Insights - C.J. Lawrence // Investment Management

September 17, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – The New S&P Sector Construction is Coming, and It Matters

Back in March we highlighted an announcement by S&P Global, Inc. that stated it was realigning three of its eleven S&P sectors, on Sept 28, to more accurately reflect the constituents’ lines of business. The realignment will result in changes to the make-up of the Technology and Consumer...

September 10, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Stock Valuations and Earnings Growth Play Tug-of-War in Earnings-Driven Markets

Better-than-expected economic data released last week did little to buoy stock prices. The 49-year low in unemployment claims, impressive increase in the ISM non-manufacturing Index, jump in non-defense capital goods orders, and 2.9% year/year growth in wages all failed to propel the market higher...

September 4, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly Market Comment – Freight Economy Remains Strong Despite Tariff Uncertainty

International trade watchers marked Sept 6 on their calendars as the conclusion of the public comment period for the U.S. administration’s proposed $200 billion in new tariffs on Chinese imports. The new tariffs could be imposed any time thereafter and come on the heels of $50 billion in new tarif...

August 27, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly Market Comment – Irrational Exuberance? No. Healthy Skepticism.

According to most conventional measures, the current bull market in stocks has now earned the moniker as the “longest bull market in history”. Most peg the beginning of the current bull run to March of 2009. Since then, the S&P 500 Index has risen over 320%. That falls short of the previous ...

August 20, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly Market Comment – Back to School with 529 College Savings Plans

Today’s American families are spending record amounts of time and resources on their kids’ activities, and parents are pulling out all the stops to enable and encourage their children’s success. Research conducted by Utah State University in 2015 suggested that families included in their stu...

August 13, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly Market Comment – S&P 500 Companies Beat High 2Q18 Expectations

Second quarter financial reporting season is approaching its close, with over 90% of S&P 500 constituents having announced quarterly results. If the remaining companies deliver results in line with expectations, earnings per share for the index will be up around 25% from last year’s level. T...

August 6, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly Market Comment – Growth Remains Attractive…Comparisons to the “Nifty Fifty” and Internet Bubble Periods Miss the Mark

The sell-off in technology shares at the end of July spurred in a chorus of money managers to suggest that the growth dam had finally broken and to forecast that the performance gap between growth stocks and value stocks would close. Several market pundits cited “excessive” valuations on growth ...

July 30, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly Market Comment – Supply-Demand Imbalance Bodes Well for Rebound in Housing Related Stocks

Estimates of U.S. Households[/caption]Wednesday’s dramatic decline in Facebook’s share price overshadowed another significant sell-off in a housing related stock. Shares of Mohawk Industries (MHK) declined 17.5% in Thursday’s trading session after the company reported 2Q18 results that fell ...

July 23, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly Market Comment – Favorable Risk-Reward Emerging in Leading Chinese Consumer Stocks

Trade and tariff concerns caused U.S. equity markets to stumble in early June and have dominated the business news flow since. But as investors turned their attention to 2Q18 earnings results, some fear subsided, and U.S. stock prices recovered. The S&P 500 Index price is up 3.1% since July 1. B...

July 16, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly Market Comment – Healthy Corporate Fundamentals and Stalled Bond Yields Keep the CJL Market Monitor in BUY Territory

The Market Monitor’s current reading is “BUY”, with a numerical score of +1, the lowest reading in BUY territory, on a scale of -6 to +6. As the Fed has lifted the Fed Funds target rate, the year-over-year interest rate rate-of-change models have weighed on the Monitor score. But despite ri...

July 2, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly Market Comment – New S&P Sector Construct Could Create Volatility this Summer (Repost from March 12, 2018)

As we mentioned last week, we will not be publishing a new WMC this week. However, since discussion of the S&P 500 sector reconstitution is heating up, we thought we’d resend the piece we wrote about the topic back in March. Why should you care? The new sector structure has meaningful implicat...

June 26, 2018
News & Media

C.J. Lawrence Recognized as Top Guns Manager by Informa Investment Solutions, PSN

For Immediate Release: NEW YORK, June 26, 2018 C.J. Lawrence today announced that its CJL Balanced product which combines CJL’s Bulldog-equity strategy with an allocation into fixed income, has been recognized with Top Gun status by Informa Investment Solutions’ PSN manager ranking database ...

