Hey Friends,

I hope you’ve had a good final week of October and start to November! Thanksgiving and Christmas are just around the corner. Today, a continuance of sorts on last week’s post will be offered.

This post will offer some very brief touch-up thoughts as to the very low dividend yields that color recent history relative to extended stock market history. Go here to view last week’s post for a refresher.

First, the friend who inspired my posting idea about dividend yields wondered about stock buybacks. It is surely rationale to posit that stock buybacks which have been commonplace across much of the low dividend yield landscape of this century have contributed to lesser dividend outflows. More company profits plowed back into company stock repurchases corresponds with less money available for dividend payments. Another thought that comes to mind is the very low interest rate environment we’ve seen over this same period of stock market history. While dividend yields have been historically very low, so have interest rates. On a relative basis, a dividend yield of 2 percent hasn’t looked so bad during much of the past decade alongside CD yields barely above zero.

As a complete sidebar, I noted something interesting this past week. Whether it holds going forward, who knows? But in researching various sectors, it’s clear that the biotech element of healthcare has been out of favor for some time while the overall market (especially tech) was roaring. Well, as of the mid part of the past week, it may be noteworthy that biotech proxies like the iShares Nasdaq Biotechnology ETF (symbol IBB) broke out strongly relative to the major indices like the Nasdaq Composite. Both biotech and the Nasd Composite rose strongly on Thursday but biotech was much stronger on a relative basis. On Friday (AAPL hurt major indices substantively), while the Nasd Composite fell harshly, the IBB stayed minimally in the green. This suggests a rotation of funds into much of the beaten up biotech sector.

Some sectors have not participated much in the long-term bull market. Perhaps biotech may be a precursor that investors may start shopping in the days ahead for undervalued sectors over just going with what’s worked (FAANG, for example). For anyone unfamiliar, FAANG is Facebook, Amazon, Apple, Netflix, Google.

Have a good weekend and see you next time. And remember to set your clocks back an hour before going to bed tonight.

Paul