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May 21, 2015 | Post by: modelcap Comments Off on Is The Stock Market Overvalued?

Is The Stock Market Overvalued?

Q1-2015 earnings for the S&P 500 companies ended up flat YoY. Flat earnings are nothing to be excited about, but the extent to which earnings exceeded earlier expectations, 4.9%, was impressive, and a wider margin than the historical average of 3% to 4%. As was widely expected, the Energy sector

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May 14, 2015 | Post by: modelcap Comments Off on U.S. Employment Is Very Strong

U.S. Employment Is Very Strong

Initial jobless claims continued at a very low level this week, at 264,000, lower than analyst estimates. The 4-week average of jobless claims, around 272k, is the lowest in 15 years, and has remained in this range for 8 consecutive months – the first time this happened since 1999-2000 (see

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Mar 26, 2015 | Post by: modelcap Comments Off on Tactical Management: From Theory To Implementation

Tactical Management: From Theory To Implementation

Confused by “tactical management?” You are not alone – it continues to be a broad term that includes a variety of active investment strategies. I wanted to share my latest article, Tactical Investment Management: From Theory To Implementation, just published by IMCA’s Investments & Wealth Monitor. In it, I try to clarify these issues:

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Mar 20, 2015 | Post by: modelcap Comments Off on Fundamentals Drive Equities

Fundamentals Drive Equities

U.S. Equities were the best-performing asset class in the world in 2014, with the S&P 500 delivering a 13.7% return – and they continue to reach new highs this year. What keeps driving the gains? At Model Capital, we believe that fundamentals drive markets, not geopolitics or technical indicators. Fundamental indicators

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Mar 17, 2015 | Post by: modelcap Comments Off on Why Are Consumers Not Spending?

Why Are Consumers Not Spending?

Retail sales declined by a cumulative 2.6% in the past three months (the red line on the 5-year chart below) – the deepest drop since 2009. This is especially surprising given the recent labor market improvements (Jobless Claims are shown by the blue line) and the drop in energy prices. Consumers

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Mar 01, 2015 | Post by: modelcap Comments Off on What’s Tactical Management?

What’s Tactical Management?

Tactical Management continues to be a broad and ambiguous term that includes a variety of active investment strategies. In my recent interview on Harvest, I tried to provide some clarity: I like to define Tactical Management as being synonymous with Tactical Asset Allocation or TAA: focusing a portfolio on asset

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Mar 01, 2015 | Post by: modelcap Comments Off on The Good, The Bad Economic Indicators –

The Good, The Bad Economic Indicators –

Employment continues to be among “the good,” showing continued strength this year. Employers added a better-than-expected 257,000 jobs to payrolls in January after a very strong December (see chart below). Initial jobless claims remain below 300,000 on a 4-week average basis for over 4 months now – the best stretch since

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Nov 26, 2014 | Post by: modelcap Comments Off on Back to “Old Normal” Economy

Back to “Old Normal” Economy

November labor figures were very strong, showing that U.S. employers added 321,000 jobs, the most since Jan-2012 and better than the most optimistic projection by economists. Previously, Q3-2014 U.S. GDP growth was revised to 3.9% annualized growth rate. Combined with Q2 growth of 4.6%, the U.S. economy has now experienced

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Oct 24, 2014 | Post by: modelcap Comments Off on Why Everyone Is Buying Stocks Again –

Why Everyone Is Buying Stocks Again –

The S&P 500 is the best-performing asset class in the world, finishing November at a new all-time high, for a 14% YTD gain. And after some mild weakness earlier in December, equities rebounded strongly. Based on our research here at Model Capital, we are convinced that fundamentals drive markets. We use

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Oct 20, 2014 | Post by: modelcap Comments Off on The Key to Successful Tactical Management –

The Key to Successful Tactical Management –

To protect against significant equity market downside, some managers adopted technical indicator-based “models”. Unfortunately, such systems amount to selling low and buying high, with performance loss from market “whip-saws” over time far outweighing expected protection benefit. As a result, performance for many managers suffered in 2014. Tactical investment management means

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