A Profile of our Growth Portfolio
Mike Moody and Andy Hyer
Podcast: A Profile of our Growth Portfolio
November 25, 2013
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Posted by: Andy Hyer
PIZ In The News
November 25, 2013From “A Momentum ETF Searches for More Upside” by ETF Trends:
Exchange traded funds using intelligent indexing or so-called smart beta strategies have come into the limelight this year as investors have poured over $45 billion into such ETFs and that was as of the end of October.
While “smart beta” may appear to be a new buzz-phrase, many of the ETFs that subscribe to non-market capitalization-weighted strategies have been around for a while. The PowerShares DWA Developed Markets Momentum Portfolio (PIZ) is a prime example.
PIZ follows the same relative strength methodology as other well-known PowerShares ETFs that track Dorsey Wright indices, such as the PowerShares DWA Emerging Markets Momentum Portfolio (PIE) and the PowerShares DWA SmallCap Momentum Portfolio (DWAS) , one of this year’s most successful small-cap ETFs. [Use This ETF for Rising Rates Protection]
PIZ has already surged 26% this year, but this ex-U.S. developed markets play may have more upside to come.
Past performance is no guarantee of future returns. See www.powershares.com for more information.
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Posted by: Andy Hyer
Reconciling Fundamentals and Technicals
November 25, 2013Another prominent bear throws in the towel. Last week, hedge fund manager Hugh Hendry said the following:
I can no longer say I am bearish. When markets become parabolic, the people who exist within them are trend followers, because the guys who are qualitative have got taken out,
I have been prepared to underperform for the fun of being proved right when markets crash. But that could be in three-and-a-half-years’ time.
I cannot look at myself in the mirror; everything I have believed in I have had to reject. This environment only makes sense through the prism of trends.
I may be providing a public utility here, as the last bear to capitulate. You are well within your rights to say ‘sell’. The S&P 500 is up 30% over the past year: I wish I had thought this last year.
Crashing is the least of my concerns. I can deal with that, but I cannot risk my reputation because we are in this virtuous loop where the market is trending.
Whether Hendry is correct in his theory that there is a disconnect between the fundamentals and the technicals or whether he is just not looking at the right fundamentals is up for debate. Pragmatists, like us, are more comfortable simply following the trends.
HT: The Reformed Broker and Abnormal Returns
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Posted by: Andy Hyer
Weekly RS Recap
November 25, 2013The table below shows the performance of a universe of mid and large cap U.S. equities, broken down by relative strength decile and quartile and then compared to the universe return. Those at the top of the ranks are those stocks which have the best intermediate-term relative strength. Relative strength strategies buy securities that have strong intermediate-term relative strength and hold them as long as they remain strong.
Last week’s performance (11/18/13 – 11/22/13) is as follows:
The laggards had a particularly rough week last week as the bottom quartile of the ranks were down 0.48% while the universe was essentially flat.
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Posted by: Andy Hyer
Quote of the Week
November 25, 2013At the top of the list of economic theories based on clearly false assumptions is that of Rational Expectations, in which humans are assumed to be machines programmed with rational responses. Although we all know – even economists – that this assumption does not fit the real world, it does allow for relatively simple conclusions, whereas the assumption of complicated, inconsistent, and emotional humanity does not. The folly of Rational Expectations resulted in five, six, or seven decades of economic mainstream work being largely thrown away. It did leave us, though, with perhaps the most laughable of all assumption-based theories, the Efficient Market Hypothesis (EMH).—-Jeremy Grantham, GMO
On the other hand, technical analysis assumes that investors are emotional and selectively irrational. I know what makes more sense to me.
HT to The Big Picture
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Posted by: Mike Moody
