MRA Technical Corner
Posted by Shane Murphy on Tue, 04/20/2021 - 14:22
Welcome to the first edition of the Michael Roberts Associates Technical Corner bulletin. Each quarter for the remainder of 2021, we’ll review global market developments through the lens of technical analysis. Now, what is technical analysis? Technical analysis is the study of price action and trends within capital markets. This is performed by evaluating the economic forces of supply and demand (sellers & buyers). To learn more about the discipline, I suggest you check out the CMT association website.
“E.S. Whaaaat?” – The Basic Principles of ESG Investing
Posted by Rachel Roney on Wed, 02/17/2021 - 10:04
If you are like many of us, you may have heard the acronyms “ESG” or “SRI” pertaining to investing, but have not really understood what they mean. Environmental/Social/Governance and Socially Responsible Investing has been around for 50+ years, but has changed significantly in the past few years as the trend of ESG investing continues to grow. We thought we’d share some of the features surrounding ESG investing with you.
While ESG investing refers, in general, to measuring and screening an investment’s environmental, social and corporate governance impact, it is more complex than just “screening out the bad guys” (tobacco, firearms, gambling, alcohol, etc.) Today, ESG investing principals have grown to include the direct engagement of money management firms with the companies they own in terms of proxy voting, direct dialogue with management, shareholder resolutions and public advocacy.
The US Dollar & Emerging Markets
Posted by Shane Murphy on Mon, 02/08/2021 - 15:31
The relationship between the US dollar and risk assets is quite an interesting one. The dollar is considered the world’s reserve currency as majority of globally traded commodities are priced in US dollars. During turbulent economic times it is not the South African Rand or the Australian Dollar that investor’s flock to for protection, it is US dollars. Whether or not the dollar is in a bullish or bearish regime generates vast implications across all asset classes. Today, we are going to talk about one relationship in particular, the US dollar and emerging market equities.
Now, what does it mean to be considered an emerging market (EM)? Well, typically EM nations have seen their economic activities evolve from an agricultural focus to a manufacturing and industrial focus. EM countries are not quite as developed as the United States, Germany or Japan but are considered to be “on their way” to becoming a developed nation. Naturally, their economic growth is driven by exports. The two biggest players in EM are China and India. They make up a very big percentage (+30%) of the global labor force and have seen rapid economic growth over the past decade or more.
Everything Old is New Again
Posted by Neil Hoyt, CFP on Thu, 01/21/2021 - 09:03
"Those who fail to learn from history are condemned to repeat it." - Winston Churchill
"What is done is done: and the cracked egg cannot be cured." - Howard Pyle, quote from the Merry Adventures of Robin Hood
"Don't throw the past away. You might need it some rainy day. Dreams can come true again. When everything old is new again.” - Peter Allen
I bet you can tell where I’m going with this...As I'm reviewing yesterday's stock market action an old "friend" caught my eye. Plug Power (PLUG) is at it again. Back in 1999 this fuel cell stock became one of the many poster children of what is now known as the Dot com bubble. You remember that period. The stock market exploded higher on the promise of the internet. Valuations didn't matter...It was going to be different this time. Plug went from $35 per share to over $1000! Then came the crash. Plug dropped down to $2/ share and spent most of the subsequent 20 years trading between $2 and $4. Last year as the enthusiasm for electric vehicles bubbled Plug went from $4 to $30. This year, not quite 3 weeks old, Plug has more than doubled and now sits at $68. This price gives Plug a stock market value of just over $20 billion dollars. They have no net income. They lose about 33 cents on every dollar of revenue. The price to sales ratio is now 67 dollars for every dollar of revenue. When the dot com bubble burst in March of 2000 the Nasdaq dropped by almost 80% and took 13 years to recover.
An Attitude of Gratitude
Posted by Rachel Roney on Wed, 12/02/2020 - 09:38
As we reflect on 2020 and look with optimism and hope toward 2021, here are a few thoughts to share with you this Holiday Season. These thoughts are primarily mine, but I think a lot of us share some of these same feelings.
Posted by Shane Murphy on Wed, 09/23/2020 - 15:52
"Fundamentals might be good for the first third or first 50 or 60 percent of a move, but the last third of a great bull market is typically a blow-off, where the mania runs wild and prices go parabolic." - Paul Tudor Jones.
The above quote from legendary money manager Paul Tudor Jones is applicable to today’s market. I’m not saying today is a mirror image of the dot com bubble, but the environment is certainly similar. Bank of America's September fund manager survey highlighted a consensus conviction on US technology stocks. 80% of survey participants cited being long U.S. Tech, up from 59% in August. At the same time, concerns about a bubble in technology jumped to #2 in the survey’s ranking of tail risks. This comes after a week of rotation out of technology and into sectors such as materials and financials. The rotation we’ve seen since September 2nd has aided the dividend growth strategy, which favors financials, utilities and consumer defensive stocks. All 3 sectors are outperforming both technology and the broad market since the September 2nd high.
It’s “All in the Farm-ily” for Michelle Papa-Dines!
Posted by Rachel Roney on Tue, 09/22/2020 - 12:46
On any given day when Michelle steps into the office, she’s already tended to 40+ chickens, 30+ pigs, 20+ ducks, 10+ turkeys, twin teen-agers, Richard and Grace, her husband Dan, a multi acre vegetable garden, 3 cats and a dog! It’s that “get it done” attitude that allows her to juggle the multiple balls in the air in terms of taking care of our clients’ service needs.
"Hitting on 18"
Posted by Neil Hoyt on Thu, 09/03/2020 - 17:08
Several years ago, I observed a friend as he sat down at Turning Stone Casino to play Blackjack. I am not a gambler myself (I’ll get into that later) but we were there for dinner and he decided to play a few hands before we were seated. He was an avid player and more than familiar with basic strategy, however luck was not his friend that night. I enjoy watching Blackjack because it is a dynamic game of shifting percentages. Every card dealt changes the odds of success for the player. Ed Thorp, the “Father of Blackjack strategy” as well as a highly successful money manager wrote the seminal book on Blackjack betting , Beat the Dealer back in 1962 in which he gave readers the odds for how to bet depending on what their starting hand was and what the dealer was holding. My friend followed this strategy perfectly. He held at 16 when the dealer was showing a 4, only to have the dealer uncover a King and drop a 5 on it. He held at 20 and watched the dealer draw a 21. On and on this went until eventually my friend threw in the towel and left the table.
Where to Find Value in the Market
Posted by Shane Murphy on Wed, 08/05/2020 - 10:27
Resilient and overvalued. That is certainly one way to describe the Growth factor of the US stock market. With companies like Nvidia, Autodesk, Visa and Dexcom all trading at greater than 15x price to sales, a reasonable investor may consider the landscape a touch overextended. If you have invested solely in pure value equities, the past decade or more has been a difficult period for your portfolio. Value has steadily underperformed Growth across all market caps since mid-year 2007. However, within the Value category there are both qualitative and style factors that deserve our consideration. Factors that crossover into strong Growth names and remain respectful of traditional Value metrics. We believe these strategies satisfy modest levels of risk appetite and have performed well on both a relative and absolute basis.
Rachel’s Thoughts from the Mile-High City
Posted by Rachel Roney on Mon, 10/28/2019 - 09:50
Two weeks ago, Neil, Sonnet, Jeff and I had the pleasure of attending Commonwealth National conference in Denver. Here are some take-aways from the conference I’d like to share with you.