Explore Our
“Off The Wall” Blog
Unique, straight-forward, unfiltered opinion on topics of concern for individuals with newfound wealth.
More New Highs
Another week and another new high for the Dow Jones Industrial Average (Dow) – AND as I write this, the Dow is trading above 16,000 for the first time in history. In fact, the Standard and Poor’s 500 index (S&P 500) and the Dow both logged their sixth-consecutive weekly advance. Though we are still measuring the impact from the government shutdown on the economy (remember that?), the commotion we suffered in October is fading into the sunset and the spotlight is returning to the Fed, the recent earnings activities and economic activity. But read more – I have cool pictures of trains in this week’s blog!
Sectors
For the week, the S&P 500 was up over 1.50%. That’s a nice week, but take a look at the chart below that shows the returns for each of the ten S&P 500 sectors. Consumer Cyclicals, Health Care and Materials were all winners compared to the S&P 500 overall while Industrials, Tech and Utilities were the bottom three performers for the week. Note however that those bottom three were all up greater than 1%.
Earnings Season – It’s All Over For Third Quarter
2,268 companies have reported and the earnings season ended on Thursday.
The percentage of companies beating their revenue estimate for the third quarter of 2013 came in with a final tally of 53.2%, which is right about where it has been on average over the recent quarters but still lower than the average of 60% since 2001. It’s nothing to dance around about nor is it anything to start crying over.
The percentage of companies beating their earnings estimates finished at 58.6%, which was lower than the final reading of 62.2% from the second quarter. With the exception of a quarterly setback in the first quarter of 2013, this is the worst reading since March of 2009 (Source: Bespoke Investment Group).
Bespoke Investment Group follows corporate earnings very closely. They publish the chart below that shows the spread between companies guiding future earnings higher or lower on a percentage basis. Up until this quarter, the spread has been negative for the EIGHT previous quarters – meaning that there are more companies stating they will earn less in the upcoming quarter than the same quarter a year prior.
With the third quarter ending, this reading printed its NINTH negative quarter in a row. Given how well the market has done, I’ll take a tenth. One basic way to interpret this is that companies feel there is more upside in projecting a poor upcoming quarter and beating it (as 58.5% of companies did) than the opposite.
Chart – Bespoke
Some good news
Ok, this is for the train geeks like me…my retirement hobby will be to build a model train layout. Anyway, there is a difference between “intermodal” rail cars and regular rail cars. Below are pictures of intermodal rail cars. They are used to ship containers. These containers go from a ship, to a port and then get loaded on trains or trucking trailers for delivery without having to unpack everything. They do not ship commodities like grain, coal, fuel, cattle, etc. in these containers. So they are used to ship GOODS.
Below are “railcars” and they are generally associated with shipping commodities.
Thanks to Orcam Financial for the chart below. It shows that intermodal rail traffic is up 6.8% this last week. So for those of you who are still with me, it means that there are more goods being shipped on these intermodal cars and according to the Association of American Railroads latest press release, it’s been 19 straight weeks in a row that this traffic has been increasing.
Please call or email with questions.
Investment advice offered through Monument Advisory Group, LLC a Registered Investment Advisor (RIA).
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries, and widely held by individuals and institutional investors. The Standard & Poor’s 500 Stock Index (S&P 500) is an unmanaged capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. The Russell 2000 Small Stock Index is an unmanaged index generally representative of the 2000 smallest companies in the Russell 3000 Index. The Russell 2000 is an unmanaged index generally comprised of companies with lower price-to-book ratios and lower forecasted growth values. The 2, 10 and 30 year Treasury is simply the yield at the close of the day.
(1) West Texas Intermediate crude spot price is as of end of week.
(2) London Bullion Market Association; gold fixing pricing at 3 p.m. London time.
David B. Armstrong, CFA
President & Co-Founder
Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Capital Management, LLC [“Monument”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. No amount of prior experience or success should be construed that a certain level of results or satisfaction will be achieved if Monument is engaged, or continues to be engaged, to provide investment advisory services. Monument is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.
A copy of the Monument’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.monumentwealthmanagement.com/disclosures. Please Note: Monument does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Monument’s website or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.
Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your Monument account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your Monument accounts; and, (3) a description of each comparative benchmark/index is available upon request.
Please Remember: If you are a Monument client, please contact Monument, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.