Market Insights

Short Interest: A Contrarian Indicator?

Earlier this year, versions of the following chart were making the rounds. The graph exhibited short interest on the SPDR S&P 500 ETF (SPY). It was mere weeks before the market would begin freefalling, and short interest was at the lowest levels since 2007.

Dissecting Q1 2020 Market Performance by Size, Sector and Factor

Now that the sun has set on one of the most volatile quarters in recent memory, let’s assess the damage. Broadly, large cap indices like the S&P 500 held up better during the selloff, as illustrated by the graph below.

Source: S&P Dow Jones Indices

The outperformance of large caps isn’t surprising...

QE Infinity, Inflation and Opportunities

We recently authored a two-part series on inflation (The Potential for a Return of Inflation), detailing how high debt levels and the Federal Reserve’s (Fed’s) unprecedented campaign of quantitative easing could eventually result in a return of inflation.

Explaining Prospector’s Approach to Downside Risk Mitigation

As you’ve surely seen, the equity markets have been under severe pressure. The S&P 500 Index, which was up roughly 4% for the year through mid-February, is now down 20.3% as of 10am EST on March 13, 2020. In comparison, small caps and energy-related stocks are faring much worse, as illustrated by...

Podcast #1 – The Prospector Story with John Gillespie

There is a story behind every person.

Prospector’s founder John Gillespie joined Havener Capital Partners founder Stacy Havener, to tell us about his story. In this podcast, Mr. Gillespie walks us through his own journey, which started with a Wall Street Journal subscription while he was in college...

The Potential for a Return of Inflation, Part 2

Last week, we discussed an array of possible factors that could contribute to a rise in inflation. These include:

• In an effort to spur the economy, policy makers have embarked on an unprecedented campaign of quantitative easing, a tool which is inflationary in nature.
• Stimulative economic policy...

The Potential for a Return of Inflation

“Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome aftereffects. Their precise nature is anyone’s guess, though one likely consequence is an onslaught of inflation.” –...

Rising Corporate Debt: Could CLOs Pose a Danger?

In the lead-up to 2008, securities known as collateralized debt obligations (CDOs) and collateralized mortgage obligations (CMOs) held large amounts of risky mortgages and were direct contributors to the credit crisis that ensued. While mortgage lending standards have improved considerably since...

Investors’ Focus on Downside Risk as Relevant as Ever

This blog below was originally posted in May of 2019; in fact, it was the second blog we ever published. However, with volatility returning to the markets as investors weigh the potential impact of the coronavirus (also known as the Wuhan coronavirus), we deemed the concepts discussed previously to...

Cash on the Sidelines Reaches Highest Levels Since 2008

Slowing global economic growth. Heightened valuations. The longest bull market in U.S. stock market history. A yield curve that spent part of 2019 inverted. Investors have had plenty of reasons to get defensive and raise cash, and many have done exactly that.

2019 was a bit of an anomaly in the way...