“Off The Wall” Blog
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Happy Birthday Marines…and Assorted Other Stuff
By David B. Armstrong, CFA | Nov 10, 2014 | Weekly Market Commentary
Today is the 239th birthday of the United States Marine Corps. It’s kind of a big deal to Marines. I’m indifferent about my personal birthday but revere the one I share with so many special brothers I’ve made over the years. I feel every bit of 47 years old but pretty damn good for 239 years old. Happy Birthday, Marines.
Please go back and read last week’s blog if you have not already done so. It is proving to be the most popular (by clicks) of all the writing this year. It’s important and not all that boring.
After saying Happy Birthday to a Marine, you may want to hug it out with a Republican…they are celebrating too. From the perspective of the market, it’s really not a big deal right now. But since it’s all over the news, it’s worth mentioning. If you are a Democrat, well, it could be worse… you could be a University of South Carolina Gamecock football fan. If you are a Democrat Gamecock fan…well…ugh. Just throwing out a little humor there…it’s been a torturous season for us.
The economy these days seems to be…how should I say this…tepid.
Which is okay.
A tepid economy can lead to noninflationary growth which promotes corporate profits and fosters an expansive monetary policy. These are a plus for stocks. Growth that comes too fast can lead to higher inflation or sizable rate increases by the Federal Reserve. Growth that slows from here can lead to a recession.
No great analysis there – just a refresher.
We follow Bespoke Investment Group for earnings research. So far, about 2,000 companies have reported their earnings and revenue for the third quarter (3Q) of 2014. Here’s where we stand:
The percentage of companies beating their revenue estimates for the 3Q currently sits at 57.2%. This number is currently below the average of 60% that we’ve seen since 2001 and also below the 60.7% that finished up the 2Q of 2014. However, the current 3Q reading is above the 56% final reading we saw in the 1Q. Since the revenue readings bottomed out in the 4Q of 2011, quarter-over-quarter readings have ping pong’ed but the trend has been steady UP for revenues.
The percentage of companies beating their earnings estimates stands at 62.9%. This is above the 58.6% final reading from the 2Q of 2014 and well above the 56.7% reading from the 1Q. We were at 66% at one point but once the small-cap stocks started reporting this came down. But it’s still good.
Here is how each sector has done so far (chart: Bespoke). Remember we have yet to waiver from our love of Industrials, Health Care and Info Tech.
Important Disclosure Information
Please remember that past performance may not be indicative 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 Wealth Management), 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 Wealth Management. 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. Monument Wealth Management 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 Monument Wealth Management’s current written disclosure statement discussing our advisory services and fees is available for review upon request.
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....
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