Tiptoe Through The Tulips, and Other Offerings from LPL Research.

Who doesn’t love Paris in the springtime?
The fundamental case for European equities continues to strengthen, with both earnings and valuations improving.  The technical perspective on Europe is mixed, with the region doing well on an absolute basis, but still unable to outperform U.S. stocks on a consistent basis.  Political concerns, which often get expressed through currency markets, are likely to determine whether European equities begin to outperform their domestic peers.  There a lot to like about the coming European spring from both a fundamental and valuation perspective. The rebound in corporate earnings growth is particularly important. But market performance relative to U.S. stocks is still relatively weak, and major political events are still ahead. We are getting our spring wardrobe ready, but still not going to put away our winter coats. Read on for the complete analysis from Burt White Chief Investment Officer, LPL Financial Matthew E. Peterson Chief Wealth Strategist, LPL Financial.

Earnings Update: Good News and Five Observations

February 22, 2017 | posted in: Blog, Financial Insights | by

The numbers are in! Fourth quarter earnings growth, while not a blowout, continued to be solid, putting the earnings recession further in the rear view mirror.     Read on for 5 key observations and complete details from Burt White Chief Investment Officer, LPL Financial and Jeffrey Buchbinder, CFA Market Strategist, LPL Financial,.

Super Bowl 51: Rooting for Shorter Skirts & Fatter Ties

February 3, 2017 | posted in: Blog, Uncategorized | by

Miniskirts and the markets Truth be told, I am not really very excited about watching the Super Bowl game between the Falcons and the Patriots. My guess is that many of you out there feel the same way, that is, unless you grew up in Boston or Atlanta. And it’s not because I’m not a football fan, as I do appreciate the sport. It’s just that the match-up of the titans of the Northeast against the upstarts from the deep South doesn’t exactly get me fired up. But, of course, I will watch, and at the end of a very long couch potato session on Sunday, spent eating too many snacks and watching some football among too many commercials with big guys drinking beer and cooing over huge trucks, I hope, for all our sakes, that the Falcons win. Why? I will root for the Falcons because if they win, I am assured the stock market will rise in 2017, and that is generally good for my clients and friends. I know the stock market will rise if the Falcons win because of what is known as the “Super Bowl Stock Market Indicator.” This principal posits that there is a correlation between a National Football Conference team (Falcons) beating an American Football Conference team (Patriots), and the market rising. Lately, this has not really been borne out, but that hasn’t stopped the media (and me!) from writing about it. Another “reliable” indicator of future market performance has been the length of women’s skirts. The theory goes along these lines: as hemlines get higher, so do stock prices. As a result, I’m sure many folks watching the aforementioned beer commercials will be rooting for shorter hemlines…for the benefit of their investment portfolios, of course. There is also the “skinny tie market indicator.” This follows the theory that the fatter the tie, the fatter and better the returns are in the stock market. However, I have a confession to make. Those of you who visit me at the office or see me during the business day may have noticed that my ties are getting skinnier each year. Please do not be alarmed by this sartorial decision – the fact is that I only recently heard about the skinny tie indicator, and didn’t realize I was signaling a downturn. I apologize for my fashion faux pas and I promise to be more careful with my business attire in the future! Other supposed stock market indicators are sales of aspirin and Tylenol, sales of men’s underwear, and the consumption of baked beans. I will leave the details of all of these up to your imaginations and/or future research. Of course, there are the actual technical indicators that market watchers can look to, such as economic policy, budget deficits, government debt, price/earnings ratios, etc., but why spoil the fun? Looking at what’s been going on in this country over the past few months, we can all use a little fun, right? A playful cataloging of money management myths is good for a laugh, and, really, who wants to read about P/E ratios on Super Bowl weekend? Plus, these “myths” are great conversation starters if you’re at a Super Bowl party where you don’t know the other guests! Anyhow, I’m off to the mall to look for some fat ties. And here’s to men’s underwear sales, higher hemlines, and the Atlanta Falcons. Let’s all have some fun on Sunday. Pass the chips!       tracking # 1-578415 IMPORTANT DISCLOSURES* *Important disclosures: 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. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. This is a hypothetical example and is not representative of any specific investment. Your results may vary. Stock investing involves risk including loss of principal. Securities offered through LPL Financial, Member FINRA/SIPC Asset Allocation does not ensure a profit or protect against a loss. Guarantees within guaranteed income products are based on the claims paying ability of the issuing company.

Is There Value in Value?

