Ryanair's reputation has taken a battering lately. The UK's Civil Aviation Authority accuses it of "persistently misleading passengers" regarding recent flight cancellations, while disgruntled staff are highlighting questionable working practices. It might come as a surprise, then, that the controversial company is deemed sufficiently "inspiring" to be a holding in a "biblically responsible" exchange-traded fund (ETF). In March, Stocktake reported on the launch of the Inspire Global Hope ETF. The US fund tracks 400 of the world's "most inspiring, biblically aligned large companies", and condemns companies "engaged in activities that are not consistent with biblical truth". There's no place for companies supporting "LGBT activism", "anti-family entertainment", pornography, alcohol or gambling, to name but a few areas of contention. Ryanair might not seem especially biblical, what with its history of hawking in-flight scratch cards, alcohol and calendars featuring scantily clad female staff. Inspire, which invests in "companies that are blessings to their communities, customers, workforce and the world", appears to think otherwise.
Quarterly gains on the cards for stocks
Technically overbought conditions mean near-term upside may be limited, but any dip is likely to be brief – the odds of another decent quarter are strong. The fact markets stubbornly refuse to dip, instead hitting high after high, is often deemed unsustainable by sceptics. In fact, it points to further gains. Since 1950, notes LPL Research, there have been 12 instances where the S&P 500 was up over 10 per cent going into the fourth quarter after making a new high in September. Stocks rose 11 times, recording average fourth-quarter gains of almost 6 per cent.
Furthermore, the S&P 500 has risen in every month from May through September; since 1928, those instances have been followed by fourth-quarter gains every time. Fat Pitch blogger Urban Carmel notes a sentiment survey showing marked bearishness among investment managers. This has happened 16 times since the survey began in 2006, notes Carmel, with stocks gaining over the following six weeks on every single occasion. Carmel notes economic data is strengthening, a point also made by the Leuthold Group's Doug Ramsey. The market is "in gear", with strength in cyclical sectors evidence of healthy risk appetites and an improving economy. In short, the bulls remain in control. Fourth-quarter gains look increasingly probable.
The most boring September in history
Markets have shrugged off talk of nuclear war to register the most boring September in history. Just before the month ended, LPL Research noted the S&P 500’s average daily range was just 0.39 per cent – well below all previous Septembers. The ongoing lack of volatility continues to break all records, although LPL cautions investors may need to buckle up in October. Historically, almost 30 per cent of all October days have closed up or down by at least 1 per cent, more than any other month. Still, September didn’t exactly stick to the historical script. Historically the worst month for stocks, the S&P 500 hit eight all-time highs in September, suggesting the market calm may persist for some time yet.
A comeback for active funds?
Active fund managers are back! Well, they’re not really – that exclamation mark was unwarranted – although things have improved for fund managers recently. More than half of global managers outperformed benchmarks between mid-2016 and mid-2017, according to the latest S&P Dow Jones Indices scorecard. In the US, 58 per cent beat the S&P 500, compared to 33 per cent in 2016.
A minority outperformed in Europe, although there was a sharp increase in outperformers. The UK numbers were especially impressive – eight out of 10 funds outperformed, prompting Money Observer to say active funds had "proven their worth since last June". That's a gross exaggeration. Luck and randomness mean the figures vary wildly from year to year – a whopping 87 per cent of UK funds underperformed in 2016 – but the key point remains that few funds do the business over the long term. In the UK, 70 per cent underperformed over the last decade.
The figures are even worse for other regions, with 85 per cent of global funds underperforming over the last 15 years. Consequently, talk of a fund manager comeback remains premature, to say the least.
Apple tops Exxon in all-time profits table
It’s official – Apple has now generated more wealth for investors than any other company in history. In February, I noted new research from Prof
Hendrik Bessembinder
showing
Exxon Mobil
occupied the top spot, generating more wealth for investors – $939.8 billion – than any other company. Apple was well behind in second place – no surprise, as Exxon has been a public company for more than twice as long. However, as the
New York Times
noted last week, Exxon shares have dipped in 2017, while Apple is up 33 per cent, meaning it has now generated a cool $1 trillion or so for investors over its relatively short history.
