The Green Book

I look forward to The Leuthold Group’s publication Perception for the Professional (also known as The Green Book) every month.  If it is not my #1 favorite read per month it is definitely in the top 3.  It is jam packed with fundamental and quant insights (sprinkled with some solid Midwest humor) that have led me down more research paths than I can think of.

We are incredibly lucky to be able to share the entire monthly research document with our readers this month.

In this month’s piece we highlight a few charts and jokes before letting you download the whole PDF, and believe me you will want to read it cover to cover…


And a few jokes:

  • She was only a whiskey maker, but he loved her still.

  • No matter how much you push the envelope, it’ll still be stationery.

  • A dog gave birth to puppies near the road and was cited for littering.

  • Two silk worms had a race. They ended up in a tie.

  • Atheism is a non-prophet organization.

  • A backward poet writes inverse.

  • In a democracy it’s your vote that counts. In feudalism it’s your count that votes.

  • When cannibals ate a missionary, they got a taste of religion.

  • If you jumped off the bridge in Paris, you’d be in Seine.

  • Two hydrogen atoms meet. One says, ‘I’ve lost my electron.’ The other says, ‘Are you sure?’ The first replies, ‘Yes, I’m positive.’

…and the joke of the month:

A mother is cleaning her teenage son’s room when she sees some magazines under his bed… Curious, she grabs the magazines and is shocked to find that they are S&M porn magazines. In her horror, she screams.

The father runs in, sees his wife crying, sits down beside her on his son’s bed, and asks, “What’s wrong?” And, pointing at the magazines in her hand, he asks, “What are those?”

The mother passes him the magazines. He flips through them, and his eyes widen as he sees some of the most explicit and disturbing S&M images his mind could have ever imagined.

The mother, between sobs, asks her husband, “What are we gonna do with this boy?”

Her husband replies, “Well, we’re not gonna spank him. That’s for sure.”

Download the full 71 page page PDF here:


The Leuthold Group, LLC33 South Sixth Street, Suite 4600Minneapolis, MN 55402

About The Leuthold GroupThe Leuthold Group was formed in 1981 and is an independent, top-down, quantitative and contrarian institutional research shop based in Minneapolis, MN. We focus on market strategy, economic, and group and sector analysis and are affiliated with Weeden & Co., a Greenwich, CT based equities trading firm.

Led by recognized market analyst Steve Leuthold, our research is conducted by a staff of seven analysts. Our proprietary databases enable us to do studies not found at any other shop on or off of Wall Street. We pride ourselves on providing our clients unique insights and perspectives in a timely manner.

Our primary research publications are Perception for the Professional and Leuthold’s Groups, both published at the start of each month. Perception for the Professional provides market commentary and analysis, opinion and special studies along with humorous insights that are a hallmark of The Leuthold Group. Leuthold’s Groups provides statistical and graphical analysis of our work on over 130 sectors covering over 2,000 individual stock names.

In addition to our main research products, we produce a number of specialized research pieces on a weekly, monthly and quarterly basis. Weekly productions include the Supply/Demand Flash Report, tracking fund flows of the equity and fixed income markets, the Major Trend Index Summary, which updates our proprietary multi-factor model, and GroupWatch, a snapshot of current group performance. Mid-month production includes Inflation Watch, REIT Beat, and The Numbers Game, a quantitative screen of topics such as earnings disappointments, cheap valuations and style-specific equities. Benchmarks – produced quarterly – contains historic data in graphical form on a wide variety of topics. Lastly, our In Focus special studies series examines topics of interest on an as needed basis. Recent topics have included deflation, turnover of the “top” U.S. companies and how long it has taken the market to recover from past bear markets.


Value Recognition – The most important factor from a long-term investment standpoint is the recognition of value, including the recognition of overvaluation and undervaluation. Valuation measurement tools, including P/E multiples, dividends, asset factors, and growth rates are, of course, important in individual stock analysis. They are also equally important in group and sector analysis, and in the analysis of the overall markets.Eventually, the market adjusts prices downward for overvaluation and upward for undervaluation. But in the real world, the market is often not efficient and these adjustments can take considerable time.

Trend Analysis – The market is typically inefficient and often irrational. That is why technical analysis should be another arrow in the quiver of investment professionals. How many times have you sold a “fully priced” stock only to see it go on, doubling and doubling again in a spasm of irrationality? How many times have you bought a “cheap” stock only to see it get 30% cheaper?

Stock groups, market sectors and the securities markets themselves demonstrate the same tendencies toward the extremes. While technical analysis has its limits, at times it can greatly enhance investment results.

Leadership Expectation – Since the beginning of market time, there have usually been clearly defined areas of market leadership: technology in the ’90s, healthcare-related stocks in the late ’80s, consumer stocks and bonds in the early and mid ’80s, energy stocks in the late ’70s, the “nifty fifty” in the early ’70s, and electronics in the early ’60s. Portfolio concentration in these broad areas can be rewarding if developed early but a horror if established too late in the game.

Projecting future areas of investment leadership is an art. It requires imagination, experience, and a sense of what might attract investors in existing or developing market and economic environments. However, risk exposure can be reduced if fundamental value recognition tools are added to the process. Trend analysis, using traditional and newly developed measures, further reduces the twin risks: the risk of being “too early” or the risk of climbing aboard near the end of a leadership phase.