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David I. Templeton, CFA  

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  • Negative Investor Sentiment Abounds [View article]
    marcianoprofac. Some believe this is a period similar to the Nifty Fifty era (1973-1974 bust). A difference though is valuations today are not near those of that time period. I do get your narrowing leadership concern though. Interestingly, activist investing is near record levels for large cap stocks today. AXP announcement today is an example. I do think some of these mega cap stock valuations are at or nearing attractive levels. As noted in my article links, maybe we are getting a sideways market correction.

    Thanks for the comment.


    Disclosure: Long AXP
    Aug 7, 2015. 07:12 PM | Likes Like |Link to Comment
  • Equity Risk Premium In A Rising Interest Rate Environment [View article]

    Following is another article on the debt burden you may find of interest.

    Jul 30, 2015. 02:09 PM | Likes Like |Link to Comment
  • Equity Risk Premium In A Rising Interest Rate Environment [View article]

    For calculation purposes in determining the discount rate for the "market", I do believe the real risk free rate is a good barometer to use for the discount rate. I use real risk free rate since I mostly look at real GDP versus nominal GDP. As you point out, over time the risk free rate should mirror the long term growth rate of GDP (and I would say real GDP).

    I do believe we are stuck in a low/slow grow GDP environment for many reason, one of which is the headwind of worldwide government debt growth. I think the Reinhart and Rogoff study, Growth in a Time of Debt ( ), is applicable to investing during this time period. The investing implications might be one where stock picking wins out over indexing as some companies are likely to grow at a much faster rate than overall GDP. Evaluating a company's earnings growth or cash flow growth via its dividend growth rate is one way to uncover some firms that may grow faster than over all real GDP.

    Lastly, I do believe, as Dr. Damodaran notes, there is the potential the Fed has kept rates too low for too long. If so, investors need to be ever vigilant to mis-priced stocks.

    Jul 30, 2015. 01:16 PM | Likes Like |Link to Comment
  • Equity Risk Premium In A Rising Interest Rate Environment [View article]

    I think the unknown variable is what is the "true" risk free rate." Has the Fed artificially forced this rate down to a level that is below what the rate should actually be? If the the rate were at a level that is equivalent to its long run average, what would your required rate of return equal? Dr. Damodaran of NYU notes:

    "The danger, though, is that the US T.Bond rate is not only at a historic low but that it may be too low, relative to its intrinsic level, based upon expected inflation and expected real growth (a topic for another blog post coming soon). If you believe that the T.Bond rate is too low, then you have the possibility that you are in the midst of a Fed-induced market bubble(s) and that script never has a good ending. The scary part is that there are no obvious safe havens: gold and silver have had a good run but don’t seem like a bargain and central banks around the world seem to be following the Fed’s script of low interest rates. You could use derivatives to buy short term insurance against a market collapse but, given that you are not alone in your fears about the market, you will pay a hefty price."

    The entire post is a good read.

    Jul 28, 2015. 08:10 PM | 1 Like Like |Link to Comment
  • Share Buyback Investment Strategy Beginning To Underperform Broader Market [View article]

    Thanks for your comment.

    I did review the RSI for both the S&P and PKW. The RSI in the 2007 -2009 time period you noted began the period at a level above 70. However, the RSI for the S&P and PKW is around 50. This would suggest both the S&P and PKE have not necessarily peaked. The bottom chart in the below link is the RSI for the S&P 500 Index.

    Jun 1, 2015. 07:12 PM | Likes Like |Link to Comment
  • Divergent Performance Between Transports And Industrials Likely Not Indicating Broader Economic Weakness [View article]

    Expectations are it will take several, if not more, months to clear the backlog. A large number of items left stranded on vessels either rotted and or became obsolete and not ultimately transported. Holiday orders for some products are not needed by retailers. Additionally, many shipping vessels have been delayed in making their round trip; thus, delaying what would be normal import volume at the moment.

