More on Related Themes
2015-10-05 00:00:00 Rethinking 'Safe Haven' Assets in a Multi-Asset Portfolio by Sponsored Content from Invesco (Article)
• Correlations have risen between perceived ‘safe haven’ assets and equities • Volatility has been a positive performer in falling equity markets, and we see it as a diversification tool in multi-asset portfolios • We look for areas where we think the markets' implied relative risk is an opportunity
2015-10-05 00:00:00 Does Wells Fargo Add Value for Investors? by Larry Swedroe (Article)
Assets in actively managed mutual funds have been a consistent source of revenue growth for Wall Street banks. But would investors have been better off in passively managed funds? I’ll answer that question for Wells Fargo and then for the group consisting of the four largest banks.
2015-10-05 00:00:00 A Growing Risk of Recession by John Hussman of Hussman Funds
With the S&P 500 within about 8% of its highest level in history, with historically reliable valuation measures at obscene levels, implying near-zero 10-12 year S&P 500 nominal total returns; with an extended period of extreme overvalued, overbought, overbullish conditions replaced by deterioration in market internals that signal a clear shift toward risk-aversion among investors; with credit spreads on low-grade debt blowing out to multi-year highs; and with leading economic measures deteriorating rapidly...
2015-10-05 00:00:00 Evaluating Sustainable Competitive Advantages: Entry and Exit Barriers by Baijnath Ramraika, CFA and Prashant Trivedi, CFA (Article)
This article is the first in a series discussing an assessment process for existence or absence of sustainable competitive advantages. In this article, we discuss the basic building blocks of an investment process designed to identify high-quality businesses: the entry and exit barriers.
2015-10-05 00:00:00 September 2015 Market Commentary by Joe Becker, Adam Schenck, Jeff Greco of Milliman Financial Risk Management
In the second half of Q3, higher volatility was the rule rather than the exception as markets wrestled with the implications of a global economy in flux.
2015-10-05 00:00:00 The Bull Market Still Lives by Brian Wesbury, Robert Stein of First Trust Advisors
Stock market corrections (usually defined as 10% pullbacks) are hard to understand. Often they happen in the midst of long-term bull markets. But why? Is it like getting the flu? Is it just emotion? Or, are corrections a necessary cleansing out of excess optimism? Our answer: we don't really know.
2015-10-05 00:00:00 US Bond Market Week in Review; Did the Window Close, Edition? by Hale Stewart of Hale Stewart
A rate hike of at least 25 basis points was a done deal a few months ago. But recent global and domestic events have greatly lowered that possibility. It began with the Chinese equity sell-off followed by the surprise yuan devaluation. Recent Chinese manufacturing weakness adds to the mix. Although some recent US news has been positive, continued price weakness, lower industrial production and a recent employment slowdown show the US is not immune to the slowing international environment.
2015-10-05 00:00:00 Green Shoots in China? by Nick Niziolek of Calamos Investments
Over the next weeks, there will be a great deal more data for us to evaluate, including foreign reserves data on October 6. Signs of stabilization in foreign reserves and savings deposits would point to a reduced risk of capital flight, which would give us more confidence in a gradual depreciation of the renminbi. We’ll also be watching for mid-month data on imports. If these green shoots begin to take hold and the markets can become comfortable that a hard landing is off the table for the near term, we wouldn’t rule out a fourth quarter rally in Chinese and global equity markets.
2015-10-04 00:00:00 Recession Watch by John Mauldin of Mauldin Economics
If recovery from a banking crisis can take ten years and we are only seven years in, I expect (barring aliens) that we have a few more years to go. A slow, muddle-through recovery may not be exciting – but it’s better than the alternatives. As I noted at the beginning, I am quite worried about the possibility of a recession in our slow-growth, barely limping along at stall speed economy.
2015-10-03 00:00:00 International Economic Week in Review for Sept. 28-Oct.2; Japan Flashing Yellow, Edition by Urban Carmel of Hale Stewart
Overall, the tone of news continues to lean negative. China continues to slow. Japan is clearly having problems regaining momentum after last year’s sales tax increase and Canada just missed being in a technical recession. The EU and UK are growing moderately, but not impressively. And it appears even the US is starting to import some of the global weakness.
2015-10-03 00:00:00 The 10 Most Competitive Countries in the World by Frank Holmes of U.S. Global Investors
No new countries have entered or exited this exalted list, and there was very little rank-shuffling. For the seventh consecutive year, Switzerland is the most competitive country. For the fifth straight year, Singapore is number two. The U.S. comes in at number three for the second year. And so on.
2015-10-03 00:00:00 Better Times are Ahead by Byron Wien of Blackstone
The best recent period for investing in equities may have been 1982–1999, but I still think reasonable risk-adjusted returns for equities are likely in the years ahead, and that Treasurys and high-quality corporate bonds are less attractive.
2015-10-02 00:00:00 ECRI Weekly Leading Index: "Pursuing the Purple Squirrel" by Doug Short (Article)
ECRI's latest weekly data point shows a decline from the previous week, but more interesting is the company's latest publicly available commentary published yesterday: "Pursuing the Purple Squirrel". It features an additional dimension to the weak data in the September Employment report with a striking analysis of the trend in JOLTS Hires minus Openings.
