News this past week:
- Oil prices declined just over 2.5% last week
- Drop in global government bonds accelerated
- G20 summit shows the divide between the US and others
- UN security council hold an emergency session in response to North Korea
- Global stocks jumped and are still at near record high
James Klempster (CFA) of Momentum Global Investment Management shares his view:
In our proprietary asset allocation models, the total returns of equity markets have four main components. These are: sales per share growth; change in margins; change in Price to Earnings (PE) ratio; and dividend yield. We model these inputs on a five year forward looking basis and use it as the foundation for generating our expected returns, we also analyse how these different elements have impacted total realised returns in the markets. It is instructive from time to time to look at how these different factors have contributed to markets returns.