New Dividend Aristocrats For 2020

Last week S&P Dow Jones Indices announced the annual rebalancing of the Dividend Aristocrats. In the rebalancing results, no companies are being removed, but S&P announced seven new additions to the Aristocrats for 2020. This brings the number of Aristocrats to 64 companies. The changes go into effect prior to the market open on February 3, 2020. As noted by S&P, "S&P 500^® Dividend Aristocrats^® measure the performance of S&P 500^® companies that have increased dividends every year for the last 25 consecutive years. The Index treats each constituent as a distinct investment opportunity without regard to its size by equally weighting each company."

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Investor Sentiment Is Mixed But Trending More Bullish

The American Association of Individual Investors' Sentiment Survey release this week showed a continued trend towards more bullishness by individual investors. Bullish sentiment rose 3.8 percentage points to 45.6% and this is up from a low 21.4% in October of last year.

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Investing In An Elevated Market

Two years ago to the day on January 20, 2018 I wrote a post, Will The Stock Market Ever Decline Again?, and it seems in January 2020, investors are faced with the same question. Written commentary today is mirroring commentary of two years ago as January's market has gotten off to a strong start just like in 2018. Historically, strong starts to a January are a positive predictor for market returns in the balance of the year. That was not the case in 2018 as that year was a down year for the S&P 500 Index.

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Small Business Doing Its Part To Sustain Economic Growth

In August 2018 the NFIB Small Business Optimism Index hit a high of 108.8. Since then the NFIB Index has declined to 102.7 as reported in the December NFIB Small Business Optimism report today. In January 2018 though, the NFIB Index level was 101.2 and today's reading shows an improving trend. Noted in the December report was the fact "an increased number of small business owners reported better business conditions and expect higher nominal sales in the next three months. While frequency of plans to raise compensation fell 2 points, it remains one of the highest readings in the survey’s 46-year history. Small businesses continued to hire and create new jobs with actual job creation matching November’s reading, the highest since May."

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Winter 2019 Investor Letter: A Recovery And New Decade

In the fourth quarter of 2019 the S&P 500 Index rose nearly 10% in contrast to 2018 where the Index was down 13.5%. What a difference a year can make. Our Winter 2019 Investor Letter looks at the Decade of 2000's versus the Decade of 2010's and certainly the most recently completed one was rewarding to investors. As the new year and decade unfold the market will grapple with headlines associated with Brexit, the ongoing trade and tariff situation, Central Banks around the world easing again and additional conflict in the Middle East. The market won't move higher in a straight line, but the market's bias over time is one where it does trend higher. Climbing a "Wall of Worry" may be the result in the coming year. Since the decade of the 1980's, only the decade of 2000's saw multiple calendar year declines. The 1980's, 1990's and 2010's each only saw one down year out of ten. So in those thirty years, the market was down in only three of the years.

More insight on our views are covered in the Investor Letter accessible at the below link.

• Winter 2019 Investor Letter

Shocks And Market Impact

From time to time investors are faced with unanticipated shocks to the market. With tensions in the Middle East, and specifically Iran, elevated again, the market will undoubtedly react to events over the course of the next few days, weeks and months. Investors should know though, the shock and damage to the equity market from these shocks historically are short-lived.

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Dow Dogs 2019 Return Unable To Keep Pace With Broader Market

First of all I want to wish everyone a Healthy and Prosperous New Year as a new decade unfolds. The  just completed decade certainly ended with a bang with the S&P 500 Index (SP500) up 31.49% and the Dow Jones Industrial Average Index (DJIA) up 25.34%. One strategy that significantly underperformed both the DJIA and the SP500 was the Dogs of the Dow investment strategy. Readers may recall from earlier posts the Dogs of the Dow strategy is one where investors select the ten stocks that have the highest dividend yield from the stocks in the Dow Jones Industrial Average Index after the close of business on the last trading day of the year. Once the ten stocks are determined, an investor invests an equal dollar amount in each of the ten stocks and holds that portfolio for the entire next year. The popularity of the strategy is its singular focus on dividend yield.

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