2015-10-02 00:00:00 The Real Burden of Low Interest Rates by Niels Jensen of Absolute Return Partners
Almost the entire world is concerned about the high levels of debt, should interest rates begin to rise again, but we are not. Don't get us wrong; a meaningful increase in debt service burdens could do substantial damage to a global economy so loaded with debt. We just don't think it is going to happen. Economic growth and inflation are likely to stay comparatively low for many years to come, and so are interest rates, but that raises another question. What damage can very low interest rates for an extended period of time actually be expected to do?
2015-10-02 00:00:00 Market Remains Overvalued, But Off Its Interim High by Doug Short (Article)
Here is a summary of the four market valuation indicators we update on a monthly basis.
- The Crestmont Research P/E Ratio
- The cyclical P/E ratio using the trailing 10-year earnings as the divisor
- The Q Ratio, which is the total price of the market divided by its replacement cost
- The relationship of the S&P Composite price to a regression trendline
2015-10-02 00:00:00 Crestmont Market Valuation Update by Doug Short (Article)
Quick take: Based on the September S&P 500 average of daily closes, the Crestmont P/E is 80% above its arithmetic mean and at the 96th percentile of this fourteen-plus-decade monthly metric.
2015-10-01 00:00:00 Small, but Noticeable Divergence Opening Up Between EM and DM by Bryce Coward of GaveKal Capital
We certainly haven’t been shy about identifying the rout in EM stocks and the very emotional selloff that took place in August. At the time we showed that the emotion at the August low was commensurate with the 2011 and 2008-2009 panics, both of which happened to be good buy spots for EM stocks.
2015-10-01 00:00:00 A Fragile Transition Supported by (Further) Policy Accommodation by Adam Bowe, Isaac Meng, Tadashi Kakuchi of PIMCO
n the following interview, Portfolio Managers Adam Bowe, Isaac Meng and Tadashi Kakuchi discuss conclusions from PIMCO’s quarterly Cyclical Forum, in which the company’s investment professionals debated the outlook for global economies and markets. They share our views on economies and investment implications across the Asia-Pacific region over the next 12 months.
2015-10-01 00:00:00 Have Commodities Bottomed? by Russ Koesterich of BlackRock
Though commodities have been the worst performing asset class of 2015, Russ explains why it’s still too early to call a bottom.
2015-10-01 00:00:00 It Ain't Over 'Til It's Over by Burt White of LPL Financial
Yogi Berra passed away last week at the age of 90. One of the greatest baseball players of all time, Berra was probably known more for his funny sayings (so-called “Yogi-isms”) than he was for his impressive career as a New York Yankee that lasted from 1946 until 1963 and included 3 MVP awards and 10 World Series championships. Some of these Yogi-isms are relevant for investors, including: 1) it ain’t over ‘til it’s over, 2) déjà vu all over again, and 3) the future ain’t what it used to be. Berra also famously once said, “Make a game plan you can stick to…unless it’s not w
2015-10-01 00:00:00 A Look at Secular Bull and Bear Markets by Doug Short (Article)
Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? At this point, six years later, the S&P 500 has set an inflation-adjusted record high.
Let's examine the past to broaden our understanding of the range of historical trends in market performance. An obvious feature of this inflation-adjusted series is the pattern of long-term alternations between up-and down-trends.
2015-09-30 00:00:00 Liquid Alternatives: Considerations for Portfolio Implementation by Justin Blesy, Ashish Tiwari of PIMCO
Since the financial crisis, investors have poured nearly half a trillion dollars into liquid alternative strategies – typically mutual funds and ETFs that deploy non-traditional strategies once reserved for large institutional investors.i These vehicles offer the potential for diversification, downside risk mitigation and attractive risk-adjusted returns with the transparency and daily liquidity many investors desire. Liquid alternatives have been a democratizing force for investors, and we believe today’s market environment arguably has only made them more attractive.
2015-09-30 00:00:00 Forget “Active vs. Passive”: It’s All About Factors by Adam Butler, Michael Philbrick, Rodrigo Gordillo of ReSolve Asset Management
We just love a good debate, and there seems to be quite a heated debate at the moment about the relative utility of passive versus active investing. Perhaps this debate is as timeless as investment management itself, but a flurry of recent studies may have finally armed passive advocates with enough ammunition to settle the argument once and for all.
2015-09-30 00:00:00 El Niño Update by Kaisa Stucke of Confluence Investment Management
Meteorologists have been calling for an El Niño event since last year. Current forecasts place the likelihood of an El Niño this winter at over 90%. Water temperatures in the Pacific, one of the first signs of a looming El Niño, have measured much higher than normal. In fact, water temperatures have been on par with the most severe El Niño event from the past 30 years. This report looks at how an El Niño develops and its possible climate, economic and geopolitical effects on the global economy. As always, we outline the potential investment implications of this event.
2015-09-30 00:00:00 Active Versus Passive – Understanding the Debate – Part 3 by Charles Batchelor of Cleary Gull
Last season, the Green Bay Packers started the season 1-2. Some fans panicked, to put it mildly. Conspiracy theories surfaced for why Green Bay’s quarterback Aaron Rodgers didn’t seem to be playing well and most people formed an opinion on who was to blame. It was at this point, following the team’s second loss, Rodgers found himself being peppered with questions from reporters attempting to figure out what was “wrong” with him and/or the team. Rodgers’ response was, “R…E…L…A…X.”
