|Written by Rob Goldman
Yes, It's October
Well, we owe you all an apology. Due to the series of Jewish holidays the past few weeks, we have been on a temporary hiatus at The Goldman Guide. But fear not. We are back and we have some surprises too... More on that later. First, the market.
How do you know when it is October? When the market stinks. And stinks it does. The major indices are down 3-5% over the past month but the true broader market is down by an even larger margin. The AAII investment survey had had record (poor) sentiment changes recently and I am puzzled as to why the market has reversed course while Mitt Romney’s poll numbers are rising.
Could it be that Wall Street prefers an Obama re-election when by most accounts it really prefers a Romney win?
Doubtful and coincidental.
What isn’t doubtful or coincidental is the fact that stock portfolios are taking it on the chin. As has been the case for much of the year, or at least since the end of Q1, no one feels like they are making money, unless they happen to own the big names that seem to attract the most cash.
Equity Fund outflows remain steady at roughly $1.3 billion per week, although investors were clearly nervous nellies at the end of September, as over $13B was removed from equity mutual funds.
This week will be an important tale as no fewer than 40% of stocks will have reported 3Q12 results by week’s end, guide financials for the balance of the year and analysts will trim their 4Q12 forecasts. So, hang in there. The worst is just about over, barring more economic calamity.
Expect more normalized jobs data in the coming weeks which could also play a role, as will the impact from both the election debates and the election itself.
So there is no need to really rush in with both feet, at this juncture. Right after the election? That’s another story. Clearly, some money is staying on the sidelines as the race is too close to call.
Interestingly, the valuation of the key indices is pretty fair. Not too cheap or expensive. The 12-month forward P/E on both the S&P 500 Index and the Russell 2000 Index are just below or above the 14.0x mark. While that may not indicate huge upside at this juncture, there will likely be greater upside in the coming months.
For example, the multiple on the Dow Jones Industrials, Transports and Utilities, all of which have high-yielding components, are trading at higher than the aforementioned indices, and with higher dividend yields to boot.
Much like there was a big surge in these segments early this year, we believe the pendulum will swing back to growth and small caps, in the next couple of months.
New Additions and Changes
Folks, we have been burning the candle at both ends for months, with our blogs, the Guide, new microcap reports, blogs, The 30-30 report, etc.
Plus, behind the scenes we have been finishing up our first book and working to provide you with even better stock investing and trading content in a timely fashion, along with new report and newsletter formats. We will even be launching a new website with webinars, interviews, and really cool content, strategies, and intel that will take our offerings to another level.
Speaking of behind the scenes, none of what we do would be possible without the tireless efforts of Nasir Saeed who makes everything work properly. He is the glue that keeps everything together, at all bhours of the day and night whether it be the website, social media efforts, client service, and more.
But, in order to accomplish our goals in providing you with our best efforts, and get some sleep, we are pleased to announce that Aaron Schweitzer has joined Goldman Small Cap Research as a Vice-President. Beginning later this month, Aaron will be a major contributor to our content generation and production.
Aaron has a wealth of experience in the financial industry as a financial advisor and member of client service teams with Morgan Stanley Smith Barney and Edward Jones. Prior to these positions, Aaron spent 11 years in engineering at Caterpillar. Aaron has a keen mind for this business and is a Chartered Financial Analyst (CFA) candidate. He graduated from (The) Ohio State University with a BS in Mechanical Engineering and an MBA in Finance from DePaul University.
Until next week…
Analyst: Robert Goldman
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