June 25, 2018
News & Media

C.J. Lawrence’s Terry Gardner Quoted in TheStreet – June 25, 2018

C.J. Lawrence’s Terry Gardner Quoted in TheStreet was asked to provide his insights on the industrial sector – June 25, 2018 Harley Davidson’s Woes May Not Affect All Industrials Amid Strong U.S. Economy by John Pickering Rough day for Harley. Harley Davidson (HOG) shares fell as m...

June 25, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Down but Not Out…Industrial Stocks Warrant a Closer Look

Investors in industrial stocks are likely disappointed with the sector’s year-to-date price performance. The S&P Industrials Sector Index price is down 4.3% year-to-date despite being up 5.1% over the last year. The sector became a market darling in late 2017, but lost its luster in early ...

June 18, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Moderate Inflation Supports Healthy S&P 500 Revenue Growth

The May Consumer Price Index (CPI) reading, released last week, came in close to 2.8% with the core reading at 2.2%. The Producer Price Index (PPI) reading echoed the improvement with a 3.1% annualized advance. The healthier pricing environment was confirmed in the Empire Manufacturing Index rea...

June 11, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Support for Consumer Discretionary Stocks…U.S. Household Net Worth Exceeds $100 Trillion for First Time

It’s not surprising that U.S. Consumer Confidence is high. U.S. household net worth eclipsed $100 trillion for the first time in 1Q18, according to the Federal Reserve Board’s quarterly Flow of Funds report. The two categories that have the greatest impact on household balance sheets are p...

June 4, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Beware of the Bond Trap

Rising bond yields are often cited as an important risk to equity prices. Not only do higher interest rates render yields on fixed income instruments more competitive with stock earnings and dividend yields, but higher interest rates raise the equity risk premium that investors absorb when owning st...

May 31, 2018
Blog , The Portfolio Strategist - Terry Gardner

From Pre-School to Pre-Med, the CJL College Planning Center Helps You Navigate the Path from College Savings to College Selection

American Family Spending on Youth Activities Soars While Education Savings Lags Today’s American families are spending record amounts of time and resources on their kids’ activities, and parents are pulling out all the stops to enable and encourage their children’s success. Research conducte...

May 29, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Growth Stocks Reaccelerate

On a relative basis, it has been a challenging decade for value investing practitioners. Since January of 2009, the S&P 500 Growth Index has delivered a 326% total return, while the S&P 500 Value Index returned 212% during the same period. Definitions of what constitutes value stocks and...

May 21, 2018
Blog , The Portfolio Strategist - Terry Gardner

C. J. Lawrence Weekly – Healthy U.S. Consumer is Bullish for Consumer Discretionary Sector Leaders

After a difficult second half of 2017, the S&P Consumer Discretionary sector index has staged an impressive comeback. In the past six months the sector price index is up 12.1%, 6.9% ahead of the broader S&P 500 Index. Over the past several years, the bull-bear battles within the sector h...

May 14, 2018
Blog , The Portfolio Strategist - Terry Gardner

C. J. Lawrence Weekly – Profit Margin Expansion Suggests Current Business Cycle Has Legs

In the late stages of a business cycle it is typical to see profit margins contract in the face of rising input costs and strained revenue growth. But over the past decade, U.S. business efficiency improvements have helped companies avoid the deep margin troughs of past cycles, and sustain histori...

May 7, 2018
Blog , The Portfolio Strategist - Terry Gardner

C. J. Lawrence Weekly – Falling Down on the Multiple Staircase

S&P 500 earnings per share estimates (EPS) for 2018 have increased 8.8% since the beginning of the year, and look to be heading higher. 2019 estimates have climbed by about the same amount. The Index price, however, is not following suit, and is down slightly (-.38%) year-to-date. The road...

April 30, 2018
Blog , The Portfolio Strategist - Terry Gardner

C. J. Lawrence Weekly – Rising Rates Provide Headwind, not Barrier, for Stocks

Last week’s market action was noteworthy for its flowing cross-currents. Economic and corporate earnings reports were particularly strong, but for bulls, the equity market’s reaction was disappointing. The S&P 500 Index finished the week close to flat, versus the prior week’s close. Ma...

April 23, 2018
Blog , The Portfolio Strategist - Terry Gardner

C. J. Lawrence Weekly – Innovation at a Reasonable Price…IRP Investing

For decades, U.S. corporate research and development (R&D) spending was dominated by automotive and pharmaceutical companies. In the 1960s and 1970s, as the big-3 auto companies became embroiled in market share wars amongst themselves, and later versus foreign auto manufacturers, research and ...