2015-09-30 00:00:00 Choose Wisely: Six Tips for Selecting Alternative Managers by Marc Gamsin, Greg Outcalt of AllianceBernstein
Alternative investments have delivered over the long term, but individual strategies can be as different as the day is long. We have some ideas on how to cut through the clutter.
2015-09-29 00:00:00 Annual Outlook by Mary Ellen Stanek of Robert W. Baird & Co.
In an environment of low rates and heightened uncertainty, the U.S. has experienced sub-par growth during this economic cycle relative to past expansions. But compared to the rest of the world, the U.S. has been a strong performer. And even with only moderate growth, the U.S. economy has experienced healthy job creation – 11 million jobs since the bottom of the recession, 3 million created last year, the highest since 1999, and 2.5 million this year.
2015-09-29 00:00:00 On My Radar: It’s Déjà vu All Over Again by Steve Blumenthal of CMG Capital Management Group
What scares me, or what worries me, is what the next downturn in the economy looks like, with asset prices where they are and a lesser ability of central banks to ease monetary policy.” – Ray Dalio with Bloomberg’s Tom Keene
2015-09-29 00:00:00 What’s the Market's Biggest Risk? by William Smead of Smead Capital Management
When meeting with clients throughout the country, investors ask if we are worried about various well-vetted and well-known negatives. The list includes what the Federal Reserve Board might or might not do, China's slowdown, emerging market struggles, plummeting commodities, dollar strength and the uncertainty over who will become President of the U.S. in 2017. We think investors are really asking us, “what’s the market’s biggest risk?”
2015-09-29 00:00:00 In 2015, Volatility from a Phantom Rate Hike by Tony Crescenzi of PIMCO
Many investors are familiar with the adage, “they don’t ring a bell,” to warn when it is time to get in or out of an investment. Well, sometimes they do, or so the famed scientist Ivan Pavlov would likely contend. The physiologist trained dogs to salivate at the sound of a bell, having conditioned them to associate the bell with the delivery of food. Pavlov discovered that he didn’t actually have to deliver the food to get the canines to salivate in anticipation.
2015-09-28 00:00:00 Staley Cates on Why Active Management Wins in the Long Term by Robert Huebscher (Article)
Staley Cates is president and chief investment officer of Southeastern Asset Management, manager of the Longleaf funds. In this interview, he says, “the passive movement is not just a big trend. It is a bubble.” He explains why passive investing has made it hard for value investors to outperform.
2015-09-28 00:00:00 The ABCs of Impact Investing by John Appleby (Article)
Impact investing is a small but growing segment of the financial landscape. It is coming to the fore as individual investors seek to “do good while doing good.” Groups from wealthy entrepreneurs to the G8, the UN and the Pope are talking about the subject. Here’s what advisors need to know if they want to serve clients who strive for “impact” with their investing.
2015-09-28 00:00:00 Valuations Not Only Mean-Revert; They Mean-Invert by John Hussman of Hussman Funds
Risk-seeking among investors can often defer the immediate consequences of extreme valuations, while vertical losses can suddenly emerge when extreme overvaluation is joined by increasing risk-aversion among investors (as evidenced by deterioration in broad market internals). In any event, investors should expect market overvaluation or undervaluation to be reliably “worked off” within a period of about 12 years, on average.
2015-09-28 00:00:00 Is China “Fixed”? Short Answer: Financial Markets Say No by Bryce Coward of GaveKal Capital
The rally in stocks off of the August low has in some respects alleviated worst case fears about the fate of the Chinese economy. After all, in hindsight it is pretty clear that the selloff was driven by a simultaneous rerating of Chinese growth expectations by market participants combined with the possibility of higher short rates in the US to boot. These fears resulted in vast under performance of growth sensitive asset prices throughout the correction and then a sharp rally in those assets in the days following its terminus.
2015-09-28 00:00:00 The Hidden Cost of Zero Interest Rate Policies by Laurence B. Siegel and Thomas S. Coleman (Article)
Zero interest rates are a massive transfer of wealth from investors and savers to governments and other borrowers around the world. We’ll show how big the scale of the transfer is.
2015-09-28 00:00:00 Describing Liquid Alts: Global Macro and Tactical Asset-Allocation Strategies by Michael Breitenbach of Larkin Point Investment Advisors LLC
Several types of strategy groups invest across multiple asset classes, dynamically adjusting relative exposures at the discretion of the manager. Two commonly offered dynamic asset-allocation strategies are tactical and global macro.
2015-09-28 00:00:00 Cars, Drugs and Risk by Christian Thwaites of Brouwer & Janachowski
Last week, two company stories showed that markets are not always about GDP, growth, inflation and macro economic indicators people (including us) like to talk about. First, Volkswagen (mission statement “…to offer… safe and environmentally sound vehicles”) admitted that well, yes, it had duped emission testers with some clever software. VW employs half a million people and accounts for 4% of the German stock market.
2015-09-28 00:00:00 Equities May Remain Trendless Until More Clarity Emerges by Robert Doll of Nuveen Asset Management
Sentiment was negative for most of last week, as investors focused on continued uncertainty over Federal Reserve policy, slowing growth in China and emerging markets and ongoing weakness in commodities. Stock prices bounced on Friday following comments from Fed Chair Janet Yellen that a rate increase was looking more likely in 2015. Nevertheless, equities finished in negative territory, with the S&P 500 Index falling 1.4%. The health care, materials and industrials sectors came under pressure, while utilities, consumer staples and financials finished higher.
