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Oct 21, 2014 | Post by: modelcap Comments Off

U.S. Equities: Out Of The Woods?

What a difference a week can make! Equities globally are now rebounding, with the S&P 500 having reclaimed almost half of its recent drop. This volatility has challenged many tactical investment managers who want to protect against significant downside in order to avoid the 2008-like disaster. Last week in the

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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 –

We are approved as a third-party manager on Jefferson National’s Monument Advisor platform.  All investment advisors who use Jeff Nat’s platform now have access to Model Capital’s tactical investment models. Please contact us for more details. Jefferson National is a leading provider of variable annuities that feature tax deferral, low fees, and a wide

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Sep 19, 2014 | Post by: modelcap Comments Off

Don’t Fret the Fed: 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 last meeting on September 16-17, the Fed kept its commitment to keep

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Sep 18, 2014 | Post by: modelcap Comments Off

Don’t Fret the Fed: Policy Changes Are Priced-In

In the statement of the latest meeting on Wednesday, the Fed kept its commitment to keep short-term interest rate target for “considerable time.” It also continued to taper its monthly bond buying to $15 billion in its seventh consecutive $10-billion cut, staying on course to end the QE program in

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Aug 16, 2014 | Post by: modelcap Comments Off

Fed Creates Financial Stability Committee –

Vice Chairman Stanley Fischer, the Fed’s #2 official, leads the new committee that will monitor financial stability. It is understood that the Fed’s goal is to avoid the emergence of asset-price bubbles after six years of near-zero interest rates and abundant liquidity. We at Model Capital Management applaud the Fed’s research and efforts to

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Aug 12, 2014 | Post by: modelcap Comments Off

Jobless Claims Lowest in 14 Years

Jobless claims fell last week – again. Initial jobless claims stand at 283,500 (on a 4-week-average basis). In the past 40 years, jobless claims reached this low level only twice: in 1988 and in 1999-2000 (see chart). The latest payrolls are also strong (248k jobs created), and unemployment dropped to 5.9%.

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Aug 12, 2014 | Post by: modelcap Comments Off

Q2 Earnings Growth is Strong at 7.7%

According to Factset, the S&P 500 Q2 earnings grew at 7.7% YoY, significantly better than analyst estimates of 4.6% as recently as in July. Q2 growth was just shy of that experienced in Q4-2013, which was the highest since 2011 (see chart). Some tactical investment managers are concerned that equities

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Aug 05, 2014 | Post by: modelcap Comments Off

Bears Bite the Dust Again -

After strong U.S. equity market performance 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 early this year, with some permanently-bearish “experts” predicting a 30% downside, or more. Instead, other than minor volatility in

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