April 17, 2018
Blog , The Trusted Navigator - Bernhard Koepp

Regs vs Tech: Then and Now…Lessons from the Past

One thing we have become accustomed to over the years is the fact that dominant companies, which we call Bulldogs at C.J. Lawrence, tend to get sued or attract regulatory scrutiny precisely because they are so successful. Microsoft was one of the first to attract such scrutiny back in 1992, when the...

April 16, 2018
Blog , The Portfolio Strategist - Terry Gardner

C. J. Lawrence Weekly – Cash Flow on the Rise

A once highly anticipated technology sales pipeline report was released on Wednesday with little fanfare. Worldwide shipments of traditional personal computers (desktops, notebooks, and workstations) in 1Q18 were equal to last year’s level, according to the International Data Corporation (IDC) W...

April 9, 2018
Blog , The Portfolio Strategist - Terry Gardner

C. J. Lawrence Weekly – Dividend Growers Provide Stability in Choppy Markets

It’s difficult to identify a singular catalyst for the market’s recent volatility. Whether it’s politics, trade, or corporate stumbles, the equity markets’ reaction to events and news has been swift and pronounced. The large intraday swings in stock prices suggest that traders are shooti...

April 2, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – The Bears are Back. Contrarians Take Note.

Despite a strong close to last week, the S&P 500 Index finished in negative territory for the first quarter of 2018. The Index is down 1.2% year-to-date. Interestingly, the headline-challenged Technology sector index continues to lead the performance pack among the major sectors, followed by Con...

March 26, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – The Stumble-Prone Equity Market Remains on Solid Footing

2017’s prize-fighter equity market now looks like it may have a glass jaw. In 2017, the S&P 500 posted a positive return in each month of the year, and shrugged off negative news at nearly every turn. But already in 2018, the market has experienced two 6+% corrections. Events that would ...

March 23, 2018
Blog , The Trusted Navigator - Bernhard Koepp

Where to Hide In A Stormy Environment?

As we recover from the 4th snow storm in the North East, markets this week succumbed to its own perfect storm. Five factors brought down the market this week: First, there was some concern about this week’s Fed meeting and how the new Fed Chair Powell would perform in his first live press conferen...

March 19, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Tight Capacity Utilization Bodes Well for Select Machinery, Building Products, and Construction Equipment Stocks

Among the economic data released last week, both Industrial Production and Capacity Utilization came in well ahead of economists’ expectations. The Industrial Production reading, a measure of total U.S. factories, mines, and utilities output, rose 1.1% from the prior month, and 4.4% from last year...

March 12, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – New S&P Sector Construct Could Create Volatility this Summer

Followers of the CJL Weekly Market Comment are familiar with our practice of looking below the broader market indices to compare the fundamentals, price performance, and valuations of the 11 different S&P Sectors, 24 Industry Groups and, 157 Sub-Industries. This style of analysis dates back to t...

March 5, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Bond Yield Forecasts Still Not Competitive with Earnings Yield on Stocks

Our CJL Market Monitor reading weakened in February, understandably, as interest rates rose and previously positive market technical measures reversed course. The Monitor remains narrowly in BUY territory with a +1 reading, on a scale of -6 to +6. The two components that lost ground in February incl...

February 26, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Technology Continues to Deliver

The 4Q17 earnings season for the S&P 500 is 91% complete and the results, to date, are impressive. Earnings per share for the S&P 500 are coming in 14.7% ahead of last year’s level. 72% of reporting companies have delivered earnings results that were ahead of analyst expectations, a 5-year...

February 20, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Financials Sector is the Baby that Should be Put Back in the Bath

We made the point in a recent Weekly Market Comment that the shrinking US publicly traded company share count could be a contributing factor to the equity market’s long bull run. The same phenomenon can also contribute to stock price volatility on a short-term basis, as witnessed during the last t...

February 12, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Volatility Returns (Chairman, James Moltz)

This week we are pleased to offer thoughts on the market from our Chairman, James Moltz. Jim launched the Weekly Market Comment at the original CJ. Lawrence back in the early 1970s and authored the piece for several decades. We are fortunate to have his perspectives and are grateful for his lead...

February 6, 2018
Blog , The Trusted Navigator - Bernhard Koepp

Corrections vs Crashes – What are We Watching?

What are we watching this morning? Despite being fundamental investors, we need to turn to technicals today to understand if a correction is “normal” or something more ominous. We look to the structure of the sell off, ie is it orderly etc. We need to make sure price discovery is achieved and ma...