2015-09-26 00:00:00 International Economic Week in Review: The Commodity Super-Cycle Explained, Edition by Hale Stewart of Hale Stewart
Despite recent financial turmoil, no one has provided a concise explanation of the commodity super-cycle, one of the primary macro-economic forces causing recent volatility. That is, until now. In a September 21 speech, Bank of Canada Governor Stephen Poloz offered the following explanation:”
2015-09-26 00:00:00 Balloons in Search of Needles by John Mauldin of Mauldin Economics
It would be hard to miss an analogy to the stock market. Everything’s peaceful and calm, you’re drinking some fabulous wine, eating some fantastic fresh game and fish, looking at all the beautiful animals as you drift easily with the current. Anybody can steer the boat in a bull market. Until the rapids hit and the bottom falls out.
2015-09-25 00:00:00 Staying Level-Headed in the Face of Fed Uncertainty by John Calamos, Sr. of Calamos Investments
As we know, uncertainty about the Fed’s plans for raising short-term rates remains a key driver of market volatility. It’s understandable that investors are afraid to be in the markets and at the same time, afraid to be out. Whenever rates do rise (probably before the end of the year), there’s every reason to expect continued heightened equity market volatility. Even so, I view a more normal interest-rate environment as long-term positive—for the economy and for the equity market.
2015-09-25 00:00:00 Weekly Market Summary by Urban Carmel of The Fat Pitch
The first drop in equities was more than a month ago, yet price has not come within even 2% of the original low since then. Despite this, bearish sentiment continues to rise as if new lows were being formed. This is a strong positive. The infamous month of October arrives this week: volatility is likely to remain high, but our view is the risk/reward of buying sell-offs is very attractive on a year-end basis.
2015-09-25 00:00:00 Are the Bulls Regaining Their Footing? by Liz Ann Sonders, Brad Sorensen & Jeffrey Kleintop of Charles Schwab
Uncertainty surrounding the Federal Reserve continues after its punt of rate hikes at its most recent meeting. But as the market gets more clarity on monetary policy and given a still-growing US economy, the bull market should slowly reestablish itself, albeit with bouts of volatility. Further support should come from global growth in areas that are net beneficiaries of the plunge in commodity prices.
2015-09-25 00:00:00 How Will These Leaders of 4 Billion People Change the World? by Frank Holmes of U.S. Global Investors
This week the U.S. played host to three prominent and illustrious leaders to billions of people: Chinese President Xi Jinping, Indian Prime Minister Narendra Modi and Pope Francis. Among them, they lead—either politically or spiritually—nearly 4 billion people worldwide, more than half of everyone living on the planet right now.
2015-09-25 00:00:00 Yes, and No by John Canally of LPL Financial
The title of this commentary is our answer to the question: Does the Fed know something we don’t know? Many market participants and pundits were asking this question late last week after the Federal Reserve’s (Fed) policymaking arm, the Federal Open Market Committee (FOMC), decided not to raise interest rates at the conclusion of its two-day policy meeting on Thursday, September 17, 2015. Market participants were asking the question although they had priced in just a 30% chance of a rate hike prior to the meeting.
2015-09-25 00:00:00 China, Commodities, and Crisis: What’s Next for Emerging Markets by Zachary Karabell of Envestnet
China’s growth story fueled global markets for years, and the recent market rout raises concerns that the spigot may be tapping out. But is it really? Emerging markets, currently out of favor with investors, are showing signs of domestic economic growth driven by an expanding middle class. Could these economies, along with China, re-emerge as bright spots in the global markets?
2015-09-24 00:00:00 The "Real" Goods on the August Durable Goods Data by Doug Short (Article)
Earlier today the Census Bureau posted the Advance Report on August Durable Goods New Orders. This series dates from 1992 and is not adjusted for either population growth or inflation. Let's now review Durable Goods data with two adjustments. In the charts below the gray line shows the goods orders divided by the Census Bureau's monthly population data, giving us durable goods orders per capita. The blue line goes a step further and adjusts for inflation based on the Producer Price Index for All Commodities, chained in today's dollar value.
2015-09-24 00:00:00 It’s Not Easy by Howard Marks of Oaktree Capital Management
In 2011, as I was putting the finishing touches on my book The Most Important Thing, I was fortunate to have one of my occasional lunches with Charlie Munger. As it ended and I got up to go, he said something about investing that I keep going back to: “It’s not supposed to be easy. Anyone who finds it easy is stupid.”
2015-09-24 00:00:00 Is Another Bear Market Ahead? by Russ Koesterich of BlackRock
Russ updates his outlook for U.S. stocks in 2015 and beyond.
2015-09-24 00:00:00 Fed Implications by Burt White of LPL Financial
The Federal Reserve’s (Fed) decision not to raise interest rates at its September 17 policy meeting was undoubtedly the biggest event of last week. Although not a big surprise, besides Donald Trump (and perhaps China), the Fed is all that anyone is talking about these days. This week we share some of our perspective on what the Fed’s decision may mean for the stock market and offer some investment ideas.
2015-09-23 00:00:00 Does a Quarter Point Really Matter? by Jerry Wagner of Flexible Plan Investments
Actually, on at least one aspect of the Federal Open Market Committee’s (FOMC) seemingly inevitable move to hike interest rates, there is considerable agreement: The first 0.25%, or 0.50%, or even 0.75% move(s) in the federal funds rate will not make a material difference to US and global economies.
