Hey all, @Nick Correa are back at it again, this time breaking down how Sam Burns uses his equity risk model to determine an ideal stock/bond allocation (the riskier the market is, the more bonds and fewer stocks you would want to own).

We get into key topics such as volatility and momentum, and we also take a look at Burns' own model, the Monitor of Analysts' Earnings Revisions (MAER), and what it indicates about which sectors (financials, energy, industrials, etc.) are the most attractive at this time.

Please enjoy! And comment if you have any questions or want clarification about Sam's process. Charts below


Link to the original interview:


Global Equity Risk Model:

Components of the equity risk model:

Dividing the MSCI "All Country World Index" (stocks) by 10 year Treasury index (bonds) can indicate investors' appetite for risk (https://www.msci.com/acwi): 

When high volatility stocks are doing well, that too is a sign that investors are putting their foot on the gas pedal:

Same when high beta stocks are outperforming the low volatility equities:


Interestingly, financials and energy now comprise a large part of the high beta index:

Here is Sam Burns' MAER rankings about which sectors have the best analyst earnings revisions (top to bottom):

Analyst are tripping over each other to update their earnings estimates for financials:

Thanks so much @Farrell Murphy and @Weston Nakamura - and, of course, the one and only @Nick Correa
@Jeremiah S @John Ahearn @Jaymes Rosenthal @Moritz Heiden @Matt Daniell @Craig P @Bradley Snyder @Sam Colt @Theodore Boydston @thomas cullis @Aneil Pokharel @Dennis Jarvis @Konrad Zawadzki @Joseph J @James J P Mulholland @Xavier Mejido @Master Of Money @Tom Catternan @Kewal Mistry @Jehan Hiramanek @Sean Morgan @Sam Mitchell @John Ahearn @Dan Little @Matthew Lansing @Matthew Lansing @Adam Toth-Fejel @Theodore Freysen @Seahyung Park @Sean Morgan @Bryce G @Dean W @ALLEN AZAR @Oliver Anderson @Andreas Niederberger @Cristofer Atiencia @Lemony Snicket @Brian Caputo @Brian Lee @brian barry @bill foord @Georgii Verbitskii @Max Wiethe @Stefan Clulow @John Fadool @Collin Velarde @James Clark @Daniel Olarte @Paul LaRue @Chris Clark @Roo Larson @Lars Andersson @Matthew Larkin @Larry Lawhorn @Larry Stein @larry cooper @Christian Petersen @Philip Peterkin @David Douglas @David Lack @David Sharp @David Douglas @Marc Liron @Ted Boydston