NAAIM Speaks is bi-monthly newsletter containing market insights and analysis from NAAIM member firms. “Speaks” is designed to provide a plethora of market analysis, indicators, some occasional humor, as well as a summary of NAAIM’s proprietary Dynamic Asset Allocation Model and Managers Exposure Index. The report is for informational uses only and is not to be construed as investment advice.

The Big Picture: Of Earnings and Valuations

By: David Moenning, Heritage Capital Research

Published: 12.9.19

This is the time of year where analysts of all shapes and sizes like to look into their crystal ball and opine on what to expect in the coming year. So, while we’re waiting for the next hearing to begin and the decision on tariffs, I thought it might be a good idea to look at some of the factors that could come into play in 2020.

To be clear, this is not going to be an exhaustive list of everything that could happen next year. No, the plan this morning is to take a look at a couple of the fundamental underpinnings of the stock market. Stuff like earnings and valuations.

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Still Operating on Fed’s Dramatic Shift

By: Paul Schatz, Heritage Capital LLC

Published: 12.11.19

With stocks so close to all-time highs, this continues to be reminiscent of 1995 when the Fed came from an overly restrictive monetary policy in 1994 to realizing they screwed up and quickly played catch up. Stocks had long understood and priced this in with 1995 being one of the all-time great investing years in modern history.

With all that said and the endless patting myself on the back for being so bullish, I do not believe adding new money nor getting more aggressive is the right play here…

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Will This Rally Ever End?

By: Jeffrey Miller Dash of Insight

Published: 12.8.19

 

Many are asking (in frustrated tones): When will the stock rally end? There will be an end, of course, but many are amazed at the longevity of this bull. The best gift I can offer to readers has two parts. First, I’ll cover things that I ignore—and you should, too! Then I’ll mention a few things well worth watching…

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NEW FEATURE: In Search of Opportunities!

By: Jacob Deschenes, ERA Capital Management

Published: 12.5.19

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ERA Capital Management’s Jacob Deschenses seeks out opportunities in winning stocks that have experienced an extreme near-term event. This month, Jacob has suggests there may be an opportunity in YUM Brand’s recent pain…

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The Message From the NAAIM Indicator Wall: The “Fundies” Say Stick With Bulls

By: National Association of Active Investment Managers

Updated: 11.4.19

The NAAIM Indicator Wall provides a weekly update to a robust array of stock market indicators. The “wall” includes readings and explanations of indicators and/or models in the areas of price/trend, momentum, key price levels, overbought/sold readings, sentiment, monetary, economic, inflation, and market cycles.

This time, we’re featuring the Fundamental Board, which is designed to look at the market’s fundamental factors such as interest rates, the economy, inflation, and valuations.


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Link to NAAIM Indicator Wall

Note: The Indicator Wall is a benefit provided to NAAIM Members and is password protected. To obtain a temporary password, contact NAAIM at 888-261-0787.

Mining the NAAIM Indicator Wall for Real World Applications

Len Fox at Scarecrow Trading, who is a two-time winner of the NAAIM Shark Tank Active Investing Strategy Competition developed a couple of portfolio strategies based on the NAAIM Indicator Wall. Below is an update of the two portfolios Scarecrow runs:


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Feel free to contact Len or his team about the methodology used in these portfolios at (952) 250-7453.

Keeping Things in Perspective

By: Rob Bernstein, RGB Capital Group

Published: 12.9.19

While the S&P 500 Index is up approximately 25% year-todate, looking at the returns since the start of 2018 helps put
that large gain into perspective. Since the start of 2018, the
S&P 500 Index is up 17.7% (or 8.8% annualized). Much of this
year’s gain was a result of recovering the steep sell off that
took place in the fourth quarter of last year.

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The NAAIM Dynamic Allocation Model

Designed to be a value-add benefit to membership, NAAIM offers a Dynamic Asset Allocation Model based on the NAAIM Indicator Wall of indicators and models. The overall objective of the model portfolio is to dynamically adapt to changing market environments and to keep equity exposure in line with conditions. The model targets a normalized allocation of 60% stocks and 40% Bonds.

Here is this week’s model allocation:


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The model has been run live on the NAAIM website for several years and has demonstrated the ability to reduce exposure to market risk during negative environments such as those seen in 2015-16 and 2018.

More on the Dynamic Allocation Model and Historical Readings

The NAAIM Dynamic Allocation Model is for illustrative and informational purposes only, and does not in any way represent an endorsement by NAAIM or an investment recommendation.

Ignore The Noise

By: Sam and Bo Bills Bills Asset Management

Published: 12.6.19

In our opinion, the day to day volatility surrounding trade worries is largely noise. With an election coming up in less than a year, there is little chance that the White House will walk away from talks (creating a sustainable decline). Similarly, China has much to lose in a trade war. While it is likely that talks will continue to drag on leading up to and possibly after the election, some deal will eventually get done. If the US economy stumbles, the White House will be forced to make a deal of some kind to preserve the election bid of President Trump. While China does not have the same political constraints as the US, their economy is feeling the effects and there is mounting pressure…

Link to the Full Article

Charts Reminiscent of 2016

By: Craig Thompson, President Asset Solutions

Published: 12.8.19

The bottom line is that the market could be at an inflection point and what happens over the coming weeks will provide valuable insight as to the longer-term direction of the broader stock market.

In the video below I highlight what we are seeing currently and what we are looking for going forward…

Watch The Video

Liquidity Trumps Earnings

By: Dexter P. Lyons Issachar Fund

Published: 12.9.19

I believe “liquidity” is more important than “earnings!” In fact, during the bear market of 1973-1974, a major stock market index lost 80% of its value as the Fed tightened the money supply to stifle soaring inflation. Earnings of the S&P 500 index rose every quarter during that bear market which tells me that earnings are not as important as we may have been led to believe. Earnings have declined every quarter this year and they are expected to show a decline in Q4 as well. Economic growth has been weakening for the last two years but the stock market does not seem to care. I believe “credit/liquidity expansion” trumps “earnings”…

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The NAAIM Member Exposure Index: Giving Bulls Benefit of Doubt, But…

The NAAIM Exposure Index represents the average exposure to US Equity markets as reported by our members in the organization’s weekly survey. Note that many NAAIM members are risk managers and tend to reduce exposure to the markets during high risk environments.

Below is last week’s exposure reading. We note that the current exposure remains in what is considered a “risk on” level, but managers appear to be keeping some powder dry – just in case.


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More on the NAAIM Exposure Index

NOT INVESTMENT ADVICE. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Investors should always consult an investment professional before making any investment.

Tags: NAAIM, NAAIM Speaks, Stocks market analysis, Stock Market Analysis, Stock market, stock market indicators, David Moenning, Paul Schatz, Jeffrey Miller, Rob Bernstein, Sam Bills, Bo Bills, Dexter Lyons, Jacob Deschenes, NAAIM Exposure Index, NAAIM Dynamic Allocation Model, Len Fox