July 30, 2014

Implications of tight credit spreads



Chief Investment Strategist James Swanson adds to his tenets of investing for the long run, pointing out that the credit markets may provide valuable information about the direction of equity markets.

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July 18, 2014

Linking equities to the economy

Two more tenets cover the links between stocks and the US economy.
To equity investors, private sector growth matters more than headline GDP.
The composition of the S&P 500 is much different from that of the US economy.


In this second of a series describing my tenets for long-term investing, I’ll review the connections between the US economy and the stock market.
 

July 10, 2014

What will GDP do next?

Purchasing managers’ indices can be reliable indicators of future growth.
Manufacturing PMIs have led GDP growth rates by about three months.
Global PMIs have been telling us to expect accelerating growth ahead.


This is the first in a series describing my tenets for long-term investing — that is, the indicators I believe can stand the test of time. I like to think about the markets in terms of the business cycle, so let’s focus on how I make decisions about where we are in the cycle.

It’s particularly important to get the direction of the economy right. When I try to anticipate what GDP will do next, I find that the best indicator of an economy’s future growth is the purchasing managers’ index (PMI).