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Fri12152017

Last updateSat, 29 Jul 2017 12am

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US Small-Caps Double Dow–a positive sign

Small Cap stock index – Russell 2000 Index has advanced 32% in 2013, whereas Dow Jones Industrial Average has grown only 19%.  This is probably the widest spread between the indices since 2003. 3 of the last four times small-caps outperformed by this much, the economy grew faster the next year and stocks stayed in a bull market for another year or more, based on data from the past 34 years.

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Thai Government Pension Fund buying Thailand Stocks

Thailand’s Government Pension Fund with $19 billion of assets is buying Thai’s stock as Thailand’s SET Index fell for 10 days, the longest losing streak since 1998.  The index has declined more than 20% from this year’s high into bear market.  SET is valued at 11.4X estimated for the next 12 months, the lowest level since July 2012.  Thailand is Southeast Asia’s second-biggest economy.

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The Great Rotation–2nd Wave

The “Great Rotation” – the shift into higher-return equities out of low-yielding bonds, is one of the top investment themes of 2013.  The first wave is driven mainly by US private pension funds and retail investors.  The second wave – will be driven by the non-US pension funds such as the Japan and Norway.

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The New Correlations Among Assets

There has been a barrage of recent evidence that markets may be entering a new and more complicated era, where large asset classes no longer move predictably in lock-step depending on the prevailing mood of optimism or pessimism over the global economy – i.e. we may be entering a period where evaluating the fundamentals of particular commodities or countries or individual stocks might be more effective – e.g. the US equity market over the past month, where correlations between stocks collapsed.

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The Great Rotation Story–This Time is Different!

When S&P 500 broke 1,500 on 2013-01-25, the ‘bull’ was attributed to the “Great Rotation” play – people selling bonds and buying equities…it was then found that there wasn’t any “Great Rotation”, monies are still pumping into bonds as well as equities.  However, after the recent sell-down started 2013-05-22 ended 2013-06-25, the “Great Rotation” from bonds to stocks is ‘in’ again.  This time is different - it could be real and the game play might have already started.

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