For those runners out there, the cold winter months cause us to run indoors. There you are on a treadmill watching TV, reading a book or just getting into your groove on the treadmill because it’s too cold to run outside. What you’re doing is actually running in place. Well similar to the indoor runner the markets have been running in place. As of the end of April the Dow Jones Industrial Average has gone nowhere, up .102%, the 30 year treasury yield has gone from 2.742% to 2.79%, virtually unchanged and first quarter GDP came in at .2%, essentially running in place.
However, as the weather gets nicer, we grab our shorts, get outside, breathe the fresh air and interact with nature as we run. Although the markets have been flat, there have been areas that have done well. International, EAFE Index is up over 9% reversing last year’s underperformance and highlighting the importance of diversification. According to Thomas J. Lee of FundStrat, 70% of companies have beaten the 1st quarter earnings estimate and these results look like the best in 10 quarters. He feels that Wall Street analyst’s earnings estimates are too low and will have to be revised up later this year. In addition, we are seeing opportunities in other areas like water. The drought in parts of California and the other parts of the world have caught our attention. HighTower has done some research on how the S&P Global Water Index has done in periods of droughts. In fact, over the last 10 years our findings have shown that the S&P Global Water Index has outperformed the MSCI World Small Cap Index by 85%.
It’s springtime, so let’s get off the treadmill, grab a water and go outside and run. As the late, great comedian Robin Williams said “Spring is nature’s way of saying ‘Let’s Party.’”