Womack Investment Advisers

As the bull market in equities enters its ninth year, investment strategist Jim Paulsen at the Leuthold Group recently released a research note in which he pointed out that the % of market cap represented by the “defensive” sectors has reached a multi-decade low, now lower even than at the peak of the dot-com bubble. This is a sign of lop-sided investing in which speculative investments are concentrated in a few areas of the market (like the current pursuit of the FANG stocks (Facebook, Amazon, Netflix and Google)), and other areas are left for dead. Paulsen writes, “More and more of the leadership stocks have been the more aggressive, high beta stocks and a lot of the defensive names have been left for dead.   They've diminished as far as their size of the overall [S&P 500] index.”   His advice to those investors holding little more than the FANGs?   Pat yourself on the back and congratulate yourself for ...

Weekly Market Commentary June 25, 2018 The Markets What time is it? The yield curve may be the pocket watch of economic indicators. It’s been around for a long time and it’s often right, but not always. The yield curve is the difference between the interest paid on two-year government bonds and 10-year government bonds. In normal circumstances, an investor would expect to earn a higher rate of interest when lending money to a government for 10 years than when lending money for two years because there is more risk associated with lending for a longer period of time. When the yield curve flattens or inverts, it suggests a shift in investors’ expectations. Financial Times explained: “The slope made up of bond yields of various maturities has a record of predicting recessions that would make even the savviest econometrician turn pea-green with envy. It is not perfect, but the curve has become flat and inverted – when short-term bond yields are actually ...