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David I. Templeton, CFA  

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  • 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
  • Dividend Payers Return Trailing Non-Payers Through November [View article]
    The return for the payers and non payers is the average return, i.e. not cap weighted. The index is capitalization weighted.

    Dec 9, 2014. 08:06 PM | Likes Like |Link to Comment
  • Shareholder Yield Investment Approach: The Best Of Both Worlds - Dividend Payers And Buyback Companies [View article]
    As noted in the S&P white paper (page 9), the Shareholder Yield portfolio contains a subset of both the buyback and dividend yield portfolio. The Shareholder Yield portfolio does not simply combine the buyback and dividend yield strategies.
    Dec 1, 2014. 11:17 AM | Likes Like |Link to Comment
  • Shareholder Yield Investment Approach: The Best Of Both Worlds - Dividend Payers And Buyback Companies [View article]
    jgrever621: Thanks for your comment.

    The article's intent was to show that investing in companies that both pay a dividend (prefer a growing one) AND buyback their shares is a combination that results in an outperforming strategy. I obviously did not make this crystal clear in the article. This is S&P's shareholder yield portfolio in the first chart above. We have noted in prior comments on our blog that buybacks alone are least preferred compared to dividend growth stocks.

    Nov 30, 2014. 11:00 AM | Likes Like |Link to Comment
  • Lower Gas Prices Alone Do Not Equate To Higher Retail Spending [View article]
    Following is a link to a chart showing the PCE for gasoline versus the price of a gallon of gas. PCE appears to decline along with the fall in prices but not at the same rate.

    Nov 25, 2014. 11:15 AM | Likes Like |Link to Comment
  • September Returns: Practically No Place To Hide [View article]

    I appreciate your reviewing our content and commenting. We have written numerous times about small caps overvaluation issue and the fact we eliminated our small cap exposure across client accounts in November 2013. There have been many articles written about the small cap performance issue. One today that you might find of interest:

    At Horan we believe large cap stocks can continue to move higher looking out over the next six months in spite of the divergence in small cap performance. Is this a canary in the coal mine? Yes. But we do not think the canary is dead yet.

    Oct 1, 2014. 10:36 AM | Likes Like |Link to Comment
  • No Alternative Other Than Stocks [View article]
    The shrinking number of listed companies is important from the standpoint of supply and demand. If demand for stocks remains the same and the supply of available stock declines, then prices will gravitate higher, all else being equal. In the video I think Jason Trennert gives a pretty good analysis behind the decline in company listings. Certainly some companies have gone out of business since the bust. However, Trennert notes more and more private companies lack the desire to go public due to the cost of increased regulation. What is occurring is companies will sell themselves to private equity firms.

    (see chart:

    Additionally, the current environment has seen a pick up in M&A activity and this was cited in a recent report by Jeremy Grantham of GMO as well. This reduces stock supply. Increased M&A historically is an early late business cycle activity. Grantham and others believe we are in the middle innings of M&A in this cycle. Companies can deploy excess cash earning zero with the net result the acquisition will be accretive to corporate earnings.

    Regarding interest rate movement and stock prices when rates rise from a low level. JP Morgan has an interesting chart showing when rates rise from a low level, below 5%, stocks have a positive correlation to the direction of the rate move. Intuitively, this might make sense in that the Fed is simply moving rates back to a neutral level in order to have fire power in the event it is needed. When rates are increased at levels above 5%, this is generally a sign the Fed is attempting to slow down the economy. Maybe inflation is beginning to become an issue, tight capacity, higher wage growth etc. In this situation, the rate rise, when above 5%, likely would result in a slowing economy and as such slowing earnings growth which then leads to lower stock prices.

    Interest Rates and equities chart:

    Lastly, regarding equity values and GDP, Scott Grannis has a nice article discussing this and it is well worth the read.

    In short valuations by this measure are at levels similar to the early 1960s. He notes this was an environment "when inflation was low and stable and U.S. interest rates were low and stable, much as they are today."

    I hope this follow up is helpful.

    Kindest regards,
    Aug 3, 2014. 04:38 PM | 4 Likes Like |Link to Comment