Morningstar Runs the Numbers

Inspired by Harper's Index (with a tip of the hat to FiveThirtyEight's Significant Digits blog), Morningstar Runs the Numbers uses a numbers-based approach to highlight recent Morningstar research, along with some outside news stories.

78 million

"We view the firm's quarterly results as squarely in line with our long-term thesis that Apple can retain customers because it has created modest switching costs around the iOS ecosystem. We will raise our fair value estimate for Apple to $138 per share from $133 thanks to stronger near-term results and slightly more optimistic gross margin and operating expense assumptions. Our narrow moat rating for the company remains intact, and we still view Apple's shares as modestly undervalued today."

6 more weeks The world's most celebrated groundhog, Punxsutawney Phil, saw his shadow on Thursday morning, which (unscientifically) portends six more weeks of winter. The Weather Channel reported that the famed rodent's proclamation read as follows:

"It's mighty cold weather, you've been braving. Is it more winter or is it spring that you're craving? Since you've been up all night and starting to tottle, I, Punxsutawney Phil, shall not dawdle. My faithful followers, I could clearly see a beautiful, perfect shadow of me. Six more weeks of winter, it shall be!"

5 percentage points per year For more than 20 years, Morningstar has recommended buying "unloved" funds--picking up shares of funds in categories that most other investors are selling. Our "Buy the Unloved" strategy involves buying one fund from each of the three equity Morningstar categories the funds that had the largest calendar-year outflows and avoiding those categories with the highest inflows (the "loved").

"Over the long term, going against the crowd has improved results. Since 1993, the unloved groups have beaten the loved categories in most three-year periods. Overall, the unloved beat the loved by more than 5 percentage points annualized from 1993 through the end of December 2016. It works because investors often chase performance, thus signaling which areas may be overvalued or undervalued."

17%

"After taking into account Facebook's better-than-expected near-term results, return on the firm's increased 2017 investments, and time value of money (as we roll our model forward), we will increase our fair value estimate to $135 per share, from $127. We view Facebook shares as fairly valued."

0.50-0.75% The Federal Reserve Open Market Committee decided to maintain the federal funds rate at 0.50-0.75% at its meeting Tuesday and Wednesday. The FOMC issued a statement saying that the monetary policy stance remains accommodative, supporting further strengthening in the labor market and a return to 2% inflation.

"In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation … . The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data."

$289 Billion With $289 billion in inflows in 2016, Vanguard raked in more fund investor dollars globally than the rest of the fund industry combined in 2016. There were a few factors driving these inflows, but the major reason is costs, said Jeremy Glaser.

"Morningstar research has shown that fees are one of the best predictors of good long-term performance. It seems that investors have caught on, and they are looking to Vanguard given its position as the low-cost provider for fund management."

227,000 The U.S economy added 227,000 jobs in January--a big bounceback from the low December number and better than most expectations. Director of economic analysis Bob Johnson gives his take on what's behind the headline number.

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