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CPGLI Outlook (bars below chart)
predicts profits growth;
S&P 500 index follows profits trend
at major turning points

CPGLI strategies outperformed market

Actual independently audited performance

Our Presentations
CPGLI introduction
CPGLI - GB Capital presentation
Macro Trends
New Funds Management Products
Dynamic Asset Allocation for Financial Planners

Our Papers
The Indicators of Stock Market Macro Turning Points During Global Financial Crisis - Application to Dynamic Asset Allocation Investment Strategy Using Index and Exchange Traded Funds

A Concept of Multiple-Entity Accounting for Capital Distribution

Our Articles

Bijak's Macroeconomic Digest
in Australian Hedge
2011 12
2012 02
2012 03
2012 04
2012 09
2012 11
2012 12
2013 02
2013 03 04
2013 06 07
2013 08

2013 11
2014 02

in Seeking Alpha
The Global Fiscal And Monetary Policy Shift Moves Markets
The Indicators Of Stock Market Macro Turning Points During The Global Financial Crisis

Bullish Case For Europe: Joint Euro Bonds
ECB Needs To Rescue German And French Banks More Than European Periphery
The 2010, 2011, 2012 Corrections Were P/E Multiple Related; Earnings Were Sound
When 'I Don't Know' Is The Right Forecast: U.S. Equities
Is it Time To Borrow Again? - The Cycle Lives On

in Advisor Perspectives
list of articles

 

 

 

 

USA CORPORATE PROFITS AND S&P 500 INDEX Quarterly Growth Outlook

The proprietary Corporate Profits Growth Leading Indicator (CPGLI) provides a quarterly outlook for the USA NIPA Corporate Profits Growth in quarterly publication: "CPGLI Outlook".

See our presentations: brief & long

The National Income and Product Account (NIPA) Corporate Profits are closely aligned with the aggregate earnings of the S&P 500 index companies (see a comparison here). The historical correlation is in excess of 96% hence our NIPA Corporate Profits Outlook can be directly applied to forecast major turning points in the S&P 500 earnings.

We prefer to use the NIPA Corporate Profits instead of the S&P 500 earnings time series on our graphs because the data is published free by the U.S. Government's Bureau of Economic Analysis National Economic Accounts at www.bea.gov

Both, NIPA profits and S&P 500 earnings, strongly correlate at the major macro turning points to the S&P 500 USA stock market index and other broad U.S. market indices including Dow Jones, Russell 3000, Wilshire 5000, MSCI USA Index and NYSE Composite.

Global Applications

The CPGLI Outlook is also applicable to some degree, at the extreme macro turning points, to global indices that tend to be then synchronized with the USA such as S&P Global 100 and MSCI All Countries World Index. Country indices such as UK, Germany, France, China and Australia are also included.

Links to our quarterly CPGLI Outlooks and Special Situation Notes samples are on the left.

The 2007-2009 Global Financial Crisis was a true test of the CPGLI outlook performance

› In November 2007, CPGLI indicator issued strong SELL SIGNAL at the market TOP.

› In March 2009, CPGLI indicator correctly picked the BOTTOM of the market issuing strong BUY signal based on "Up strong" Outlook for V-shape recovery in corporate profits. 

› In May 2009 it correctly signaled beginning of the V-shape economic recovery.

› Then, for the next 4+ years in quarterly outlooks, the CPGLI indicator correctly predicted strongly growing profits and rising with it broad stock market.

› The indicator, however, did not predict the Lehman Brothers bank collapse in September 2008.

› The Special Situation Notes in April and May 2009 correctly signaled a sharp turnaround in the financial stocks.

› In November 2011 CPGLI Outlook predicted positive for stocks stabilization of the Eurozone.


Institutional Clients

The CPGLI Outlook would be most beneficial to global multi-asset, global macro, CTA (Commodity Trading Advisors), alternative, special situations funds and proprietary traders who are allowed to widely adjust allocation to equities and level of leverage.

The independent research supports investment decisions and recommendations of the client fund managers, investment boards/committees, investment strategists and investment consultants.


