Post-election prices of Saul’s & other sto

Most investors are familiar with this often used cliché: the stock market hates uncertainty. Uncertainty is the inability to forecast future events. As an individual investor, when situations of heightened uncertainty arise, my best defense is to conduct my own due diligence for all my investments and be well-informed as much as possible.

THE STOCK MARKET PRIOR TO THE NOVEMBER PRESIDENTIAL ELECTION

Prior to the 11/8/2016 Presidential election day, Wall Street was on edge with heightened uncertainty and anxiety, after the S&P 500 index finished lower on Friday, 11/4/2016, for the ninth-straight session - its longest stretch of declines since December 1980. [Actually, the S&P 500 index only fell by 3.07% over the nine-day period, versus falling 9.4% over 9 straight sessions 36 years ago in December 1980.] Senior index analyst Howard Silverblatt at S&P Dow Jones Indices stated that the slow downward momentum was due to uncertainty. Among many other wide opinions, this one stood out and caught my attention. On 11/5/2016, Mohamed El-Erian, chief economic advisor to Allianz, the corporate parent of PIMCO where he served as CEO and co-CIO (2007-2014), wrote the following in his article, “4 things to know about the longest stock market selloff since 1980:”
http://finance.yahoo.com/news/el-erian-4-things-to-know-abou…

“… here are four things that investors may wish to know:

  1. This is not the major stock market “correction” that quite a few professionals have been concerned about. As yet, there have been no signs of “capitulation” trades, nor have there been indications of particular positioning stress and instances of liquidity dislocations. Instead, it has been a remarkably orderly and gradual repricing of risk on account of higher political uncertainty for markets that had positioned itself early for a high probability Hillary Clinton victory next week.

  2. The rise in political uncertainty is but one of the many “unusual uncertainties” facing the markets (and the economy more generally). And these are not just political. They also relate to economics (including the puzzle of low productivity), financial developments (such as the impact of ultra-low and negative interest rates), and institutional factors (including increased political attacks on central banks in Europe, Japan and the United States).

  3. While not big, the recent equity selloff has added to the (correct) sense that it is very hard for investors to secure high returns just from exposure to general market indices. As demonstrated again this year, it is a challenging environment for diversified, index-based buy and hold strategies. Good individual name selection and timely tactical repositioning have been – and will remain – much more important drivers of total return.

  4. What happens next to markets will remain sensitive to political developments, including the outcome of Tuesday’s US election and next month’s Italian referendum. And this phenomenon is by no means limited to 2016. Political risk will remain in play next year with a series of important elections in Europe. And all this in an environment in which, due to prolonged central bank activism, markets have been decoupled from underlying economic and corporate fundamentals.”

PRESIDENTIAL ELECTION AND THEREAFTER

During the recent past 4 months, the stock market encountered 3 situations/events, among others, that created heightened uncertainty, i.e., a huge upset in the U.S. presidential election on 11/8/16; a “dark” presidential inaugural address on 1/20/17; and the president’s first address to the U.S. Congress and Nation with a “presidential” tone on 2/28/17.

So how did the stock market respond? In spite of these and other events, the stock market indices - DOW, S&P 500 and NASDAQ - continued upward with strong gains as shown in the following table.

							
	  DAY Of   DAY AFTER  % Change	   DAY OF     % Change	 DAY AFTER	% Change
	 ELECTION   ELECTION   since	INAUGURATION    since	PRES ADDRESS	 since
	 11/8/16     11/9/16  Election 	   1/20/17     Election     3/1/17	Election 
							
DOW	18,332.74  18,589.69	1.4%	 19,827.25	 8.2%	 21,115.55	 15.2%
S&P 500	 2,139.56   2,163.26	1.1%	  2,271.31	 6.2%	  2,395.96	 12.0%
NASDAQ	 5,105.68   5,163.26	1.1%	  5,555.33	 8.8%	  5,904.03	 15.6%

What about specific stocks? For comparison purposes, I included Saul’s recent stock portfolio and some of the stocks that I either hold or have on my watch list. Since the 11/8/2016 election day to 3/1/2017, a vast majority of the stocks listed below not only realized price gains, but outperformed the DOW, S&P 500 and NASDAQ. Only a very few realized price drops. Further analysis for each stock listed below might be necessary in order to determine whether or not price gain or loss was attributable primarily to actual performance of corporate governance, guidance, business operations and fundamentals.

