About 12 years ago, Cabana’s lead engineer David Covington and I were working on our original portfolio and were discussing why we felt like limiting big losses and protecting drawdown was so important to long-term success in investing. The first part is simple math. If you lose a lot in a bad market, you must… Read the full article.
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The long weekend did not soothe bond or stock markets as evidenced by the continued sell-off yesterday. The correction in equities continues coincident with the ongoing drop in bond prices and jump in yields. I like to take things day by day and do not enjoy or value predictions as a rule, but it appears… Read the full article.
Just before Christmas we wrote a commentary suggesting that the easy low volatility investing might be coming to an end after more than a year of the broad equity indices moving up without a correction of more than 5%. Not only is such an unabated move up highly unusual, but it is not particularly healthy… Read the full article.
Well, 2022 is officially here. The last two years have really been a blur to me. I am sure the feeling is pretty much the same for everyone else. I am paid to talk about the markets, so I will. I think it is beyond remarkable that the broad stock indices realized up years… Read the full article.
U.S equity markets have been on almost a straight upward path for more than a year, with no pullback approaching a 10% “correction”. This unusual period of easy times may be coming to an end. The emergence of the COVID-19 Omicron variant, coupled with rising inflation and a tightening of monetary conditions by the Federal… Read the full article.
Will Last Week’s Up Trend Continue Through Year’s End?: Market Commentary from Cabana’s CEO – December 13, 2021
We ended last week’s commentary with a look at the major stock indices and pointed out that, despite an all-out sell off over the past few weeks, the broad market (S&P 500, Dow Jones and Nasdaq) held important technical support at the 50-day and 200-day moving averages. This supported the view that bulls still held the stronger hand and… Read the full article.
The last week certainly falls into the not so easy category when it comes to investing. Equities of all types have sold off… hard. Small caps and technology have gotten the worst of it, but that is largely due to the blue chips and industrials underperformance over the past several weeks. All major indices have fallen from 5-10% in the rush to exit risk assets. The culprit is alleged to be a combination of the Covid-19 Omicron… Read the full article.
Covid-19… The Gift That Just Won’t Quit Giving: Market Commentary from Cabana’s CEO – December 1, 2021
The emergence of a new coronavirus strain dubbed Omicron sent world stock markets into freefall late last week. Whether this new threat sets us back economically remains to be seen. Initial reports suggest the variant is more transmissible than Delta and is likely to be less responsive to vaccination and treatment. The good news is that the early… Read the full article.
As predicted last week, market volatility has been elevated. Part of this, in my opinion, is due to seasonal (holiday) factors and part is due to the need to work through overbought conditions in the market cap-weighted indices, following the large move up beginning in early October. Yesterday, equity markets opened with significant gains across the board… Read the full article.
Nothing is Ever Completely Clear When It Comes to Investing… and Today is No Different: Market Commentary from Cabana’s CEO – November 16, 2021
The major U.S. stock indices broke a six-week winning streak last week. This is despite a pretty strong day on Friday. As we have pointed out several times, some backfilling is entirely appropriate given the move up we have seen since early October. The New York Fed released its Manufacturing Index for November yesterday. Manufacturing activity exceeded expectations and appears to… Read the full article.
Eight Straight Days of Gains by the S&P 500… a Winning Streak not Seen Since 1997: Market Commentary from Cabana’s CEO – November 8, 2021
Equity markets continue upward on the back of strong earnings. Most of the companies (81%) in the S&P 500 that have reported, beat analysts’ forecasts. A blowout jobs number on Friday and muted response to the Fed’s announcement of its intent to taper bond purchases, have also contributed to eight straight days of gains by the benchmark S&P 500 (SPY). This is… Read the full article.
Think it’s Too Late to be a Rock Star at Something? Look at Mick Jagger: Market Commentary (or Just Commentary) from Cabana’s CEO – November 1, 2021
November is here and the holidays are around the corner. Time keeps on flying by. Sometimes I wish everything could just stop. Only for a while. Maybe for a month or two. Then I could catch up on all the things I need to do, the people I need to hug, the beautiful world I need to… Read the full article.
October Was a Good Month for Investors… Can We Expect the Same from November and December?: Market Commentary from Cabana’s CEO – October 27, 2021
Earnings season remains in full swing. As of this morning, 162 companies in the S&P 500 have reported. Eighty two percent have beaten estimates – and by a median of 9%. These continue to be solid numbers. More importantly, the actual and projected growth trend is positive. This trend is ultimately weighed against current price… Read the full article.
Earnings season is now in full force and 55 companies have already reported their third quarter results (11% of the S&P 500). Of these, 85% beat their estimates – and by a median of 9%. We have another 76 companies reporting this week. We reiterated again last week that it is largely earnings that drive stock prices, and indirectly the relative attractiveness of other asset classes in the never-ending search… Read the full article.
Despite Recent Volatility, We Remain Well Within a Bull Market: Market Commentary from Cabana’s CEO – October 12, 2021
Equity indices remain weak and volatile. Bond yields have continued to climb on the back of a perceived worldwide energy shortage. Typically, we see bond yields fall when stock prices drop (bond yields and prices move in the opposite direction). This is due in part to a flight to safety but, more importantly, as a result of forecast economic weakness and… Read the full article.
Two weeks ago, we pointed out that a long-overdue market correction had likely begun. Despite a snap back in prices that took place during the third week in September and some healthy rotation into cyclicals, the broad market cap-weighted indices have reversed to new lows. The S&P 500 (SPY) dropped 5% in September, for its worst month since March 2020. October hasn’t been much better, as the… Read the full article.
A few weeks ago, I mentioned that we were watching for a break above 140 bps (1.4%) on the ten-year treasury bond, coupled with a positive stock market close. We got just what we were looking for last week and the breakout held for an important technical “weekly close.” To me this is strong evidence of renewed belief in… Read the full article.
Well, the much anticipated market correction appears to be underway. We have recently touched on the numerous factors coming together at once as a catalyst for an inevitable pullback. The one which we did not see coming is the potential collapse of a really huge Chinese real estate company named Evergrande. It seems to be grand all right. Mainly in how much debt it has. Three-hundred billion… Read the full article.
The past week has seen the broad US equity markets drift lower. The S&P 500 dropped just under 2% over the course of four consecutive trading days. Today we saw some buyers step in and we finished in the black, albeit by a nose. September is traditionally weak and there are plenty of reasons for that trend to continue… Read the full article.
I hope this week’s commentary finds everyone safe and rested, following some time off spent with family and friends. Summer is over and it is time to get back after it. We should see an uptick in market volume as traders and institutional desks come back online. We may also see some renewed focus on the fundamentals underpinning our economy…. Read the full article.