Kind of uncharted territory as we head through what some analysts are calling "the greatest bull market ever". I think that might be going a bit far, at least in the MFI world.
I wrote back in mid-August that my MFI Index was nearing correction territory. It was down 7.3% from the end of June 2017. In 2015 my MFI Index was down almost 9%. So if it has been the greatest bull market of all time, it has left a pretty good swath of value stocks behind,
So it may be uncharted in how long can it last? But For value stocks, we have some catching up to do. I am hopeful that that catching up is by value stocks going up, rather than growth stocks going down.
I think value stocks are catching up, although it has been such a rocket-fuel first two weeks it is hard to tell. But my MFI Index is up 5.3% through 8 trading days this year. I note it was only up 4.7% ALL of 2017. And the M&A I predicted this year? I see where PBI has been approached by Carlyle Group and popped 13% yesterday.
I see some people taking money off the table as the market has gone too far and too fast. But I am not so sure that is the case. Anyone who heard Warren Buffett the other day needs to have a good think about what he said.
- market is not overvalued as long as interest rates stay low and
- The impact of lowered corporate tax rates is huge.
So definitely watch the 10 year yield. But I doubt Powell will be much more hawkish than the dovish Yellen.
Here is my MFI Formula tranche I started at start of year:
|1/2/2018||Start||Current||Dividend||Pct Gain||R3K Gain|
So definitely trending with the 5.3% for MFI Index.
You can tell there is some concern about interest rates and rate hikes. Look at some of my bond-like investments the first 2 weeks:
|Dividend Stocks||Current||2018 Change||12/30/17 Price||Yield|
Even my dividend index, if you pull out the equities and MLPs is down 1.7%:
So early returns tell you that things that are not inflation sensitive will struggle.
I continue to sit on my hands, but will be making some changes at start of February. One area I am thinking about adding exposure is copper. Read a great report about how copper supplies are not keeping up with demand. But not sure... pretty happy with where my portfolio sits right now, all-in-all.