2015-09-23 00:00:00 Balancing Risks and Opportunities in the Multi-Speed World by Richard Clarida, Andrew Balls of PIMCO
Read our global economic outlook for the near term and implications for asset classes.
2015-09-22 00:00:00 On My Radar: “Dammit Janet” by Steve Blumenthal of CMG Capital Management Group
Whatever you can do, or dream you can… begin it; boldness has genius, power and magic in it.” – Johann Wolfgang von Goethe
2015-09-22 00:00:00 Activate Your Portfolio by Edward Perkin of Eaton Vance
As the bull market ages and bouts of extreme volatility return, now may be the time for actively managed equity strategies.
2015-09-22 00:00:00 The Unique Benefits of Mortgage-Backed Securities by Jason Mandinach of PIMCO
MBS have potential to outperform U.S. Treasuries with high liquidity and low correlation to risk assets.
2015-09-22 00:00:00 Meet Jeremy Corbyn by Bill O’Grady of Confluence Investment Management
On September 12, Jeremy Corbyn, a longtime Member of Parliament, was elected as the new leader of the UK’s Labour Party. In this report, we begin with a short biography of Corbyn followed by a description of how he won his party’s leadership role. With this background, we explore Corbyn’s long held policy positions and their potential impact on UK policy. We offer our reflections on Corbyn’s win, including an examination within the context of other political developments in the West. As always, we conclude with potential market ramifications.
2015-09-22 00:00:00 US High Yield: Energy Is Lagging, but Consumers Are Set to Spend by Scott Roberts and Rahim Shad of Invesco Blog
Weak commodity prices have made this year’s US high yield story a “tale of two markets.” Year-to-date returns for the overall high yield market were a meager three basis points (0.03%) through Aug. 31. However, if you peel back energy and metals and mining, the rest of the asset class delivered a respectable 2.6% total return over the same period.
2015-09-22 00:00:00 Market Segments to Consider While the Fed Holds by Russ Koesterich of BlackRock
After last week’s Fed news, investors may want to review their exposure to these two market segments.
2015-09-21 00:00:00 Weighing the Week Ahead: Has the Fed Assumed a Third Mandate? by Jeff Miller of NewArc Investments, Inc.
Despite many signs of economic improvement, the Fed chose to maintain policy accommodation at emergency levels. In a week that is light on data and long on speeches, this news will be enough to keep Fed policy at the forefront.
2015-09-21 00:00:00 When an Easy Fed Doesn't Help Stocks (and When It Does) by John Hussman of Hussman Funds
Investors who wonder why the stock market failed to advance on the Fed’s decision to leave interest rates unchanged would do well to understand that the market is following a script that has played out repeatedly across a century of market history. The short explanation is straightforward. When investors are risk-seeking (which we infer from the behavior of market internals), Fed easing tends to be very favorable for the stock market, because risk-free, low-interest liquidity is a hot potato to risk-seeking speculators.
2015-09-21 00:00:00 Federal Reserve Kicks the Can on Interest Rates by Christopher Molumphy of Franklin Templeton Investments
We were a little disappointed the Fed didn’t take action, primarily because we think the longer the Fed stays on hold the longer we will have uncertainty in the marketplace.
2015-09-19 00:00:00 Here Are Two Ways Investors Can Take Advantage of the Fed's Uncertainty by Frank Holmes of U.S. Global Investors
Although interest rates could still be hiked in one of the two remaining times the Federal Open Market Committee (FOMC) meets this year, I’m inclined to think they’ll stay near zero until at least 2016. The decision is a welcome one for both gold demand and new home purchases. When rates rise, gold becomes less attractive for some investors, who are encouraged to exchange their no-yielding gold for income-producing assets.
2015-09-19 00:00:00 Upon Further Review: More Reflections on the Fed by Carl Tannenbaum of Northern Trust
The Federal Reserve has typically downplayed market expectations of inflation. These indicators emerge from trading in Treasury Inflation-Protected Securities (TIPS), which can be influenced by many things.
2015-09-19 00:00:00 Annual Outlook Address by Mary Ellen Stanek of Baird Investment Management
The uncertainty caused by speculating on when the Fed will raise rates is almost worse that the move itself. We think the Fed needs to forecast where the U.S. economy will be in terms of full employment and inflation a year or two down the road given the long and variable lags of the impact of their policy changes. We think they have been too optimistic in terms of the expected growth of the economy.
2015-09-18 00:00:00 A Fed Move Could Be Good News for Emerging Markets by Mark Mobius of Franklin Templeton Investments
If in coming months the Fed feels confident enough in the US economy to raise interest rates, it could be viewed as positive news for emerging markets, particularly those with export ties that benefit from a strengthening US economy.
2015-09-18 00:00:00 Looking At A Decade Of US Equity Valuations by Eric Bush of GaveKal Capital
Expensive stocks can always get more expensive and cheap stocks can always be cheaper. Consequently, making short-term market calls based on valuations is a fool’s errand. However, valuations end up always mattering in the long-run even if they are usually usurped in the short-run by investor sentiment. Therefore, we thought it would be a worthy exercise to take a look at how US equity valuations by industry group look today relative to the past decade.
