Mar 12, 2023
Jay Pestrichelli, CEO of ZEGA Financial, joins Derek Moore again to discuss markets going higher even when earnings decline post bear markets. Plus, they discuss Michael Kantro’s HOPE graph showing the order of slowing in the economy through the lens of Housing, New Orders, Profits, and Employment. Then they move on to the drivers of returns talking through PE multiples, margins, revenues, buybacks, and dividends. Speaking of dividends, are they going to be the next big thing if investors believe markets may trade flat for a while? Finally, Jay and Derek give some recommendations that may or may not be good.
Percentage of total stock returns dividends historically make up
Examining prior 1 year forward stock returns after bear market low is in vs. earnings declines
HOPE or Housing, Orders, Profits, Employment, and typical cycles from slowdown to expansion
How dividends plus premium (covered call) selling may augment returns in flat markets
Where market returns come from
How changing margins, PE multiples, share buybacks, and revenues determine returns
Examining where returns came from in other decades and where we stand now
Will dividends be the next hot investment area funds flow to?
Number of new highs in markets by year
Number of greater than >1% down days in the S&P 500 Index
How much the Fed Funds futures implied interest rate has changed by a wide amount
Being hedged vs a dividend strategy
Mentioned in this Episode:
US Debt Bomb and Growing Interest Rates effects on US Federal Deficit and Budget https://podcasts.apple.com/us/podcast/us-debt-bomb-interest-rates-brewing-auto-loan-problem/id1432836154?i=1000602839094
Underperformance of International Stocks https://podcasts.apple.com/us/podcast/underperformance-of-international-stocks-valuations/id1432836154?i=1000601650028
Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt
Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag
Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr
Contact Derek derek.moore@zegafinancial.com