February 5, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – The Tug‐of‐War Between Lower Valuations and Faster Earnings Growth Still Skews Towards Growth

There are multiple reasons cited for last week’s equity market blow off. It’s difficult to know which event set the downdraft in motion but the rapid rise in interest rates, after several years of historically low rates, is a good place to start. The U.S. Benchmark 10-Year Treasury Yield finishe...

January 29, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Want to Buy Stocks? Get In Line.

Positive 4Q17 earnings results, an improving economic backdrop and outlook, rising corporate profit forecasts, and increasingly bullish sentiment have added fuel to an already roaring stock market fire. The S&P 500 Index tacked on another 2.2% last week, putting the index price up 7.5% year-to-d...

January 22, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Inflation Counter‐Forces in the New Economy

In the previous millennium, strategists and economists would sometimes gauge inflationary pressures by measuring and comparing the prices of New York City taxi medallions versus the price of a seat on the New York Stock Exchange. The price for a NYSE seats, which allowed the limited number of holder...

January 17, 2018
Blog , The Trusted Navigator - Bernhard Koepp

The Death of “New Normal” – Preparing for Normal

The term, New Normal became the new paradigm in business and economics to describe the financial environment in the wake of the 2008 crisis and the global recession that followed. Mohammed El-Erian, the then head of PIMCO, first used the term in 2010 in a lecture titled “Navigating the New Nor...

January 16, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Want Blockchain Exposure? Buy a Basket “OF MAGIC”

Until last week, Kodak was an imaging company struggling to manage the transition from film and hardware to digital and software. The 130-year-old company, which emerged from bankruptcy in 2012, had lost 80+% of its market value since re-emerging as a public company. But on Tuesday, Kodak announced ...

January 12, 2018
Blog , News & Media

Upcoming Webinar – C.J. Lawrence Portfolio Strategy & Outlook 2018

On Tuesday, January 23 at 12:00 PM EST, C.J. Lawrence will host a live 60-minute webinar with C.J. Lawrence’s senior partners and portfolio management team – Bernhard Koepp, Terry Gardner, Jr., – to discuss the latest market outlook and investment thesis for 2018. This webinar will set the...

January 8, 2018
News & Media

Why Fund-Flow Stats Aren’t the Indicator They Used to Be

C.J. Lawrence’s Portfolio Strategist and Investment Manager Terry Gardner on how fund-flow data is still used. Ву Simon Constable | January 7, 2018 10:03 p.m. ET Whether the traditional fund-flow data will be of any use in calling a market top this time is an open question. РНОТО: ISTOCKPHO...

January 8, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – CJL Market Monitor Continues to Favor Stocks

As investment managers, we sleep with one eye open and the other on our Market Monitor. The C.J. Lawrence Market Monitor was created in the early 1980s to measure the attractiveness of the stock market. It calibrates the relative appeal of stocks versus fixed income and tests the internal technical ...

January 2, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – 2017 Scoreboard Highlights Consistent Technology Leadership

When we wrote the year-end market summary last year, we noted the high level of sector rotation that took place on a quarterly basis throughout 2016. In 2017, leadership was instead remarkably consistent. Of the major S&P 500 sectors, Technology led all others in three out of four quarters and f...

December 28, 2017
Blog , The Trusted Navigator - Bernhard Koepp

“US GDP Moves Above Potential” – Implications for Markets

Using Reinhart and Rogoff’s work, suggesting that it normally takes a decade for an economy to reach potential output growth following a financial crisis, our former CJL colleague, Ed Hyman, at Evercore ISI points out that the US economy has finally broken out of its decade of sub-par growth (see ...

December 20, 2017
Blog , The Trusted Navigator - Bernhard Koepp

“A Perfect Year” – Outlook for 2018

As of this writing, 2017 is the first perfect year where the S&P500 had a positive return every month for the entire year. 2017 also coincides with the US Output Gap swinging back to the long-term trend line which we haven’t seen for a decade meaning that the economy is back on track. Economie...

December 18, 2017
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Time to Rotate to Value Stocks?…Not So Fast

The likely passage of the U.S. tax reform bill, a bump up in the U.S. Fed Funds target rate, and better than expected economic data have all contributed to a reevaluation of equity investor sector and style weightings. As discussed in last week’s note, we got a glimpse of rapid sector rotation two...

December 11, 2017
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Cash Can be King Even When You’re Bullish

Whether it’s the machines at work, or faster fingered traders, when the market shifts, it happens fast. The week after Thanksgiving provides a good example of how quickly sentiment can change, and how dramatically and demonstrably the market reacts to those shifts. For months, pundits have been ca...

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