2015-09-18 00:00:00 When Doves Cry … Yeah! Fed Punts and Keeps Rates Unchanged by Liz Ann Sonders of Charles Schwab
The Fed opted to stall on raising rates for the first time since 2006; primarily citing global turmoil and still-restrained inflation for its decision. In addition, the accompanying Federal Open Market Committee (FOMC) statement was not as hawkish as many expected (meaning, those who had been expecting no hike, were also expecting a more hawkish statement).
2015-09-18 00:00:00 Fed Leaves Interest Rates Unchanged: 4 Insights from Loomis Sayles by Orla O'Brien of Loomis Sayles
The FOMC signaled that plans for interest rate normalization are deferred but not yet derailed. It's difficult to categorize this outcome as a genuine surprise. While the rate decision and accompanying policy statement were no doubt dovish relative to expectations, the so called 'dot plot' reveals that the median Fed member sees that interest rate normalization, once begun, is expected to proceed at the same pace as was expected in June.
2015-09-18 00:00:00 Japan Then and Now by Kenichi Amaki of Matthews Asia
Late in 2006, Matthews Asia was wrapping up a special report titled “Japan Reawakens.” The timing of that AsiaNow publication, just ahead of the Global Financial Crisis, was unfortunate to say the least. With the ensuing economic turmoil, Japan fell asleep again, sliding off the radar screens of many investors. But as interest in Japan has more recently re-emerged, I thought it would be important for us to take a look back and consider what we previously published. Has Japan evolved the way we had envisioned? What’s changed and what hasn’t?
2015-09-18 00:00:00 Should Emerging Market Investors Fight the Fed? by Burt White of LPL Financial
Emerging market stocks have not won much lately, but the Fed may be a winnable fight. The Federal Reserve, which announces its policy decision on September 17, 2015, is on the verge of starting a rate hike cycle for the first time in more than 10 years. We have previously written that the start of Fed rate hikes has not marked an impending end to bull markets for U.S. stocks (despite the popular Wall Street adage “don’t fight the Fed.”) In reality, the first rate hike has told us we are about halfway through the cycle as discussed in our Weekly Market Commentary of August 25, 2014.
2015-09-18 00:00:00 The China Syndrome: Lessons from the A-Shares Bubble by Jason Hsu of Research Affiliates
The rapid rise and sharp decline of the A-shares market represents a massive redistribution of wealth, especially painful to uninformed investors who bought hot stocks near the peak. What should the Chinese government do now?
2015-09-17 00:00:00 Empirical Finance: Meeting Fiduciary Standards Through Skepticism, not Cynicism by Adam Butler, Michael Philbrick, Rodrigo Gordillo of ReSolve Asset Management
Michael Edesses is out with a scathing article lambasting the field of empirical finance. He draws inspiration from Harvey, Liu and Zhu’s (HLZ) recent article, entitled “…and the Cross Section of Expected Returns”, but extends HLZ’s conclusions to an absurd limit. In this article, we discuss why we embrace the framework of healthy skepticism described by HLZ, but in the context of a more optimistic and constructive view of empirical finance.
2015-09-16 00:00:00 Deconstructing the Consumer Price Index: Inside the Consumer Price Index by Jill Mislinski (Article)
Let's do some analysis of the Consumer Price Index, the best known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart below illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U, which I'll refer to hereafter as the CPI.
2015-09-16 00:00:00 New Study: We're Nowhere Near Peak Coal Use in China and India by Frank Holmes of U.S. Global Investors
Resource investors, take note: By 2025, just 10 years from now, energy consumption in Asia will increase a whopping 31 percent. A whole two-thirds of that demand, driven largely by China and India, will be for fossil fuels, most notably coal.
2015-09-16 00:00:00 Technically Speaking: DeJa Vu All Over Again by Lance Roberts of Streettalk Live
In yesterday's missive "It All Comes Down To This," I discussed the upcoming Federal Reserve meeting and the expectation that the Fed once again delays hiking rates due to global economic and market weakness. With markets oversold on a short-term basis combined with a spike in volatility and bearish sentiment, a "punt" by the FOMC will likely spark a short-term rally in the market. Such an outcome would NOT be surprising by any means since the market has rallied the week of an FOMC "no hike" meeting since 2013.
2015-09-16 00:00:00 China, Commodities, and Crisis: What's Next for Emerging Markets? by (Article)
China’s growth fueled global markets for years, and recent events raise concerns about other emerging markets, heavily dependent on Chinese demand and already out of favor with investors. This month, we consider "China, Commodities, and Crisis: What’s Next for Emerging Markets?"
2015-09-15 00:00:00 Gundlach on Donald Trump, China and Fed Policy by Robert Huebscher (Article)
Despite grabbing most of the headlines and leading in many of the polls, Donald Trump is not expected to win the Republican nomination. But Jeffrey Gundlach said that Trump has done the electorate a “big favor by bringing up issues that have been conveniently buried for quite some time.”
2015-09-15 00:00:00 On My Radar: Valuations, Forward Returns and Recession by Steve Blumenthal of CMG Capital Management Group
Of the nine market declines associated with recessions that started with valuations above the mean, the average decline was -42.8%. Of the four declines that began with valuations below the mean, the average was -19.9%”– Doug Short
2015-09-15 00:00:00 China: Double, Double Toil and Trouble/Fire Burn, and Cauldron Bubble? by Andy Rothman of Matthews Asia
Many argue that China’s economy is descending into policy chaos and a witches’ brew, otherwise known as a hard landing. But perhaps tellingly, even during the recent A-share fall, Chinese consumers seemed to shrug off the drama and continued to spend. China’s recent economic developments can be seen as stumbles along the path toward growth rates that are continuing to decelerate (but are still quite fast) from an economy that is increasingly “rebalanced.” This latest issue of Sinology explores the thinking behind this non-consensus conclusion.
