Leuthold Funds will distribute capital gains to shareholders of record as of November 16, 2016, with the x-date and payable date of November 17, 2016. For the details, click here.
Sentiment: Not Yet Good Enough To Be Bad
Stock market sentiment has certainly heated up in response to the tax hike (...wait until those first paychecks arrive), but investor optimism is still a good distance away from the levels seen at the interim peaks of April 2010, April 2011 and April 2012.
- We’re eager to see whether the public begins tiptoeing back into stocks now that the S&P 500 has printed a new high and a band-aid solution to the deficit has been reached. And, perversely, valuations should now be high enough to get the public interested in stocks. Since 1980, months of net inflows into U.S.-focused equity funds have occurred at an average Normalized P/E of 20x—exactly where the S&P 500 stands today. (Net outflow months occur with P/E ratios 3-4 points lower than this.) Remember, though, stocks can go up without public buying pressure… witness 2012.
- Contrarians should note many of our sentiment measures show considerably less optimism than in early 2010, when the S&P 500 was more than 300 points lower than today. For example, the CBOE Equity Put/Call Ratio has tended to show less enthusiasm (i.e., lower call buying) at each successive intermediate-term market peak since April 2010. Interestingly enough, a nearly identical pattern played out during the 2002-07 bull market, with the Put/Call Ratio recording peak optimism in January 2004—almost four years before the eventual bull market high.
- One certainly shouldn’t expect the options data or any other sentiment measure to “ring a bell” at the final bull market peak. Don’t expect the loony atmosphere of 1999-2000 to reappear. I expect the top to be fairly subdued. An historical analog might be the market top of November 1980, which represented the only month of sizable mutual fund inflows for that entire 2 1/2 year bull market.
The Leuthold Group, LLC provides research to institutional investors. It is also a registered investment advisor that uses its own re- search, along with other data, in making investment decisions for its managed accounts. As a result, The Leuthold Group, LLC may have executed transactions for its managed accounts in securities mentioned prior to this publication.
The information contained in The Leuthold Group, LLC research is not, without additional data and analysis, sufficient to form the basis of an investment decision regarding any one security. The research reflects The Leuthold Group, LLC’s views as of the date of publication, which are subject to change without notice. The Leuthold Group, LLC does not undertake to give notice of any change in its views regarding a particular industry prior to publication of their next research report covering that industry in the normal course of business. The Leuthold Group, LLC may make investment decisions for its managed accounts that are inconsistent with, or contrary to, the views expressed in current Leuthold Group, LLC reports.
As with any investment, there can be no assurance that any of the funds’ investment objectives will be achieved or that an investor will not lose a portion or all of his or her investment in a fund. Limited Partnerships may offer limited liquidity, may engage in speculative investment practices, may offer limited valuation information to investors and will not be registered. A prospective investor should consult its own tax advisor regarding tax consequences of an investment in a fund.
This report does not constitute an offer or a solicitation of an offer to buy a security. Any offer of solicitation for Limited Partnerships must be made only by means of a delivery of a definitive private offering memorandum. The Partnership’s performance data have not been compiled, reviewed or audited by an independent accountant, and data for recent periods may be adjusted as a result of a subse- quent audit of the year of which those periods are a part.
Because the views expressed in Leuthold Group, LLC research relate to industry groups rather than individual securities, industry group ratings cannot be assumed to apply to each individual security within a group. Thus, if industry group “A” is ranked “Attractive,” The Leuthold Group, LLC may still decide to sell one or more of the component securities in group “A.”
Weeden Investors, L.P., Weeden & Co., L.P.'s parent company, owns 22% of Leuthold Group’s voting securities. An Executive Man- aging Director of Weeden & Co., L.P. is a member of The Leuthold Group, LLC board of directors.
Weeden & Co., L.P. makes a market in AAPL, ABCO, ALGT, ALXN, AMAT, AMKR, AMTD, AMZN, APKT, ARBA, ARUN, ATVI, AZPN, BIDU, BIIB, BRKS, CACC, CATM, CAVM, CELG, CERN, CHKP, CIEN, CLMT, COST, CRAY, CREE, CSCO, CSGP, DELL, DLLR, DLTR, EFII, EZPW, FFBC, FISV, FITB, FULT, GHDX, GPRO, HA, HBAN, HGSI, HMIN, IMAX, INTC, IPGP, IPHS, ISIL, JAZZ, JDSU, JKHY, KALU, LBTYA, LSTR, MAT, MDCO, MGLN, MSCC, MSFT, NFLX, NIHD, NTAP, NXTM, ONNN, OZRK, PACW, PDLI, PRXL, PSMT, QLGC, QSII, RVBD, SATS, SCHN, SCHW, SFLY, SINA, SLAB, SMCI, SNDK, SPLS, STLD, STX, SUSQ, TEVA, TQNT, TRMB, TTWO, UHAL, UMPQ, VMED, VOD, VPHM, VRTX, WBMD, WERN, WRLD and ZBRA.
Weeden & Co., L.P. Member FINRA, NASDAQ, and SIPC.