The Portfolio Strategist Archives - C.J. Lawrence // Investment Management

June 17, 2019
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – S&P 500 Earnings Forecasts are Heading Lower. Can the Market Handle It?

The S&P 500 posted another positive performance last week and is now within 2% of the Index’s record high set back in April. Last week’s U.S. economic reports were generally supportive. Retail sales for May came in close to expectations and prior months’ results were revised upwards. U...

June 10, 2019
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Will China Bite the Apple?

Equity analysts have been slow to lower earnings forecasts for this and next, but the bond market is already signaling meaningfully slower growth ahead, catalyzed by lower global trade activity....

February 18, 2019
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Global Freight Indices Showing Softness

Given China’s voracious appetite for dry commodities, the BDI is considered a good leading indicator of Chinese economic output. The signal it is currently sending is that Chinese economic growth may be slower than consensus forecasts. The BDI reached a 5-year high in July of 2018 but is now dow...

January 14, 2019
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Individual Investors Sell Stock and Bond Funds, While Institutional Investors Shun Stocks

Outflows from domestic equity mutual funds and exchange traded funds (ETFs) accelerated into year-end 2018. According to data from the Investment Company Institute (ICI), domestic equity funds experienced outflows of $105.5 billion in 2018, $30 billion of which flowed out in the fourth quarter. ...

January 7, 2019
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Stock Price-to-Earnings Ratios May Have Bottomed

The daily whipsaw of the stock market is challenging the convictions of both bulls and bears. 3% intraday moves in index prices have become the norm and the CBOE Volatility Index (VIX) has not closed below 15 since early October. Investor concerns mostly center around the depth of a prospective glob...

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

C.J. Lawrence Weekly – Economic Fears Feed Market Volatility but Slow Stable Growth and Tame Inflation Could Be Bullish for Stocks in 2019

Positioning portfolios for next year and beyond will be challenging for top down investors and managers. The 2019 and 2020 economic and corporate profit outlooks are murky and investors who remember the sting of the 2008 downtown may choose to remain in safe ports rather than face the risk that the...

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

C.J. Lawrence Weekly – Checking the Pulse of the Freight Economy

The shift in economic and market sentiment during the past few weeks has been palpable. The once synchronized global growth chorus has subsided and has been replaced with a negative refrain of global growth deceleration. ...

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

C.J. Lawrence Weekly – S&P 500 On Track for “Quiet” Year Despite Spike in VIX

Media headlines, suggesting that the recent spike in the VIX is associated with record high volatility in stocks, miss the mark. An analysis of historical patterns of annual high and low prices suggests that stock price differentials have been muted in 2018. ...

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

C.J. Lawrence Weekly – Innovation on Sale

The recent market downdraft may be creating opportunities for active managers and investors to buy industry leaders and innovators at attractive prices. In April of this year, we authored a note titled Innovation at a Reasonable Price, which highlighted increasing rates of research and development ...

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

C.J. Lawrence Weekly – Don’t Fear the Rate Cycle

But an examination of past rate cycles suggests periods of steadily rising rates do not end bull markets. In fact, periods of economic growth and tightening interest rate conditions are often accompanied by strong equity performance. Excluding the high-inflation period of the late 1970’s-early 1...

September 24, 2018
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – Peak Margins? Not Yet.

The combination of improved corporate operating efficiencies, new process technology, automation, and lower corporate tax rates look to be contributing to a new era in profit margin expansion. The S&P 500 Index trailing 12-month net income margin reached 11.3% in 2Q18 and is expected to rise to 11....

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 Discreti...

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

The growth in the pace of housing completions, now at a 1.26 million seasonally adjusted annualized rate (SAAR), suggests that the U.S. housing market remains under-supplied and is only inching its way back to balance. At the same time, millennials are entering the housing market at a rapid pace, h...

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

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

The sell-off in Chinese shares, including those listed on U.S. stock exchanges, may provide an attractive buying opportunity for investors with a longer-term view. Despite its challenges, China remains the worlds’ fastest growing economy, according to data provided by the World Bank, and its dome...

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...

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

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

A closer look at sector fundamentals, and the progression of sales and earnings forecasts, suggests that industrial stocks may have been prematurely discounted. Industrial stock prices may already reflect much risk and may not be discounting the possibility that we are in the midst of a capital spen...

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

The Fed’s recent snapshot paints a picture of a healthy U.S. household sector. That is good news for U.S. Gross Domestic Product (GDP), two-thirds of which is driven by consumer spending. But while some market watchers suggest that the U.S. economy is late in the business cycle, U.S. household...

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

C.J. Lawrence Weekly – Growth Stocks Reaccelerate

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 growth stocks differ, but most agree that to qualify as a value stock a company’s shares should ...

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

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

As we take a look at retail sales and the health of the U.S. consumer, some have suggested that the consumer is extended. But by the Fed’s proprietary measure, the U.S. consumer’s balance sheet looks pretty healthy. The healthy pace of retail sales, and historically high readings for Consumer C...

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

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

Meaningful revenue growth combined with expanding margins is a good recipe for profits, and owning stocks with that winning combination is a proven strategy for capital appreciation. The most attractive candidates can be found in the Technology and Industrials sectors which are delivering on both....

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

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

In the 1980s, C.J. Lawrence Chairman, Jim Moltz, observed the long-term cyclical trends in P/E multiples and coined the progression, the “Multiple Staircase” (see chart below). The Multiple Staircase showed that the S&P 500 P/E multiple trended in stair-step fashion, in one direction for abou...

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

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

There has been considerable focus in the financial media, and among market pundits, regarding the headwinds for stocks posed by rising interest rates. Our work agrees that rising rates do present challenges, but that strong corporate earnings growth can be a healthy off-set. ...

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

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

The largest R&D spenders generate substantial cash flow that helps fund innovation, and several trade at what we view as reasonable valuations. That is a desirable combination. We call it Innovation at a Reasonable Price (IRP) investing. Facebook is leading the charge in artificial intelligence t...

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. The IDC report serves as a reminder that solid core franchises, even ones that no longer grow, can generate meaningful cash flow to support growth businesses, and creates optionality for corpora...

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

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

Improving fundamentals and corresponding increases in corporate cash flow should help dividend payors maintain and increase payouts to shareholders in 2018. Shares of companies with track records of consistent and meaningful dividend increases, look poised to outperform in 2018 and deserve a meanin...

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

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

Our outlook for the stock market remains constructive, based on improving economic and equity market fundamentals, but recognizes that the market is prone to stumbles. For long-term investors willing to wade into the market’s volatile waters, the risk-reward ratio remains favorable....

November 7, 2017
Blog , The Portfolio Strategist - Terry Gardner

C.J. Lawrence Weekly – U.S. Economy is Supportive of Accelerating S&P 500 Top-Line Growth

Reported S&P 500 sales per share growth, for 3Q17, has been encouraging. With over 80% of constituents having reported results, S&P 500 sales are coming in 5.8% ahead of last year’s levels. ...

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