							
	  DAY Of   DAY AFTER  % Change	   DAY OF     % Change	 DAY AFTER	% Change
	 ELECTION   ELECTION   since	INAUGURATION    since	PRES ADDRESS	 since
	 11/8/16     11/9/16  Election 	   1/20/17     Election     3/1/17	Election 
							
DOW	18,332.74  18,589.69	1.4%	 19,827.25	 8.2%	 21,115.55	 15.2%
S&P 500	 2,139.56   2,163.26	1.1%	  2,271.31	 6.2%	  2,395.96	 12.0%
NASDAQ	 5,105.68   5,163.26	1.1%	  5,555.33	 8.8%	  5,904.03	 15.6%
							
SHOP	    41.35      40.58   (1.9%)	     50.09	21.1%	     59.65	 44.3%
ANET	    86.07      85.40   (0.8%)	     89.80	 4.3%	    120.64	 39.5%
SBNY	   122.03     131.01	7.4%	    154.45	26.6%	    162.72	 33.3%
PAYC	    45.68      42.31.  (7.4%)	     49.19	 7.7%	     55.71	 22.0%
HDP	     8.35       8.62	3.2%	      9.00	 7.8%	     10.12	 21.2%
AMZN	   787.75     771.88   (2.0%)	    808.33	 2.6%	    853.08	  8.3%
SPLK	    59.78      59.99	0.4%	     53.78     (10.0%)	     63.70	  6.6%
TWLO	    31.41      31.81	1.3%	     28.38	(9.6%)	     32.32	  2.9%
UBNT	    52.72      52.71   (0.0%)	     58.55	11.1%	     49.59	 (5.9%)
LGIH	    32.26      31.49   (2.4%)	     29.34	(9.1%)	     29.44	 (8.7%)
							
URI	    75.87      88.86   17.1%	    111.19	46.6%	    133.36	 75.8%
MTW	     4.08       4.66   14.2%	      6.05	48.3%	      6.28	 53.9%
QRVO	    50.96      51.78	1.6%	     61.02	19.7%	     67.85	 33.1%
NTAP	    32.49      33.19	2.2%	     36.37	11.9%	     43.01	 32.4%
CF	    24.34      26.48	8.8%	     34.20	40.5%	     32.15	 32.1%
DVMT	    49.68      49.37   (0.6%)	     59.26	19.3%	     64.08	 29.0%
AMED	    40.10      39.55   (1.4%)	     46.35	15.6%	     51.20	 27.7%
SWKS        77.33      77.66    0.4%         88.67      14.7%        96.74       25.1%
AAON	    28.35      29.80	5.1%	     32.70	15.3%	     35.30	 24.5%
LAD	    77.71      79.76	2.6%	     99.41	27.9%	     95.92	 23.4%
HXL	    46.27      47.73	3.2%	     51.02	10.3%	     55.63	 20.2%
BRK-B	   147.79     151.28	2.4%	    160.21	 8.4%	    177.28	 20.0%
DIS	    94.38      94.64	0.3%	    107.66	14.1%	    111.04	 17.7%
ANIP	    50.82      55.27	8.8%	     56.24	10.7%	     59.80	 17.7%
DHI	    27.77      27.54   (0.8%)	     28.31	 1.9%	     32.60	 17.4%
LHCG	    42.45      41.95   (1.2%)	     46.24	 8.9%	     48.52	 14.3%
NEU	   396.71     400.69	1.0%	    430.51	 8.5%	    441.18	 11.2%
TJX	    73.23      73.94	1.0%	     75.49	 3.1%	     78.45	  7.1%
VMC	   119.73     131.55	9.9%	    129.87	 8.5%	    124.38	  3.9%
QCOM	    68.27      67.88   (0.6%)	     62.88	(7.9%)	     57.01	(16.5%)

[Note: Company names are provided below at the end of this post]

Graphically, here’s a chart showing Saul’s top gainers - SHOP, ANET, SBNY, PAYC and HDP - substantially outperforming the S&P 500 for the 11/8/2016 - 3/1/2017 time period.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?..

Here’s the chart showing the top 5 gainers from my list - URI, MTW, QRVO, NTAP and CF - substantially outperforming the S&P 500 for the 11/8/2016 - 3/1/2017 period.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?..

My due diligence on corporate performance helps me narrow down my portfolio choices to a manageable level. Dealing with uncertainty demands vigilance, keeping myself as well-informed as possible. For example, I hold a basket of investments in health-related sectors where there currently exist heightened uncertainty about the fate of the ACA and any changes to Medicare. So far, there has been a lot of noise with empty talk that I’ve quickly filtered out; right now, I’m in “where’s the beef?” mode.

As always, conduct your own due diligence and decision-making.

Regards,
Ray


SHOP  Shopify	
ANET  Arista Networks	
SBNY  Signature Bank	
PAYC  Paycom Software	
HDP   Hortonworks	
AMZN  Amazon	
SPLK  Splunk	
TWLO  Twilio	
UBNT  Ubiquiti Networks	
LGIH  LGI Homes	
	
URI   United Rentals	
MTW   Manitowoc	
QRVO  Qorvo	
NTAP  NetApp	
CF    CF Industries	
DVMT  Dell Technologies
SWKS  Skyworks Solutions	
AMED  Amedisys	
AAON  AAON, Inc.	
LAD   Lithia Motors	
HXL   Hexcel	
BRK-B Berkshire Hathaway	
DIS   The Walt Disney Company	
ANIP  ANI Pharmaceuticals	
DHI   D.R. Horton	
LHCG  LHC Group	
NEU   NewMarket	
TJX   The TJX Companies	
VMC   Vulcan Materials	
QCOM  QualComm

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Whew! That’s gonna take more than one time through to digest. Thanks for a very comprehensive analysis and write up.

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