2015-09-15 00:00:00 Market Unease May Continue for Some Time by Robert Doll of Nuveen Asset Management
Markets calmed last week relative to recent turmoil, but investor sentiment remains fragile. The focus on Federal Reserve policy, weakness in China and concerns about economic growth continued to drive sentiment. The S&P 500 Index gained 2.1%, commodities were flat and bond yields rose. Technology and health care posted the best results, while energy lagged.
2015-09-15 00:00:00 Active Versus Passive – Understanding the Debate Part 2: Passive Investing by Charles Batchelor of Cleary Gull
In this next post, I’m going to focus on passive investments and passive investing. If it looks like I just repeated myself, I didn’t. Passive investments are much different than following a passive investment strategy for portfolio management. As a reminder, a passive investment is a style of management where a predetermined basket of securities are purchased and automatic adjustments are made with no personal judgement or forecasting.
2015-09-14 00:00:00 The Beauty of Truth and the Beast of Dogma by John Hussman of Hussman Funds
When you examine historical data and estimate actual correlations and effect sizes, the dogmatic belief that the Fed can “fine tune” anything in the economy is utter hogwash. Truth, on the other hand, is beautiful. Economic relationships that are supported in real-world data are a sight to behold.
2015-09-14 00:00:00 Early Cyclicals Moved to New Relative Highs During Recent Market Turmoil by Jennifer Thomson of GaveKal Capital
Regular readers are familiar with our reliance on ‘baskets’ of stocks in order to gain a high-level perspective on general market trends.
2015-09-14 00:00:00 Investing for Income: Meeting the Challenges of a Low Yield Environment by Paul Reisz, Tina Adatia, Tanya Sanwal of PIMCO
For many investors, generating a high and sustainable income stream is challenging in the current secular landscape, which PIMCO calls The New Neutral. Over the next three to five years, we expect to see global economies converging to modest trend growth rates as central banks are constrained to set policy rates at levels well below those that prevailed before the financial crisis.
2015-09-14 00:00:00 Are You Investing in Tomorrow's Dividend Growers? by Clint Harris of Invesco Blog
Some 420 companies in the S&P 500 Index pay dividends. If you own a fund that invests in dividend-paying companies, it’s critical for you to understand your fund’s selection criteria. Does it look for increasing dividends? Stable dividends? High dividend yields? These differences can matter greatly to your results.
2015-09-14 00:00:00 Designing the Appropriate Common Stock Retirement Portfolio: Stock Selection Options Part 1 by Chuck Carnevale of F.A.S.T. Graphs
What is the best way to design or construct a common stock portfolio? This is a question I am often asked and my short answer is always the same - it depends. The truth is, there is no perfect method or strategy for designing a stock portfolio that is right for every individual investor. However, there are principles of sound investing that every investor can follow and apply when designing a common stock portfolio that’s just right for them.
2015-09-14 00:00:00 A Turn of the Tide Revisited by Martin Pring of Pring Turner Capital Group
US equities reached a major inflexion point in the year 2000. It was historic because it represented both a secular and primary reversal. A primary trend revolves around the business cycle and typically lasts 2-3 years, whereas a secular one lasts much longer and embraces several cycles. Our objective here is to revisit an article published earlier this year in which we pointed out some ominous signs for US equities. At that time some trend reversal signals, such as negative long-term moving average crossovers, were required as confirmation.
2015-09-12 00:00:00 International Economic Week in Review For Sept. 7-11 by Hale Stewart of Hale Stewart
There has been a slight but important shift in news coverage over the last few months. It started with the wild gyrations of the Chinese stock market, which, in retrospect, granted journalists permission to write more negative stories about the global economy. Since then, we’re seen more discussion about EM capital flight, the fiscal troubles of Brazil and the potential issues related to Russia. The news is hardly catastrophic; it simply represents the natural ripples flowing out from China’s attempt to change its economic model and the potential Fed rate hike coming down the pike.
2015-09-12 00:00:00 Life Is Uncertain and So Are Interest Rates by Frank Holmes of U.S. Global Investors
Right now, a lot of investors are wondering about the uncertainty of rising interest rates—the causes, effects and possible ramifications. Many people have been saying for weeks and months now that a rate hike is imminent and that September is the anticipated takeoff. I’ve been skeptical of this, and now a chart from highly-respected market analyst Jeff deGraaf confirms my skepticism.
2015-09-12 00:00:00 Active Versus Passive – Understanding the Debate by Charles Batchelor of Cleary Gull
The purpose of this series of blog posts is not to add to the already massive number of studies, whitepapers, presentations, academic papers, blogs, etc. that attempt to prove which overriding type of investment product, “active” or “passive,” is “better.” Furthermore, I am not going to give you my opinion on which product type is superior. Rather, my primary goals are to better define what is being debated, spend time on what I do not believe has been discussed nearly enough during the “active vs. passive” debate.
