Trigger goes hereExtremes of investor sentiment, whether bullish or bearish, have proven to be a valuable tool for identifying periods with a high probability of major trend changes.Indeed, one of the most reliably profitable strategies through time has been to adopt an investment position counter to these extremes of crowd behaviour. It is [...]
By Jonathan Baird - January 7, 2022 Perhaps the defining characteristic of the bull market of recent years has been its exceedingly narrow breadth, rivalled only by the markets of the 1920s, the “Nifty Fifty” era of the early 1970s, and the internet bubble at the turn of the century.All but the most casual [...]
A long-time investment maxim is that it pays to watch the stock transactions of company insiders, for they are in the best position to know the future earnings prospects of their company’s. Indeed, academic studies have confirmed that extremes of insider buying or selling are a useful leading indicatorof share prices. Various services [...]
By Jonathan Baird - December 7, 2021 We have long found that the analysis of capital flows, investor sentiment and market extremes are among the most useful factors to consider in producing superior investment returns and mitigate risk.All three phenomena are depicted in the chart above.The enormous capital flows into stocks since the March [...]
By Jonathan Baird - November 16, 2021 The ratio of tangible to intangible (e.g., goodwill) has changed substantially over the years. In 1975 fully 83% of the S&P 500’s total assets were classed as tangible. That number has now fallen to 10% versus 90% that are intangible.The trend to a higher ratio of intangible [...]
Global stock markets, fueled by a combination of unprecedented fiscal and monetary stimulus and extreme investor optimism, have soared to match the value of global GDP. The only previous example of this behaviour occurred at the peak of the internet bubble at the turn of the century.The previous example of this phenomenon can [...]
The total earnings return on equities (calculated as the inverse of the P/E ratio plus dividends) are currently negative for the first time in history. Inflationary pressures and the lowest interest rates in 5000 years have produced this toxic situation for investors.The factors that have produced the current negative return environment: negative real [...]
