CAMS Weekly View from the Corner – Week ending 3/16/2018
March 19, 2018
The bulk of our Weekly Views in recent months has been a continual focus on the backdrop of the economy as viewed through an array of economic angles. This focus underlines our on-going central theme of an absolute need for growth if our markets are to hold up in light of their historically high valuations.
Markets offer many purposes beyond being an investment option for our savings. One of the valuable attributes of markets is the “message” collective participants leave in their wake relative to the expected economic backdrop by what they are willing to push up to leadership status.
Leadership can take shape in several ways through various inter-market relationships as well as various observations in the stock market itself.
As a general observation markets have leaned toward believing in the economic growth narrative, in the past year or more, as reflected in the continual leadership of growth oriented categories as gauged by their performance.
Simply put, if the growth categories can outperform value categories, along with outperformance of a major index such as the S&P 500, then we have a clear leader. In addition, this leaves off an inherent message from collective participants in their belief of economic growth going forward.
The above picture offers five different bars representing different general categories in the stock market.
The blue is the S&P 500 while the red and pink are small and large size growth companies respectively. The green and aqua bars are small and large size value oriented companies respectively.
As the bars clearly denote, thus far in 2018, the growth categories (small and large) are clearly leading the S&P 500. Furthermore, their outperformance of the value categories is tremendous.
With the above we are seeing synchronicity within stock market leadership and the growth message emanating out of economic releases we have shared here in recent months. Markets are forward looking and can change – hence send a message – before current economic releases reflect weakness.
With this, as we stand currently, stock market leadership is pointing toward more growth coming.
I wish you well…
Director, Market Research & Portfolio Analysis
Portfolio Manager, CAMS Spectrum Portfolio
H&UP’s is a quick summation of a rating system for SPX9 (abbreviation encompassing 9 Sectors of the S&P 500 with 107 sub-groups within those 9 sectors) that quickly references the percentage that is deemed healthy and higher (H&UP). This comes from the proprietary “V-NN” ranking system that is composed of 4 ratings which are “V-H-N-or NN”. A “V” or an “H” is a positive or constructive rank for said sector or sub-group within the sectors.
This commentary is presented only to provide perspectives on investment strategies and opportunities. The material contains opinions of the author, which are subject to markets change without notice. Statements concerning financial market trends are based on current market conditions which fluctuate. References to specific securities and issuers are for descriptive purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. There is no guarantee that any investment strategy will work under all market conditions. Each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. PERFORMANCE IS NOT GUARANTEED AND LOSSES CAN OCCUR WITH ANY INVESTMENT STRATEGY.