Despite a strong 2016, there may still be some value in the value sector.     We recommend that investors generally maintain balance across value and growth stocks. Improving economic and profit growth create a favorable backdrop for value. Our sector views point to balanced style views, particularly our positive views of both technology and financials. Other factors to consider include relative valuations (favors growth) and technical analysis (favors value). Read more from Burt White Chief Investment Officer, LPL Financial Jeffrey Buchbinder, CFA Market Strategist, LPL Financial

Next stop…DOW 36,000?

January 27, 2017 | posted in: Blog, Financial Insights | by

With the Dow conquering 20,000 on Wednesday, there is a bit of euphoria out there on “The Street,” along with a healthy dose of skepticism. I’m now fielding questions such as “Is this the start of a new upward leg of the stock market?” or alternatively, “Should I sell my stocks now because they are so pricey?” And, of course there are the general types of questions along the lines of, “What does Dow 20,000 mean?” or “What effect does Dow 20,000 have on my portfolio?” The answer to these questions requires some perspective and experience, and since I’ve been in the investment world since 1975, I believe I maintain a good inventory of both. Let’s travel back to 1999 together for a moment, and let me set the scene. The Dow has risen by close to 18% per year for the prior 20 years* and optimism reigns supreme. I am at an investment seminar in Boston and the huge concern on the minds of the participants and the speakers is the “Y2K problem,” (remember that?), which addressed how computers would handle the century’s turn. Massive spending increases on the parts of corporate IT departments attempting to ward off the potential Y2K disaster are adding fuel to a seemingly unstoppable tech stock rally. During this seminar, I am presented with a signed copy of a book by Glassman and Hassett called “DOW 36000: The New Strategy for Profiting from the Coming Rise in the Stock Markets.” At the time of the book’s publishing in early 1999, the Dow is trading close to 10,000. Many professionals embrace the book’s thesis that a “new paradigm” for evaluating stocks is taking hold – one not as concerned with underlying fundamentals such as price/earnings ratios…Accordingly, stocks are deemed to be underpriced and ready to soar to unfathomable heights. So goes the thinking. Sadly, the book’s publishing was followed by the worst decade in stock market history, which included a tech crash, and later, a devastating full market collapse. After reaching a high of close to 14,000 in October 2007, the Dow dropped to 6,500 during 2009. Glassman and Hassett, the former Wall Street darlings, were eviscerated by the press and in academic circles. As a reminder of what occurred, I always keep my signed copy of the book close at hand to show to clients and colleagues. It invariably draws out a few laughs and stimulates lively discussion. So what does 20,000 mean? On the surface, it doesn’t mean a whole lot. After all, 20,000 is just a weighted measurement of the prices of 30 stocks which comprise the Dow Jones Industrial Average index. But to me, after I dive beyond the surface and reflect on what has occurred in the markets over my career, it actually has much greater significance.. Dow 20,000 means and affirms to me that stock prices DO rise in the long run, and if one holds on to their quality stocks through bad times and good, they will always make money. The ride may be rough, and at times appear to be bleak and hopeless; look no further than the state of economic affairs in 2008-9, during the mortgage and real estate collapse, when the Dow fell to 6,500. But, do the math: a new $1000 investment in the Dow in 2009 would be worth over $3000 today. Good investing takes patience and a long view. At the same time, 20,000 also indicates that it may be time to proceed with caution. It means we must not forget that when markets are frothy, investors can get too optimistic and not see the danger lurking around the bend. Euphoric investors can drive stock prices to unsustainable levels, resulting in inevitable large market corrections. And, as we experienced in recent years, depending on the magnitude of the correction, it may take years for the market to recover. So, Glassman and Hassett were appropriately discredited, but in fact, in one aspect they were right. I am certain the Dow will, indeed, reach 36,000 one day. But when will it happen? That I can’t tell you, and the Dow may very well fall back to 15,000 again before reaching 36,000. But I do believe 36,000 is inevitable, in the same way that rocky markets and large market corrections are. It is the nature of financial markets. Understanding the bumps and turns, and keeping a lid on the euphoria, will serve you well and ensure that you capture the returns that the markets will inevitably bring you. Do I hear Dow 50,000?   *Dow Jones 12/31/79-12/31/99, via AmericanFunds.com/advisor/tools/planning/hypotheticals/update-review/htm   DISCLOSURES: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. This is a hypothetical example and is not representative of any specific investment. Your results may vary. Stock investing involves risk including loss of principal.