Q&A: SSR Posture, the Election and Interest Rates

Written by Andy Pratt on .

We often receive feedback and questions about current events in the stock market. Recently, popular topics are our SSR strategy positioning, the election and the looming December interest rate hike decision. Below is a Q&A addressing each topic.

Q: Small-cap stocks slightly outperformed large-caps in September and have shown some momentum recently. Why are you still weighted towards large-caps?

On the Market with Jack & Lowell

Written by Jack Burney & Lowell Pratt Jr., CFA on .

Burney Company Chairman and Founder Jack Burney and President Lowell Pratt Jr., CFA both have extensive experience investing in equities, the former founding the company over 40 years ago and the latter with 30 years of experience. From time-to-time, we share their conversations on the stock market and investing. Below are excerpts from a recent conversation regarding Value vs. Growth stocks:

August Market Commentary

Written by Alex Shen, CFA and Andy Pratt on .

The stock market enjoyed a remarkably quiet month of August as the S&P 500 finished flat and did not see a single day in which it moved more than 1%. In fact, on July 12th the S&P 500 was down 1.5% and has not seen a greater than 1% move since then. What a contrast to last August! This relative calm is reflected in VIX, the market fear gauge, though VIX only measures expected volatility 30 days out.

VIX August Update

Longer term measures of volatility are higher than normal suggesting possible future volatility. In an election year, especially an election year with two unpopular major party nominees, this perhaps should be expected, though there are other explanations as well.

REITS are Now the 11th Sector in the S&P 500

Written by Alex Shen, CFA and Andy Pratt on .

Freshly carved out of the Financial sector, REITs are the newest Sector in the S&P 500. Sectors – like Financials, Information Technology and Consumer Staples – are the broadest classification of stocks with industry groups and sub-industries further demarcation points. The weighting of financial stocks in the S&P 500 fell by a fifth and REITs now comprise 3.1% of the index giving them a higher weight than materials, telecoms and utilities.

REITs were previously grouped with financials because they shared some qualities with financial stocks. Both Financials and REITs, for instance, have been more volatile than the S&P 500 as a whole with standard deviation of 7% compared to the index’s standard deviation of 4%. But while mortgage REITs will continue to be classified as financial companies, the pairing with equity REITs made less sense as the correlation between eREITs and financial companies is less than the correlation between financials and the rest of the S&P 500.