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I've been buying shares of SFGIX, FMIJX and GAOAX over the past few days. © 2015 Mutual Fund Observer. All rights reserved.
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I have not yet done any buying in the recent market pullback. Currently, my equity allocation is at a neutral position (50%) within a range of 45% to 55%. If I had been more prudent and lowered my allocation in equities towards its lower range, as I felt equities were overvalued, I'd have a full ten percent that I could load. Now it is a only five percent. Still this is a sizeable sum for me; and, I have decided to wait a while longer to see how this plays out. I'm thinking we will see more downside before we see a substainable upside.
Old_Skeet
I thinking ... we will need good corporate earnings reporting during 2016 to generate a good substainable stock market rally. If I were to decide to lighten up in equities I'd much rather sell in an up day than a down day (selling into strength).
Jan 8 2016, 08:00 ET | By: Stephen Alpher
Goldman's equity team cuts $3 per share from its expectation of S&P 500 E P S for 2015-2017. The new numbers are $106, $117, and $126, respectively.The revision means annual E P S growth of -7% in 2015 (the worst performance since 2008), 11% in 2015, and 8% in 2017.At issue, naturally, is energy, and that sector last year likely posted a decline in operating E P S for the first time in 48 years. Also important topics are margins that appear to have peaked, and the risk of a broader economic slowdown.On margins, it's all about tech, and in tech it's all about Apple. Goldman expects tech margins to peak this year and then begin to decline. If you can find an S&P 500 company that can raise margins, buy it.
http://seekingalpha.com/news/3020796-goldman-cuts-s-and-p-500-earnings-outlook
Market Commentary (posted Jan 7th 2016) from OTTER CREEK LONG/SHORT OPPORTUNITY FUND OTCRX
As we have discussed in prior letters, we believe the overall valuation in both the equity and bond markets are not overly attractive on an absolute basis
considering the fundamental growth outlook. S&P 500 earnings are expected to be around $125 per share in 2016 implying a price to earnings ratio of
approximately 16x – near historical averages – however, we see potential downside risk to earnings estimates this year. The US economy continues to grow
modestly despite a sluggish industrial and commodity environment. However, we believe that there are lingering risks surrounding China which combined with
the potential for ongoing stress in credit markets should be a pause for concern going forward.
As we enter January, we have approximately 18% of the Fund in cash and are looking opportunistically to deploy that capital. We expect markets to be volatile
as the Federal Reserve attempts to gradually increase interest rates in the midst of moderate domestic growth and soft global growth trends. We look forward to
an in-depth discussion on broader macro outlook, portfolio positioning, and new ideas during our quarterly conference call on January 20th
http://www.ottercreekfunds.com/media/pdfs/OCL_Factsheet.pdf
I don't think we'll get there (August lows) this time around - probably later this year and then some. Market is in extreme oversold levels and I would bet on a 1 to 3 day bounce beginning on Tuesday, January 12. This is a trading bounce, however. After that? Who knows.
TPS, thanks for posting the information on projected earnings for 2016 & 2017.
After reading your post, I revisited and reviewed some source information on reported earnings for the S&P 500 Index along with some forward estimate numbers.
Using this information I computed the Index to now be selling on a reported basis at TTM P/E Ratio of 21.6 this is down from my 2015 year ending findings and closing number of 23. On forward estimates I had the Index with a year ending estimate of 17.4 which has now dropped to 15.8. These current P/E Ratio numbers are looking better to me.
So on Friday afternoon, I put my buying britches on and bought a little adding to an existing position (DEQAX) found in my G&I Global Equity Sleeve. This fund is invested heavily in the defensive sectors at better than 50% and then add the communication and real estate sectors and this accounts for about 65% of the fund's sector holdings. In addition, it sports a decent yield of at about 2.75% with a distribution yield of about 7.4%. Year-to-date it is down 3.4% as compared to the Index being down about 6.0%. It’s not a top bell ringer of a fund but just a steady producer that performs well in down markets; and, a primary reason I own this fund.
For those interested it’s M* report is linked below.
http://www.morningstar.com/funds/XNAS/DEQAX/quote.html
Normally, I'd be saying I'm buying.... but not this time. I feel like, well, some things have changed. Let me list them: 1. August low ......the rally is gone from that; 2. the leaders do not lead (i.e., healthcare); 3. small and mid caps are in big trouble; 4. the transports are still going down ..... that worries me greatly. Most everything has a rollover top. Earnings are the only thing holding this market, yet, one can only hope, the dollar goes higher. The jobs report was a joke.....GDP seems to be slowing. Where would the sun rise? I believe the transports......for one who was beaten so badly, it should be the first to rise from the dead. The beautiful thing about the market is you can lay your money down and place your bets.....legally, no less.
God bless
the Pudd
Our distributions so far this year came largely from our most conservative income-oriented funds. So, relatively speaking, our small equity positions have increased a bit recently. And as part of annual rebalancing I ended up throwing a few more dollars at PRNEX which has had a horrible year. But, we're talking small amounts here. (Probably raised that fund's allocation by 1-2%. )
No - I wouldn't back up the truck and start buying at these lofty levels. Although if 25 years old again I'd probably be in invested in 1-3 good global allocation funds and out fishing or something. It's all about risk tolerance and time horizon.