Insight and Action

Afraid of Momentum? Don't Be

The S&P 500 is trading 4.3 percent above its 50-day moving average (about 1 standard deviation), and technician Chris Verrone of believes the trend will continue. His Monday morning note to clients includes data demonstrating the S&P 500 trends to rise EVEN AFTER running above trend. In 901 observations since 1983, stocks have rallied by an average 0.8 percent over the subsequent 20 days, and 10.9 percent over 250 days.

So momentum begets momentum.

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Stock dividends account for 52 percent of total S&P 500 return since 1988, compared to 48 percent for stock price appreciation.

So for all the discussion about finding the next great growth stock, long-term investors are even better served by staying with consistent dividend growing companies. This becomes abundantly clear over time, since reinvested dividends produce increased holdings and beget even more dividends. Compare the difference between price-only return and TOTAL return for the S&P 500 since 1988:

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The Dirty Little Secret About Dividends: They Matter More

Three central banks in the past 24 hours have reiterated their commitment to easy money. Norway and Sweden both announced earlier this morning they will maintain rates at current levels (1.5 percent and 1.0 percent, respectively) in order to "support economic recovery." Yesterday Canada removed rate hike language from its own press release, implying low rates for longer.

Their actions (or lack of, depending on your perspective) should come as no surprise. Nine additional central banks have lowered benchmark lending rates since September.

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The Global Money Train Is Fueled Up. All Aboard!

The 25% Growth Club

Bloomberg TV is shining the spotlight this week on the key companies driving growth in the U.S. economy. Finding them is no easy task.

Current U.S. GDP growth of 2.5 percent still lags the post-recession norm of 3-4 percent, and S&P 500 earnings will likely slow next year to 6 percent according to the strategists surveyed by Bloomberg. Fact is, growth may actually be getting harder to find. It's one of the reasons Bernanke & co. continue supplying $85 billion per month of liquidity.

So with growth getting harder to find, we're go to work. We screened the S&P 1500 for companies with earnings gains of at least 25 percent over three years:

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Uploaded by UUID:8672769 at 10/22/2013 10:22 AM

The Upward Trend in Tech Stocks May Not Be Over Yet

Insight & Action

Oil Below $100 Benefits Everyone, Even Investors

Uploaded by UUID:8672769 at 10/17/2013 10:24 AM

How Ironic That Health-Care Stocks Look So Healthy

Uploaded by UUID:8672769 at 10/16/2013 10:34 AM

U.S. Default: Saga, Farce or Opportunity?


About Insight and Action

Insight & Action identifies trends across global markets and finds ways investors may profit. We crunch our own numbers, spotlight commentary from influential thinkers and try to arm investors with insights into what's moving and what's not. Analyses or commentary are the views of the author, and do not necessarily reflect the views of Bloomberg News.


  • Adam Johnson
    Adam Johnson