Proven Long Term Performance

The CPGLI Outlook provided advance signals of major turning points and trends in Corporate Profits growth.

The CPGLI indicator only signals the future direction and strength of the growth at four levels: "up strong", "up", "slow" and "weak”.  It does not set target values.

Profits Growth outlook Growth actual %   CPGLI Outlook
7 years performance
4Q Up      
3Q Up 3.5  
2Q Up 1.1  
2012 1Q Up -2.7  
4Q Up 6.7  
3Q Up 1.6  
2Q Up 4.5  
2011 1Q Up strong -3.7  
4Q Up strong 2.3  
3Q Up strong 1.6  
2Q Up strong 3.0  
2010 1Q Up strong 10.5  
4Q Up strong 9.3  
3Q Up strong 10.1  
2Q Up strong 3.5   Profits Growth Outlook
2009 1Q Up strong 14.4    
more        

Since 2006 an independent organization, has monitored and audited our CPGLI Dynamic Asset Allocation investment strategy in real time.

The investment strategy uses the proprietary CPGLI Outlook for equities asset allocation and leverage decisions after applying a degree of judgment by GB Capital Pty Ltd Dynamic Asset Allocation Consultants.

The CPGLI Dynamic Asset Allocation investment strategy outperformed the S&P 500 index

Return % CPGLI Dynamic Asset Allocation S&P500   CPGLI Dynamic Asset Allocation
7 years Returns
Total 7y 97.3 12.4    
Annual 7y 10.2 1.6    
       
2012 27.4 13.4  
2011 (15.5) 0.0  
2010 47.3 12.8  
2009 79.5 23.4  
2008 (24.8) (38.5)  
2007 (3.4) 3.5  
2006 (4.5) 11.7  
       
Risk      
Sharp ratio 0.19 0  
Ulcer index 17.48 1.22  
         

Actual independently audited performance                        ...more

The CPGLI strategy fell less than market in 2008 and enhanced returns of rising market in 2009,10,12.

The CPGLI Global Macro investment strategy results

Return % CPGLI Global Macro S&P 500  

CPGLI Global Macro
4 years Returns

Total 4y 264.3 62.5    
Annual 4y 42.2 14.1    
       

2012 25.4 13.4  
2011 (12.4) 0.0  
2010 52.8 12.8  
2009 from May start 117.1 27.1  
       
Risk      
Sharp ratio 0.55 0  
Ulcer index 0.35 0.22  
         

Actual independently audited performance                           ...more


Investment Decisions Tool for Dynamic Asset Allocation, Risk Reduction & Higher Returns

The CPGLI is a validated and proven tool for equities asset allocation and global macro strategies over the medium term.

The indicator aims to provide advance signals of the most lucrative periods of the stock market when corporate profits grow strongly and market follows the trend. Historically, these were the best times to be overweight and leveraged in equities.

The investment risk is reduced by limiting exposure to equities during the more volatile periods of a slower/weaker growth in profits. These are times to be underweight in equities and to avoid leverage.

This increased accuracy in profits growth outlook will provide a measurable improvement in investment returns for any multi asset diversified fund that invests in equities.

Comparisons can be calculated with specific funds when accurate information is available.

 

This will enable a GB Capital client to accurately measure the performance improvement that would have been possible with the use of the CPGLI asset allocation overlay.

CPGLI enables New Product Development

The CPGLI outlook provides an opportunity to develop new investment products aiming to reduce risk and enhance returns.

Some examples of diversified fund opportunities are:

› enhanced traditional funds (conservative, balanced, growth, high growth)

› dynamic asset allocation

› capital guaranteed growth

› protected capital and flexible annuity

› leveraged

Click here for New Products presentation.

› CTA would enhance their core trend following and momentum strategies by adding the directional CPGLI Trend Filter for equities. CPGLI can be a foundation for new directional strategies supported by Stop Loss mechanism.

Our asset allocation consultants tailor the new products to our clients' investment philosophy and strategic investment parameters defined by investment boards and committees.


 
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