Crestmont Research Year-End Updates Part I

The initial series of year-end updates to the Crestmont Research website is now available at The updates are listed below in this newsletter. Your comments and suggestions are welcomed ([email protected]) and often influence future updates and additions.

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The next set of updates should be available on January 17th, and a final set of updates is expected on or before February 4th. If you received this notification directly from Crestmont Research, you will be promptly notified of future new additions and updates. If this notification was forwarded to you, please visit the upper-right corner of the home page to sign-up for this complimentary service.

Today's updates are listed below. The most significant points are:

(1) 2019: Despite relatively elevated valuations, the stock market ended the year at record highs. Momentum is a more powerful force than valuation in the short-run. Graham's weighing machine remains in the back seat to his voting machine.

The year 2019 and the decade ending 2019 delivered another pair of records for the history books: (1) as of July 2019, the current economic expansion became history's longest and, (2) 2010-2019 is the first calendar decade without a recession (Recessions by Decade).

As long as good economic conditions prevail, significant downside risk in the stock market is likely to be deferred, and the market will likely benefit from its current momentum.

Nonetheless, stock market valuation remains high (Secular Stock Market P/E), and volatility has returned to the moderate zone (Stock Market Volatility: An Erratic Cycle). For more on volatility, see Volatility in Perspective.

Lastly, consistent with recent years, 2019's initially hopeful surge in reported earnings tapered throughout the year (Earnings Trends: History & Future). It's unclear whether the final reports of 4Q19 EPS will reflect the sixth "big dip" in a row. Each of the past five years had significant declines in reported EPS as the year was finalized after year-end. Update pending...

(2) Outlook: Crestmont's objective is to provide an outlook for investing over the next decade or two. Crestmont does not attempt to predict cyclical cycles--the shorter-term periods of surge and fall within longer-term secular periods. The value of Crestmont's research and analysis is its forecast of the secular market environment.