Navigating the Changing Investment Landscape in 2018 Presentation to AAII San Antonio, TX December 5, 2017

Transcription

1 Navigating the Changing Investment Landscape in 2018 Presentation to AAII San Antonio, TX December 5, 2017 John Derrick, CFA President The Derrick Letter, LLC

2 Investment Survey Probability that the S&P 500 will be up next year? What will the S&P 500 return over the next 5-10 years? What will long-term Treasuries return over the next 5-10 years? What will inflation average over the next 5-10 years? 2

3 2017 YTD Stock Market Performance Stock Market - Year-to-Date % Change Through Nov 30th NASDAQ COMPOSITE INDEX DOW JONES INDUSTRIAL AVERAGE S&P 500 INDEX S&P MIDCAP 400 INDEX RUSSELL 2000 INDEX S&P SMALLCAP 600 INDEX Source: WSJ.com 3

4 2017 YTD S&P 500 Sector Performance S&P 500 Sectors - Year-to-Date % Change Through Nov 30th INFORMATION TECHNOLOGY HEALTH CARE MATERIALS CONSUMER DISCRETIONARY FINANCIALS INDUSTRIALS UTILITIES CONSUMER STAPLES REAL ESTATE ENERGY TELECOM SERVICES Source: WSJ.com 4

5 2017 Bond Market Performance Bond Market - Year-to-Date % Change Through Nov 30th ISHARES 20+ YEAR TREASURY BOND ETF ISHARES J.P. MORGAN USD EMERGING MARKETS BOND ETF ISHARES NATIONAL MUNI BOND ETF ISHARES IBOXX $ HIGH YIELD CORPORATE BOND ETF VANGUARD TOTAL BOND MARKET ETF ISHARES TIPS BOND ETF Source: WSJ.com 5

6 It s Been a Great Stock Market Run 6

7 MSCI World 2017 Factor Performance Source: State Street Global Advisors 7

8 Low Volatility has Defined the Market in

9 Why has Volatility been so Low? Source: Bloomberg 9

10 Why has Volatility been so Low? 10

11 Bond Yield Distortion Source: Blackrock, Bloomberg 11

12 U. S. Financial Conditions Remain Loose Even as the Fed Tightens Source: St. Louis Fed FRED Database 12

13 Synchronized Global Growth 13

14 Synchronized Global Growth Source: Deutsche Bank Securities 14

15 Source: Informa Financial Intelligence, CNBC 15

16 Credit Cycle Showing its Age Source: Informa Financial Intelligence, CNBC 16

17 Risk in High Yield? Source: Société Générale, MarketWatch.com 17

18 Long Term Equity Cycle Through August

19 Risk Taking at Record Levels for Institutional Investors Source: BofAML, Yahoo! Finance 19

20 Retail Investors Feel Really Good about

21 Current Market Valuations are Not Supportive of Additional Gains if History is an Accurate Guide 21

22 Multiple Expansion Can t be Counted on in 2018 Source: Credit Suisse, WSJ s Daily Shot 22

23 Valuation For Major Assets Classes are Expensive Across the Board Source: Goldman Sachs, Bloomberg 23

24 Equity Market Risks Internal Market Divergences Emerging 24

25 FANG+ Futures Source: 25

26 FANG+ Futures Source: 26

27 Earnings Outlook Source: Bloomberg 27

28 Earnings Reaction Source: FactSet 28

29 Earnings Reaction Source: State Street Global Advisors 29

30 The Fed is a Risk to this Market 30

31 Long Term Yield Cycle Source: Bloomberg 31

32 Long Term Equity Returns Source: Martin Capital Advisors 32

33 10-Year Forecasted Real Returns and Volatility Source: Research Affiliates, Marketwatch.com 33

34 GMO 7-Year Forecasted Real Returns Source: 34

35 Where are We in the Long Term Equity Cycle? 35

36 2018 Forecast in a Nutshell 36

37 How do You Create Wealth over the Long-Term? Why You Need to Sign Up Today! Get Timely, Actionable and Differentiated Information First Month is Free Month to Month Commitment If its not adding value just cancel Volatility will not remain low forever Two Subscription Levels Silver $20 per Month, General Market Commentary Gold $60 per Month, General Market and Specific Stock Ideas 37

38 Disclaimer This presentation contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. Our recommendations and analysis are based on publicly available information, such as SEC filings, corporate press releases and presentations, current events, and what we ve learned as financial journalists. It may contain errors and you shouldn t make any investment decision based solely on what you read here. It s your money and your responsibility. No Investment Recommendations or Professional Advice. The Derrick Letter, LLC (TDL) is not a registered investment advisor. We cannot and do not provide personalized financial or investment advice for any individual. We do not know you or your situation, and therefore cannot or make any recommendation about which strategies, services, or approaches may be suitable for you. We operate under freedom of speech. We publish written content in articles, newsletters, reports, s, tools, alerts, social media etc. for educational and entertainment purposes only. This content may contain some factual information and data, as well as subjective, opinion-based analysis. The presentation is not intended to provide tax, legal, insurance or investment advice, and nothing on the site should be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security by TDL or any third party. You alone are solely responsible for determining whether any investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal and financial situation. You should consult an attorney or tax professional regarding your specific legal or tax situation. Stocks mentioned in this report that I currently have a LONG position in: MHK, PHM, WMT, GILD, DLR, ORCL, GOOGL, EMR 38