    Just some initial observations.
    May 29, 2015. 04:11 PM | Likes Like |Link to Comment
  • Anemic Economic Growth Since The Great Recession And Some Causes [View article]
    David de los Angeles,

    Apologize for not responding sooner to your comment. It has been a busy week on our end. I do appreciate you comments and links. From the data I review, taxes on corporate income have indeed increased on both an absolute dollar basis and as a percentage of GDP. Below are links to two charts noting these increases.

    May 16, 2015. 09:17 AM | Likes Like |Link to Comment
  • Higher Yield And Value Oriented Strategies Underperforming Broader Market [View article]

    I will see if I can get the exact calculation in the outside program we use. I know it is taking price and yield and linking the returns for a total return calculation. I believe this implies reinvestment. I am not sure what compounding period is being used, i.e., monthly, quarterly, etc. Give me the weekend to see if I can come up with the compounding/linking period.

    Apr 23, 2015. 09:27 PM | Likes Like |Link to Comment
  • Higher Yield And Value Oriented Strategies Underperforming Broader Market [View article]

    Below is a link showing total return for each ETF. The change in performance order is the dividend ETF (SDY) slightly outperforms the S&P 500 Value ETF (IVE). Both Value and dividend focused investments still under-perform the Growth ETF and the S&P 500 Index. I hope you find this helpful.

    Apr 23, 2015. 08:38 PM | 1 Like Like |Link to Comment
  • Higher Yield And Value Oriented Strategies Underperforming Broader Market [View article]

    The returns are price only.

    Apr 23, 2015. 05:31 PM | Likes Like |Link to Comment
  • Emerging Markets Not Out Of The Woods Yet [View article]
    The TW$ does include emerging currencies. Below is a link to relatively current weights.

    Some emerging economies do benefit from a stronger dollar, but mainly through lower imported oil costs. Many emerging economies have debt denominated in Dollars and the stronger Dollar makes it more costly for emerging countries to service the debt in Dollars. There is more at play here; however, broadly, a strong Dollar is a negative for most emerging economies.

    Apr 11, 2015. 03:44 PM | Likes Like |Link to Comment
  • How To Profit From An Increase In Oil Prices When It Occurs [View article]

    Below is a link to the charts for 2009-2010 and the year 2014. XLE does outperform over the years you inquired about. Again, the shape of the future curve is important in the ultimate performance of USO.

    Jan 29, 2015. 11:03 PM | 1 Like Like |Link to Comment
  • Shale Oil And Gas Production Projected To Increase In February [View article]

    First, thanks for your comment. I do believe fracking technology will continue to improve (refracking) that will drive down the cost of extracting hydrocarbons in the various shale formations and provide access to additional energy resources within formally capped frack wells. To me a longer term issue is the decline rate for fracking fields and wells and the well life extension resulting from this newer technology. In the short run (over next several years?) this technology is likely to keep pressure on supply growth.

    Jan 21, 2015. 03:21 PM | Likes Like |Link to Comment
  • Strong Rebound In Third Quarter 2014 Buybacks [View article]

    All data points are quarterly period figures and not cumulative.

    Jan 1, 2015. 11:08 AM | Likes Like |Link to Comment
  • Is The Recent Market Decline Really A Rout? [View article]

    I appreciate your commenting on the article. We do not believe the sky is falling as you noted in your earlier comment. As we noted in the opening of our article,

    "These dramatic headlines can cause investors to lose sight of the real market action, and more importantly, the potential direction of the market as one looks ahead. I would not argue with the fact that one market sector has "tumbled," the energy sector. Other than the energy and telecom sector, investors have enjoyed respectable returns to date in 2014. Also, the S&P 500 Index remains up 11.8% in 2014 through today's close. This double digit return is on top of the 32+% return for the S&P 500 Index in 2013."

    We believe investors must take a longer view of market/economy as the hour to hour gyrations can lead investors to make incorrect conclusions about the long term market direction.

    Dec 11, 2014. 10:10 AM | 1 Like Like |Link to Comment