Gavekal Capital: What Factor Drove The Market In May?

Monday, June 2, 2014

What Factor Drove The Market In May?

Of the 30 factors that we track, Price to Earnings ratio had the highest correlation to the market in May followed closely correlation to the Euro and 1-month change in sales estimate. For the past year, Price to Book ratio has the highest correlation (0.94).

In May, Tech and Health Care carried the market higher while Energy, which has had a wonderful start to the year, underperformed.

While Tech stocks had a solid May, they remain the furthest away from their 3-month high of any sector. 8% of all Tech stocks are at least 30% off their 1-year high (second only to Materials) with an additional 9% of stocks at least 20% off their 1-year high.

About Gavekal Capital

Gavekal Capital is a US registered investment advisory firm that manages the Gavekal Knowledge Leaders Strategy. Knowledge Leaders are a group of the world’s leading innovators with deep reservoirs of intangible capital. These companies often possess competitive advantages such as strong brand, proprietary knowledge or a unique distribution mechanism. Knowledge Leaders are largely service-based and advanced manufacturing businesses, often operating globally. Gavekal Capital seeks to identify the world’s leading knowledge companies through a proprietary process that analyzes corporate knowledge investments.
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