Dancing with the Trend

January 2017

Dancing with the Trend

Diversification and Multicollinearity

by Greg Morris

Di-ver-si-fi-ca-tion 1. the act or process of diversifying; state of being diversified. 2. the act or practice of manufacturing a variety of products, investing in a variety of securities, selling a variety of merchandise, etc., so that a failure in or an economic slump affecting one of them will not be disastrous. Relying on Webster doesn’t provide much help to investors wanting to learn about diversification.  Diversification is a free lunch!  I do not know who said that, but I certainly agree with it.  However, let me expound on some misunderstandings regarding Read More 

Dancing with the Trend

Did 2016 Meet Your Expectations?

by Greg Morris

Welcome to 2017!  For those of use born in the 1940s or earlier, we’re delighted to be here.  In the US Equity markets, there were 3 fairly big pullbacks.  They stand out in the performance chart of the S&P 500, Dow Industrials, Nasdaq Composite, Russell 2000.  Looking at the data over the full year instead of just the final numbers can give you a clearer understanding; in the case of 2016, without the rally in the last 2 months, it would not have been a very good year.  Returns would have been in the 2-3% range instead of the annual returns shown on the right Read More 

Dancing with the Trend

New Year Nonsense

by Greg Morris

Each year for as long as I can remember pundits, experts, and talking heads are offering their projections (guesses) about the new year and what to expect from the market.  There are a few ‘techniques’ that seem to be used each year such as the January Barometer, the Super Bowl Indicators, etc.  Let’s review what they are then I’ll try to shoot them in the head to put them out of your misery. January Barometer The January barometer is based on the view held by many in the stock market that the performance of the S&P 500 index between the first Read More