Ticker Sense

ETFs’ $30.8 billion inflow of new capital in January was the most positive month since December 2008.  Total assets rose 8.4% to $1.2 trillion.  Twenty-three new funds were issued, bringing the total number of active ETFs to 1,376.

US equity, bond and EM equity funds accounted for the bulk of the inflows, while currency funds were the only group to have a net outflow in January.  The sub-group with the biggest net inflow was US large cap equities while the biggest loser was US consumer staples.

The SPDR S&P 500 ETF (SPY) continues its reign as the largest fund by total assets, at $99.1B accounting for 8.6% of the total market.  The top ten largest funds account for 36.2% of all ETF assets. 

SPY is also the most active ETF by volume, followed by XLF (US - Financial Sector), EEM (Emerging Markets) and IWM (US - Small Caps).

Click below to watch Laszlo Birinyi's interview on Bloomberg TV this morning.

Blogger Sentiment Poll Participants:               

24/7 Wall St (+) The Aleph Blog (+) Biiwii (-) Bruce Krasting  BullBear Trading (N) Carl Futia (+) Dash of Insight (+) Dividend Growth Investor (+) Elliot Wave Lives On (+) Expected Returns (-) Fallond Stock Picks (+) Global Economic Intersection (N) GEI – Investing Blog (-) Humble Student of the Markets (+) In the Money  Learning Curve (-) MaoXian  Night Owl Trader (+) The Mess That Greenspan Made  Oil Trader’s Blog  Peridot Capitalist (-) Prometheus Market Insight  Quant Investor  Shanky’s Tech Blog (-) Short Takes (-) Smart Money Tracker (-) StockAdvisors.com  Traders-Talk  ValuePlays  VIX and More (N) Wall St. Cheat Sheet  Wall Street Folly  Wishing Wealth (+) Zentrader (+)

The S&P 500 is up 22.5% from its bottom on October 3^rd.  Analyzing our Market and Sector 10% Filter (from our Pre-Market Report this morning) we find that the average rally since 1945 is a 37.1% gain that lasts 327 days.   If the current rally were to follows the average, the market will rise an additional 14.5% over 200 days.  This would equate to an S&P 500 peak of 1,543 on August 25^th.

Blogger Sentiment Poll Participants:                    

24/7 Wall St (+) The Aleph Blog (+) Biiwii (-) Bruce Krasting  BullBear Trading  Carl Futia (+) Dash of Insight (+) Dividend Growth Investor (+) Elliot Wave Lives On (+) Expected Returns (-) Fallond Stock Picks (+) Global Economic Intersection (N) GEI – Investing Blog (-) Humble Student of the Markets (N) In the Money  Learning Curve (-) MaoXian  Night Owl Trader (+) The Mess That Greenspan Made  Oil Trader’s Blog  Peridot Capitalist (-) Prometheus Market Insight  Quant Investor  Shanky’s Tech Blog (-) Short Takes  Smart Money Tracker (-) StockAdvisors.com  Traders-Talk (-) ValuePlays  VIX and More (N) Wall St. Cheat Sheet  Wall Street Folly  Wishing Wealth (+) Zentrader (+)

With the first month of the year in the books, we thought we would examine the best strategy so far in 2012 as a potential guide for the rest of the year.  To help us in this regard, we present at right our S&P 500 performance matrix. 

The matrix uses nine criteria (note that each criterion is independent of the other).  Stocks are sorted by each criteria (P/E, 2011 performance, yield, etc.), divided into ten groups of fifty, and then the performance of each group is calculated.

In January the worst strategy was to own the 50 stocks with the highest dividend yield at the start of 2012.  That group of fifty, on average, lost 1.03%.  Perhaps not so coincidentally, that was the best strategy in 2011.¹  The best performing strategy in January was to buy the stocks that were the worst performers last year.

¹"What Worked in 2011?".Birinyi Associates, Inc.12-S-02.1/3/12

Blogger Sentiment Poll Participants:                   

24/7 Wall St (N) The Aleph Blog (+) Biiwii (-) Bruce Krasting  BullBear Trading  Carl Futia (+) Dash of Insight (+) Dividend Growth Investor (+) Elliot Wave Lives On (+) Expected Returns (+) Fallond Stock Picks (+) Global Economic Intersection (N) GEI – Investing Blog (N) Humble Student of the Markets (N) In the Money  Learning Curve (-) MaoXian  Night Owl Trader (+) The Mess That Greenspan Made  Oil Trader’s Blog  Peridot Capitalist (-) Prometheus Market Insight  Quant Investor (N) Shanky’s Tech Blog (-) Short Takes  Smart Money Tracker (N) StockAdvisors.com  Traders-Talk (-) ValuePlays  VIX and More (N) Wall St. Cheat Sheet  Wall Street Folly  Wishing Wealth (+) Zentrader (+)

Entering 2012 we read much about how 2012 would be the year of the large / mega cap stocks, how they are at the lowest valuation in many years and in many instances they pay significant dividends.  While many mega caps have performed well this year, the equal weighted S&P (an index where every stock has the same weight regardless of size) is ahead of the weighted S&P.  We would also note that the 50 largest stocks in the S&P 500 at the start of the year are up 4.1% while the fifty smallest stocks are up more than double that: 9.7%.

To us this suggests that picking stocks matters more than grouping stocks into artificial segments, such as mega cap or low P/E or high P/E.

We have just published our February newsletter and are happy to report that all three portfolios are up on the year with the Growth portfolio up over 7%.  We are often asked how we do it.  The answer is simple: stock picking.  While the focus today is on ETFs, sectors and macro opinions we prefer the "model T" approach, which is old fashion stock picking.  And to those that argue that stock picking is harder today than at any point in the past, because of the increase in correlation among assets, we would point out that despite the S&P 500 still being under its April 29, 2011 high there are 192 stocks in the index that are higher now than they were in April 2011.  For those that know where to look the opportunities are there.

Apple reported a record $13.1 billion in net income in their first quarter earnings report.    That gives AAPL the 2nd most profitable quarter of any S&P 500 member since 2000.  Only Exxon Mobil (XOM) has earned more (in their 3rd quarter 2008 report of $13.4 billion).   Prior to Apple's report last night, XOM had been the only S&P 500 member to earn over $10 billion in a single quarter.