Timothy Clontz
05-26-2013, 08:39 AM
Sector Model XLB 3.97%
Large Portfolio Date Return Days
BBRY 7/16/2012 99.72% 313
CAJ 9/25/2012 5.26% 242
BOKF 2/4/2013 16.60% 110
SWM 2/12/2013 30.76% 102
MWW 4/11/2013 16.52% 44
ABX 4/11/2013 -21.67% 44
TPX 4/22/2013 -6.37% 33
TTM 5/6/2013 -3.87% 19
DLB 5/13/2013 0.64% 12
GMCR 5/24/2013 -1.41% 1
S&P Annualized 10.82%
Sector Model Annualized 25.83%
Large Portfolio Annualized 32.05%
YTD
S&P 15.67%
Sector Model 24.23%
Large Portfolio 18.43%
From: http://market-mousetrap.blogspot.com/2013/05/05262013-crystal-ball-is-always-green.html
No rotation.
As you can see, the year to date performance of the sector model is again outstripping the full portfolio. Meanwhile the Mousetrap continues to evolve, and the fundamentals are increasingly moving toward larger companies.
That makes sense, in light of the outperformance of the sector model, since the sector ETFs are cap weighted indexes.
It also makes sense as a trend continues to mature and as retail investors pile into stocks.
Of further note is the fact that the fundamental filters are beginning to make more sense from a classical value perspective. These are right at the top of the selections:
Cash Flow Growth 5-Year High
Sales Growth 5-Year High
EPS Growth 5-Year High
Est EPS 1st Qtr Out High
Est EPS 2nd Qtr Out High
Total Return 1-Year Low
That translates to three things:
1) Earnings have usually been good in the past, and are
2) estimated to be good in the future, but
3) the price is depressed right now.
That’s simpler than what the model was spitting out before.
Heck, even Buffet could do that.
As for the market, I can’t say what it’s GOING to do. I can only comment on what it seems to THINK it’s going to do. It THINKS it’s going to go back to its long term median regression. That would take the current trend above 2000 in mid-2015.
Keep in mind that the market thought it would ride the long term regression back in 2007 too.
A regression is great for estimating what the market will do a few business cycles out, but can’t tell you anything about the next few months. It’s like that Shiller Yield I graphed a few weeks ago: fantastic for estimating ten year returns, and worthless in any shorter time frame.
The ONLY meaningful use of the Shiller Yield is to compare regional indexes for long term opportunities.
But don’t use long term estimates to predict the short term.
And for goodness sake, don’t use the news!
99% of the market news articles have no idea what they are saying in terms of tradable calls. I know this because they usually tell me what I’m thinking myself, and my brain can’t time its way out of a paper bag.
News articles have only one true goal – to sell news articles.
It’s like politicians – their only goal is to get re-elected.
Or judges – their only goal is to keep from being overturned.
So, news articles will write what you want to read; politicians will do what their donators demand; and judges will adjust justice in favor of whoever has more money to pay for appeals.
They don’t even pretend to be interested in truth, justice, or the American way.
What they ARE interested in, is money: news sales, political contributions, the richest litigant.
If you want to predict the future, you only need to do one thing: follow the money.
Investing works the same way: stocks make money when businesses make money.
End of story.
Tim
Large Portfolio Date Return Days
BBRY 7/16/2012 99.72% 313
CAJ 9/25/2012 5.26% 242
BOKF 2/4/2013 16.60% 110
SWM 2/12/2013 30.76% 102
MWW 4/11/2013 16.52% 44
ABX 4/11/2013 -21.67% 44
TPX 4/22/2013 -6.37% 33
TTM 5/6/2013 -3.87% 19
DLB 5/13/2013 0.64% 12
GMCR 5/24/2013 -1.41% 1
S&P Annualized 10.82%
Sector Model Annualized 25.83%
Large Portfolio Annualized 32.05%
YTD
S&P 15.67%
Sector Model 24.23%
Large Portfolio 18.43%
From: http://market-mousetrap.blogspot.com/2013/05/05262013-crystal-ball-is-always-green.html
No rotation.
As you can see, the year to date performance of the sector model is again outstripping the full portfolio. Meanwhile the Mousetrap continues to evolve, and the fundamentals are increasingly moving toward larger companies.
That makes sense, in light of the outperformance of the sector model, since the sector ETFs are cap weighted indexes.
It also makes sense as a trend continues to mature and as retail investors pile into stocks.
Of further note is the fact that the fundamental filters are beginning to make more sense from a classical value perspective. These are right at the top of the selections:
Cash Flow Growth 5-Year High
Sales Growth 5-Year High
EPS Growth 5-Year High
Est EPS 1st Qtr Out High
Est EPS 2nd Qtr Out High
Total Return 1-Year Low
That translates to three things:
1) Earnings have usually been good in the past, and are
2) estimated to be good in the future, but
3) the price is depressed right now.
That’s simpler than what the model was spitting out before.
Heck, even Buffet could do that.
As for the market, I can’t say what it’s GOING to do. I can only comment on what it seems to THINK it’s going to do. It THINKS it’s going to go back to its long term median regression. That would take the current trend above 2000 in mid-2015.
Keep in mind that the market thought it would ride the long term regression back in 2007 too.
A regression is great for estimating what the market will do a few business cycles out, but can’t tell you anything about the next few months. It’s like that Shiller Yield I graphed a few weeks ago: fantastic for estimating ten year returns, and worthless in any shorter time frame.
The ONLY meaningful use of the Shiller Yield is to compare regional indexes for long term opportunities.
But don’t use long term estimates to predict the short term.
And for goodness sake, don’t use the news!
99% of the market news articles have no idea what they are saying in terms of tradable calls. I know this because they usually tell me what I’m thinking myself, and my brain can’t time its way out of a paper bag.
News articles have only one true goal – to sell news articles.
It’s like politicians – their only goal is to get re-elected.
Or judges – their only goal is to keep from being overturned.
So, news articles will write what you want to read; politicians will do what their donators demand; and judges will adjust justice in favor of whoever has more money to pay for appeals.
They don’t even pretend to be interested in truth, justice, or the American way.
What they ARE interested in, is money: news sales, political contributions, the richest litigant.
If you want to predict the future, you only need to do one thing: follow the money.
Investing works the same way: stocks make money when businesses make money.
End of story.
Tim