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Nov 17, 2014 | Post by: modelcap Comments Off

U.S. Stocks Are The Best YTD Performers

When looking at U.S. equities, it appears that the severe October selloff is all but forgotten. After a 2.4% gain in October, the S&P 500 (ETFs: IVV, SPY) continued to reach new all-time highs – for a 1.2% gain so far in November, and 12.3% YTD. Not so for global

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Nov 10, 2014 | Post by: modelcap Comments Off

Q3 Earnings Growth is Strong at 7.9%

The S&P 500 Q3 earnings are growing at 7.9% YoY, according to Factset. Growth is much better than analysts’ estimates of 4.6% on Sep 30; and above-average 77% of companies beat estimates. Revenue growth is also strong, 4% YoY. Some tactical investment managers are concerned that equities are overvalued –

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Oct 28, 2014 | Post by: modelcap Comments Off

Oil Price: Beginning Of A Downtrend

Oil price just sank below $75 for WTI contract. Supply-demand fundamentals drive the price of oil over a longer-term period, say, 2-3 years. One chart summarizes the most essential data points: the Medium-Term Oil Market Balance chart. The chart, shown below, is produced by the International Energy Agency’s (IEA) as part of

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Oct 24, 2014 | Post by: modelcap Comments Off

Why Everyone Is Buying Stocks Again

What a difference a coupe of weeks can make in the market! In the week of October 15th equities seemed to be in a free-fall. The S&P 500 dropped to its intra-day low of 1821 and registered a 9.4% loss from its peak (7.3% loss on an end-of-day basis). But in

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Oct 20, 2014 | Post by: modelcap Comments Off

The Key to Successful Tactical Management

What a volatile month October was! The S&P 500 sold off by 7.4% from peak to trough on the closing basis, then regained most of the lost ground. To protect against significant downside, many managers adopted technical indicator-based stop-loss, or “risk-management” systems. Unfortunately, such systems amount to selling low and

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Oct 03, 2014 | Post by: modelcap Comments Off

How High Is Equity Valuation?

Observers have been citing the high level of Shiller’s P/E (above 26) as reason to predict a drop in U.S. equities. I highlight below some of the details of its calculation that impact how it should and should not be used. First off, Shiller’s cyclically-adjusted P/E (“CAPE”) is often misused

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Sep 26, 2014 | Post by: modelcap Comments Off

Don’t Fret the Fed (Part 3): Finishing the Job

People like to blame the Fed for almost anything. The fact is, the Fed’s policies helped generate an economic recovery starting in 2009, followed by GDP growth for five years running, despite significant headwinds (declining home prices, deleveraging, weak employment, low confidence). On the other hand, the more hawkish European

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Sep 25, 2014 | Post by: modelcap Comments Off

Model Capital is now available on Jefferson National –

A variable annuity (VA) is a great tax-deferred way to invest, but does it come with high fees? At Jefferson National it costs just $20 a month! The best part – advisors can grow their practice by helping clients transfer VA’s from expensive providers to JeffNat, while maintaining tax deferral.

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Sep 19, 2014 | Post by: modelcap Comments Off

Why We Need Inflation –

As soon as the Fed’s policies are mentioned, almost every intelligent person thinks of the threat of dangerous, damaging, ugly… Inflation! This includes ordinary folks as well as “experts” – academics, billionaire hedge fund managers, and politicians. In the meeting on October 28-29, the Fed ended its bond-buying QE stimulus program.

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Aug 27, 2014 | Post by: modelcap Comments Off

Strong Fundamentals vs. Perceived Risks in 2014

This year was characterized by a conflict between strong fundamentals and perceived risks. After a 32% gain in the S&P 500 last year, many observers were puzzled by the equity market’s continued strength. The financial media and the web were filled with predictions of a correction, with some permanently-bearish “experts” predicting

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