On January 12, 2020, we said the following:
“…we’ve elected to choose the second lowest yielding stock (Nike), regardless of price, to see if it would perform any better than O’Higgins Penultimate Profit Prospect stock.”
For the year of 2020, the Penultimate Profit Prospect stock was Pfizer (PFE) as outlined in Michael O’Higgins book Beating the Dow.
Below is the performance of Nike (NKE) and Pfizer (PFE).
In our last posting on January 16, 2020, we said the following:
“Worth noting is the fact that in periods when the year-over-year (YoY) data on the stock market went negative, as last shown in Q1 2019, the following recovery exceeded 20%, at minimum. Currently, as reported by the Federal Reserve Bank of St. Louis, we’ve seen an increase of approximately +12% from the Q1 2019 y-o-y low.”
At this time, the Wilshire 5000 sits at a +17% increase above the same quarter last year (October 2019). Meanwhile, the GDP data says there is a long way to go before achieving the descending trendline of 2.11% (YoY) from 1975.
Exceeding the 2.11% level in GDP will likely warrant the NBER declaring the recession as ended. However, we will wait to see as the pandemic seems to be resisting even the best of intentions.
Posted in GDP, Wilshire 5000
On June 8, 2020, the National Bureau of Economic Research (NBER) officially declared the U.S. economy in recession. This follows the prior call of a recovery in the U.S. economy in June 2009. What does the New York Times Recession/Depression Index look like as of December 22, 2020?
We have put blue arrows to show the points of interest to us. We believe that we’re in the early stages of the recession which should see an intermediate drop in the indicator before another spike to a new high level. That spike should be at or above the 300 level and the peak would mark the end of the recession (+/- month).
See Also:
Posted in NYT Recession/Depression Index
Below is a list of money standards, starting in 1870. Periods prior to 1870 will be added over time so please check back for updates.
The goal of this list is to update the areas missing with data that informs on why the standard ended. Any contributions to this topic are appreciated, especially if they accompanied with full citations from the sources.
Below is a chart of investment returns for various instruments as published by Business Insider. This includes the 2nd, 3rd, and 4th ranked low yield stocks of the Dow Jones Industrial Average.
see also:
Posted in Bitcoin, Crude Oil, Dogs of the Dow, Index YTD
Below are the books that we’ve read cover-to-cover in 2020. Don’t forget to check out our 2018, 2017, 2016 and Dow Theory Letters book lists.
The top three must read books from the latest list are:
Since our last posting on the Market Ratio on August 13, 2020, the Dow Jones Industrial Average has increased approximately +7.40%.
However, this wasn’t the payoff based on our work of August 13, 2020. As seen below, the payoff has been a gain of nearly 3x what the DJIA had achieved in the same period. Continue reading
Below is a chart of investment returns for various instruments as published by Business Insider as of December 11, 2020. This includes our own Top Five of the Toronto Stock Exchange 60 (TSX 60) high P/E stocks.
see also:
Summary: Low Yield crushes High Yield in the last year.
In the January 2020 Issue, Morningstar.com published their DividendInvestor which contains their Income Bellwether Watchlist. Below is the performance* of the stocks based on the top highest and lowest dividend yield from December 10, 2019 to December 11, 2020 (intraday).
As the data continues to demonstrate, low yield generally outperforms high yield. This has been resoundingly shown in our Dogs of the Dow in the period from 1996 to 2019.
*United Technologies was excluded from the results.
see also:
Posted in Dogs of the Dow, Income Bellwethers, Morningstar
The concept of a market indicator or market timing tool isn't a new concept. While compounding is THE most power force in investing, market timing tools come in a close second. As the old saying, "don't tell me what to buy, tell me when to buy".
Our team has developed a proprietary market timing tool which we are calling NLO Market Score. In its simplest form, the tool assigns a score ranging from -6 to +6 to the market and is similar to market breath.
For example, the market score reached -6 on March 12, 2020 when the S&P 500 was at 2,481. Since then, the market have risen nearly +50% in less than a year.
However, the 2008 bear market pushed the score to -6 early in October thus leaving little upside if you did a one time purchase. No single (or multiple) market indicator will be accurate enough to call market bottom and that goes for ours as well. That being said, we've back tested the indicator with a reasonable success rate which we define as any positive return.
Below, in table A, we have summarize the outcome of purchasing the S&P 500 when market score reaches -6. In table B, we show the details of the trade/transaction.
Table A:
Table B:
A close observation and you will notice that there are purchase dates within days of each other. To adjust for that, we have taken only the first indication that occurs within that year. The result are summarized in tables C and D.
Table C
Table D
As a long-term holder of equities, we are pleased with an extreme high success rate coupled with above average (>10%) annualized return.
It has been asked what the total return for the respective Dogs of the Dow (high yield stocks) would be compared to the top Low Yield stocks, that we favor, if they were compounded over time.
In this series, we’ll identify the total return of the portfolio, as best we can, based on the Dogs of the Dow strategy as outlined in Michael O’Higgins book Beating the Dow. This strategy requires that the portfolio is switched out each year with a new set of ten high yielding stocks from the Dow Jones Industrial Average.
Additionally, we will list the total return, within the limits of the available data, of the high yield and low yield stocks when ranked in the highest and lowest selecting the top ten in each list.
We are posting the total returns of the stocks from December 31, 1991 to the intraday price as of December 10, 2020.
As we have observed in the past, it becomes very challenging to generate total returns for High Yield stocks as part of the Dogs of the Dow strategy simply because so many of them go bankrupt. Four of the listed high yield stocks went bankrupt (Sears, General Motors, Woolworth, Eastman Kodak).
See Also:
Notes:
Posted in Dogs of the Dow
Below are the upside resistance targets based on the work of Edson Gould and applied to the Nikkei 225 Index from 1989 to 2020.
As can be seen based on the conservative upside target of 22,983.45, once the level of the index got to the 22,937.60, there was a trading range established with a significant downside move before breaching the 28,401.78 mid-range target.
The new upside resistance level to watch for is 28,401.78. At this point, we should expect similar price action of trading in a range and/or declining sharply before the next surge to the upside.
Posted in Edson Gould, Japan, Nikkei, SRL, upside target
It has been asked what the total return for the respective Dogs of the Dow (high yield stocks) would be compared to the top Low Yield stocks, that we favor, if they were compounded over time.
In this series, we’ll identify the total return of the portfolio, as best we can, based on the Dogs of the Dow strategy as outlined in Michael O’Higgins book Beating the Dow. This strategy requires that the portfolio is switched out each year with a new set of ten high yielding stocks from the Dow Jones Industrial Average.
Additionally, we will list the total return, within the limits of the available data, of the high yield and low yield stocks when ranked in the highest and lowest selecting the top ten in each list.
Because our earliest list is 1991, we posting the total returns of the stocks from December 31, 1990 to the intraday price as of December 7, 2020.
As we have observed in the past, it becomes very challenging to generate total returns for High Yield stocks as part of the Dogs of the Dow strategy simply because so many of them go bankrupt. Notice that in the Low Yield group, only one of the ten stocks goes bankrupt (Bethlehem Steel) while four companies in the High Yield group (Sears, Westinghouse, Eastman Kodak, General Motors) filed bankruptcy.
See Also:
1991 Dogs of the Dow: One Year Returns
Notes:
*Union Carbide bought by Dow Chemical (DD)
*AlliedSignal bought Honeywell (HON) and assumed Honeywell’s name and potentially their share data.
*Texaco was bought by Chevron (CVX)
Posted in Dogs of the Dow
