Interesting Fact:
Over the last decade, roughly 150 active large value funds have closed.
Q1 2024: The Momentum Continues
The S&P 500 closed at record highs 22 times during Q1 2024—the highest figure since Q1 1995 and a stark contrast to 2023, when it had no record closes at all (the first time since Q1 2012) despite advancing by 26%. From 1950 through 2023, the S&P 500 has gained 8% or more 16 times in Q1. In 15 of those instances, it added to its gains throughout the year, for an average advance of 9.7% over the following 3 quarters. (In 1987, the one exception, the S&P 500 started the year with a blistering 20% advance for Q1, but on October 19, Black Monday, it declined by over 20% in a single day—yet, remarkably, still finished positive for the year.)
Although a strong start to the year is generally a bullish signal, investors should curb their enthusiasm for spectacular gains for the rest of 2024: in 10 of those 15 years, the Q1 gains eclipsed those of the remaining 3 quarters.
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Sector Performance
Notably, 10 of the 11 S&P 500 sectors were positive for the quarter (with the sole decliner, real estate, losing 1.1%). Communication services shares were the best performer for Q1 2023 (up 15.8%), followed by energy shares, which declined in 2023 but advanced by 13.7 % to start the year; the third-best performer were technology shares, which advanced by 12.7%.
How Can I Invest in a Market Selling at All-time Highs?
As value investors with a contrarian streak, we like to invest when no one else wants to buy, so investing while the market is at all-time highs naturally feels uncomfortable to us. Historically, however, not investing simply because the market is at (or near) an all-time high has been a mistake. Interestingly, since 1950 the S&P 500 has closed at an all-time high 6.6% of the time (making today’s situation less rare than it might seem). In addition, as the following chart shows, historically there has not been a significant difference (in terms of future returns) between investing on a random day versus investing on days when the S&P 500 was at all-time high. Most important, however, we invest in stocks—not markets. And although the major indices are arguably overextended at present, we still see stocks that we believe are intrinsically undervalued.
Speaking of investing at all-time highs, one way an investor can protect themselves while investing in an overheated market is by dollar-cost averaging. The below article explains further:
This Investing Strategy Can Help Calm Your Anxiety About the Stock Market
https://www.barrons.com/articles/stock-market-investing-dollar-cost-averaging-60497c1b
In January 2022, financial advisor Andrew Fincher was working with a couple who wanted to invest the six-figure proceeds they made from selling one of their parents’ houses. They were concerned that the market could plunge after they bought in.
Fincher of VLP Financial Advisors in Vienna, Va., recommended that they dollar-cost average. Instead of investing all the money at once, he set up a plan to invest portions of their real estate proceeds at regular intervals over the next six months.
It paid off. While the S&P 500 started off 2022 hitting a record high, it soon plummeted as the Federal Reserve hiked interest rates to tame inflation. The couple didn’t feel the same sting they would have had they invested all at once.
Notable Reads:
How High-Yield CDs Turn into 0.05% CDs While You’re Not Looking
https://www.wsj.com/personal-finance/high-yield-certificate-deposit-lower-rates-f926545d
John Furlong signed up for a certificate of deposit last year that paid 3.85%. When he checked his account in February, he was surprised to find the bank was only paying him 0.05%.
The 62-year-old construction manager thought there was a mistake. Then an employee at his branch in Henderson, Nev., told him that his $50,000 CD had matured and automatically rolled into a new one that was paying a lower rate. The only way to get out of the low-rate CD was to pay an early withdrawal fee
“It’s fool’s gold,” he said. His money is earning $2.15 a month until the new CD matures in October, instead of the $160 he had been collecting.
Bitcoin Is Soaring This Year. Goldman’s Crypto Skeptic Isn’t Biting
https://www.ft.com/content/670bf843-bb42-4743-bd68-d85ca36ab584
We respect how she is sticking to her convictions and fully agree with her premise that we would stay away from crypto as there is no way to value it. It is our opinion that, at some point in time, a great many people will lose a substantial amount of money speculating in crypto currencies.
The Big Problem for Marijuana Companies? What to Do With All That Cash
https://www.wsj.com/business/hospitality/california-restaurants-cut-jobs-as-fast-food-wages-set-to-rise-eb5ddaaa
Clayton Taylor recently received an urgent call: A marijuana distributor needed him to pick up $400,000 and move it across California.
Taylor isn’t a drug mule—he runs a company that provides security services to legal cannabis companies. A client’s bank account had been frozen, and the next day was payday. Could Taylor transport cash the company had stowed away so it could pay its roughly 100 staffers?
This story is amazing. The current situation in untenable and needs to be resolved through legislation.
Notable Listens:
Squawk Pod: Point72’s Steve Cohen: owning the Mets & betting on AI
Interview with Hedge Fund Legend & New York Mets owner Steve Cohen (discusses the business of sports, AI, equity markets and more).
Squawk Pod: Barry Diller on Disney’s win & social media’s toll on teens
Interview with Expedia & IAC Chairman Barry Diller (Discusses the Disney proxy fight, Paramount Global, Truth Social, AI and a four-day work week).
Important Disclosures. The information herein is provided by Boyar’s Intrinsic Value Research LLC (“Boyar Research”) and: (a) is for general, informational purposes only; (b) is not tailored to the specific investment needs of any specific person or entity; and (c) should not be construed as investment advice. Boyar Research does not offer investment advisory services and is not an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”) or any other regulatory body. Any opinions expressed herein represent current opinions of Boyar Research only, and no representation is made with respect to the accuracy, completeness or timeliness of the information herein. Boyar Research assumes no obligation to update or revise such information. In addition, certain information herein has been provided by and/or is based on third party sources, and, although Boyar Research believes this information to be reliable, Boyar Research has not independently verified such information and is not responsible for third-party errors. You should not assume that any investment discussed herein will be profitable or that any investment decisions in the future will be profitable. Investing in securities involves risk, including the possible loss of principal.
Important Information: Performance Information. Past performance does not guarantee future results. The reports in this sample are for informational purposes only and the performance of the stocks selected is not indicative of the performance of all the stocks profiled in Boyar Research. The performance of the stocks selected and the performance of the stocks in Boyar Research may in fact diverge materially. Additional information regarding the performance of other companies featured in Boyar Research is available from Boyar Research upon request. This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by affiliates of Boyar Research. Any information that may be considered advice concerning a federal tax issue is not intended to be used, and cannot be used, for the purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein. Clients of an affiliate of Boyar Research and employees of Boyar Research own shares in Disney & IAC.