ve had some bumps along the way so I feel very fortunate to be here today. I’m doing…

The Noise Visualized

Since 2000, there have been 364 days when the S&P 500 has closed up or down by two percent. On average, this means one two percent move every 11 days. Below, the red dots represent every two percent day. The media loves these two percent days and Mr. Market is happy to provide them all…

Diversity In Your Portfolio

“Don’t put all your eggs in one basket” Many people in finance have an all or nothing mentality.  While it makes good sense for professionals to become ninjas in their respective discipline, for the laymen investor, this dogmatic thinking can be very dangerous. The professional investor who understands that their strategy goes in and out…

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…