Happy Friday! There are more good news articles, commentaries, and analyst reports on the Web every week than anyone could read in a month. Here are eight fascinating ones I read this week.
Value investing is back in fashion, writes the Financial Times:
As the broader US equities market nears an all-time high, value has come back into fashion. The value side of the mutual fund world boasts the best performing funds of last year and is now ahead of its growth focused rivals for the first time in five years, according to Lipper, a research group.
In part that reflects the impact of one stock, Apple, which accounts for more than 5 per cent of the S&P growth index and has tumbled by almost two-fifths from its September high. Technology also ranks as the worst-performing industry group on the S&P 500 this year, up just 3.7 per cent.
A fundamental shift may also be under way though, as the wider market rally encourages investors to change strategy.
Daniel Gross writes on the health and sustainability of American's latest spending spree:
Retail sales have bounced back smartly since their spring 2009 lows. Every month, in effect, they set a new record. Sales of big-ticket items like cars and homes are up sharply as well. But consumers are shopping till they drop without dropping their plastic. The level of revolving debt -- i.e., credit cards -- was about $851 billion in January 2013. That's below the outstanding total in January 2006. The upshot is that American consumers are supporting a significantly higher level of retail spending with a much lower level of credit card debt. And to the extent they are financing purchases with debt, they are doing a much, much better job staying current on their payments.
Mind the gap
This chart, from the Economic Policy Institute, shows the gap between productivity of workers and those workers' average incomes:
Buy and hold
Josh Brown shares some context on the stock rally:
Today marks four years since that amazing bottom -- according to Bespoke Investment Group we're at 1,460 days, making this current bull market the eighth longest of all time! Further, in terms of the strength of the rally: "Since the closing low on 3/9/09, the S&P 500 has rallied 129.3%, which ranks sixth all time. If the S&P 500 can manage to rally another 17 points, the current bull will move up the ladder to fifth strongest all time." Wilshire Associates estimates that $11 trillion in investor wealth has been regained as a result of the rally's run.
To which I say Happy Fourth Birthday to the Impossible Rally -- the most hated, doubted, fretted over, denied and despised bull market we may ever see as long as we live and trade. The amount I've learned -- about both stocks and myself -- just from trading and investing in this trend has been absolutely staggering, the kind of education that you truly cannot put a price on.
Instead, Gruber says, "the single biggest problem that Apple faces, and almost nobody is talking about," is the threat of Apple losing its really talented employees.
He says some people that he knows have already left, but he also cautions that some people have come back. He's also careful to note that not a lot of people have left.
"The problem isn't that Apple is bleeding talent, the problem is that they could," says Gruber. "It would be devastating to the company."
Stocks are at an all-time high, but small businesses aren't cheering, as this chart from Calculated Risk shows:
The history of Lefkofsky and Mason highlights the need for a new CEO who can stand up to his chairman. "I was talking with Andrew about his regrets," says Sennett, recalling a rare occasion where the rapid-fire Mason paused before speaking his mind. "He told me that he should have questioned the accounting metrics the company was using. But he relied on Lefkofsky to handle the finances. After the SEC began investigating this, I think he realized he should not have passed the buck."
Jack Lew, the new secretary of the Treasury, says we have a resilient economy. Watch the video here.
Enjoy your weekend.