Strategist Jim Paulsen just said the perfect quote to be scoffed at on social media. Of course he doesn't believe this but it makes for the headline of the day for CNBC. Gotta love it. In the past, you would probably say that this signals a market top but if you look below the headline, his bullish case is much like ours. He just said the quote to gain more views and mission accomplished on that.
This week I spent a couple of days in Hartford attending IMPACT Live 2017 where I met other great bloggers and inbound marketing experts. Thanks to IMPACT CEO Bob Ruffolo for the invite and incredible conference. I'm already looking forward to next year. While the conference centered on marketing, the talk that blew people's minds was from Paul Roetzer on "The Path to a More (Artificially) Intelligent Future." It definitely made for great lunch conversations shortly afterward. Here are some of the highlights and my thoughts.
The S&P 500 is roughly halfway through earnings season with 237 companies having reported. It has been a very strong period so far with 79% of companies beating expectations vs an average 73% over the last 10 years. Earnings are on track for double-digit growth once again and this should be a bullish catalyst for the market in the second half of the year. As we discussed in our last quarterly webcast for clients, reported earnings continue to accelerate and we view this as extremely positive for the stock market. Here is the chart from our call:
Back in 1999, I was covering technology IPOs for CREF Investments. The theme was that brick and mortar stores were going to be crushed by online retailers. All you needed was eyeballs on your website and your stock would go up 10% per day. It was a crazy time. The theme would turn out to be a good one but way too early and most of the companies that I saw during that period are now bankrupt.
This year, emerging markets have run ahead of the S&P 500 after years of underperformance. Thanks to a declining dollar and continued monthly inflows, emerging markets have been a shining star in the 1st half of the year. Now the question is: will the trend continue? Let's take a quick look at a couple of charts.
Congrats to Roger Federer on his 8th career Wimbledon title and 18th Grand Slam title! The man is simply the best player to ever play the game. At 35 years old, he is aging like fine wine. I remember that there were rumors that he'd retire on top many years ago but he just keeps on playing and winning majors. This year he cruised through the Wimbledon championship without dropping a set. He manages his playing schedule so his body doesn't break down. I'd say he is doing a pretty good job of that. In 2017, he has won both Grand Slams that he entered and carries a 31-2 record on the year, including an 8-0 mark against the top 10 players. What investing lessons can we take away from the greatness of Roger Federer?
The 4th time was the charm for mainland Chinese stocks which were rejected from MSCI for the past three years. MSCI announced that domestic Chinese stocks will be included in MSCI's global emerging-market index for the first time -- inclusion will begin in 2018. It is largely a symbolic victory for China as they will finally be included in the popular MSCI indices but with just a 0.7% weighting.
When you go grocery shopping and walk down the cereal aisle, are you overwhelmed by the number of varieties? There are probably too many choices. Today the same situation exists in the stock market. Investors have so many choices that you literally have tens of thousands of alternatives.
In the last 10 years, there has been a dramatic shift away from mutual funds and into exchange traded funds or ETFs. The amount of mutual funds peaked around the year 2000 and has remained pretty constant around 8000 funds. In the meantime, the number of publicly traded stocks has declined steadily and the amount of ETFs has been on the rise. Today the number of funds and ETFs is almost 3x the number of stocks available on US exchanges. If you add them all up, you have roughly 13,000 potential investment options between stocks, ETFs and mutual funds.
During a bull market, it seem like every single year a chart will start circulating comparing the current price action to a terrible period like 2008, 1987 or even 1929. Well today is that time again. Yogi Berra said it best: "It's like déjà vu all over again." Here is the chart that is making its rounds on Wall Street.
I remember hearing about bitcoin for the first time about four years ago when there was news that someone used the digital currency to buy a Tesla Model S for $103,000 which was the equivalent of 91.4 bitcoins. That buyer may have a bit of remorse because if he held on to his digital currency, it would be worth roughly $260k today. This year the cryptocurrency is up 193% and it is up almost 4x in the last year. It has become one of the hottest investments of 2017. Now the question is: should you be a buyer or is it a bubble?
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