2015-09-12 00:00:00 Weekly Market Summary by Urban Carmel of The Fat Pitch
It's never perfect in equity markets; when price patterns and breadth look healthy, sentiment is overly bullish and further appreciation becomes limited. When price falls, the price pattern looks scary and breadth looks terrible but sentiment becomes too bearish. These are when longer term lows form. More likely than not, that is where equity markets are now.
2015-09-11 00:00:00 Closed End Funds versus Exchange Traded Funds by Heather Rupp of AdvisorShares
There are currently a number of fund-based options available to investors looking for yield. In addition to traditional open-ended mutual funds, investors are also turning toward closed end funds (CEFs) and exchange traded funds (ETFs) to generate yield, including in the high yield bond market. Both CEFs and ETFs have continuous trading and pricing throughout the day, making them very liquid options for investors. While CEFs tend to be actively managed, there are both index-based options and actively managed options in the ETF space.
2015-09-11 00:00:00 An Expert’s Guide to Market Volatility by Russ Koesterich of BlackRock
Russ shares three themes that have emerged from his conversations with numerous clients following the market drama in recent weeks.
2015-09-11 00:00:00 Global Economic Perspective: September by Franklin Templeton Fixed Income Group of Franklin Templeton Investments
While the [US] Fed is facing an extremely delicate task ... it is still our belief that the US economy remains sufficiently strong to be able to bear a gradual increase in short-term rates in the coming months.
2015-09-11 00:00:00 Protecting Against Inflation In a Deflationary World by Steven Malin Ph.D. of Allianz Global Investors
Powerful global deflationary forces will continue to put downward pressure on the prices of inputs and outputs for months, if not years, to come. Even if the US Federal Reserve and the Bank of England raise policy interest rates over the months ahead, inflation risk premiums built into market interest rates will remain small. In the absence of strong wage increases, unprecedented global growth in the supply of resources and outputs relative to demand will linger—and inflation will remain constrained.
2015-09-10 00:00:00 Describing Liquid Alts: Alternative-Asset Beta (FX, Commodities, MLPs and beyond) by Michael Breitenbach of Larkin Point Investment Advisors LLC
The alternative-asset beta family of related liquid alternative strategies invests in alternative assets such as foreign exchange, commodities, and energy infrastructure. Ideally, these investments will provide attractive risk-adjusted returns that are uncorrelated with traditional equity and fixed-income markets.
2015-09-10 00:00:00 Uncertainty = Opportunity® by Richard Bernstein of Richard Bernstein Advisors
While market volatility is currently making front-page headlines in the media, we argue that investors must look past the noise and objectively focus on the fundamentals. Before you decide on a drastic asset allocation shift, learn what opportunities we see in these uncertain markets.
2015-09-10 00:00:00 Analysts Haven’t Been this Negative on Emerging Markets Since... by Bryce Coward of GaveKal Capital
In simple terms, everyone has moved to the same side of the boat when it comes to expectations about the prospects of emerging market stocks. Not since the financial crisis nadir in stock prices have analysts of EM stocks been so bearish and quick to rerate expectations. Yet, amid all this negativity, there arises a fantastic opportunity for investors of EM stocks. As the famous Warren Buffet axiom states, “Be fearful when others are greedy and greedy when others are fearful”. To say that analysts are fearful would be an understatement.
2015-09-10 00:00:00 Equity Valuations, Recessions and Stock Market Declines by Doug Short (Article)
Note from Doug: In response to a request, I've updated the data in this article through the August month-end numbers.
Earlier this year I had a fascinating conversation with Neile Wolfe, of Wells Fargo Advisors, LLC. Based on the underlying data in the adjacent chart, Neile made some cogent observations about the historical relationships between equity valuations, recessions and market prices:
2015-09-09 00:00:00 What's Needed for the Prime U.S. Workforce to Fully Recover? by Doug Short (Article)
Next week market mavens and economists will be focused on the question of whether the Federal Reserve announces a rate hike at the conclusion of their September 16-17 meeting. Today the Financial Times reported that World Bank chief economist, Kaushik Basu, has warned the Fed to delay a rate rise to avoid the risk of “panic and turmoil” in emerging markets. At this point, the Fed's dual mandates, inflation and employment, appear to be sending mixed messages.
2015-09-09 00:00:00 Competing with the Alpha and the Omega by Cole Smead, CFA of Smead Capital Management
In the Bible, Jesus said, “I am the Alpha and the Omega, the first and the last, the beginning and the end.” While Jesus infers that he is at both the beginning and the end of time, we as investors can only operate in the present with a knowledge of what has come before. To better understand today's commodity market circumstances, we believe investors should examine the herd mentality and the psychological backing that may lead to contrarian investment opportunities.
2015-09-09 00:00:00 Markets Remain in Turmoil, but Should Stabilize Eventually by Robert Doll of Nuveen Asset Management
Global equity markets fell last week with the S&P 500 Index down 3.4% and some non-U.S. markets declining even more. The sell-off is a continuing reflection of the ongoing turmoil that started a few weeks ago when China devalued its currency on August 11.
2015-09-09 00:00:00 Technically Speaking: A Sucker's Rally? by Lance Roberts of Streettalk Live
In last week's technical review "The Mark Of A Bear," I stated: "The Bulls have remained firmly in charge of the markets as the reach for returns exceeded the grasp of the underlying risk. It now seems that has changed. For the first time since 2007, as we see initial markings of a potential bear market cycle." The problem in stating that we MAY be seeing the initial markings of a potential bear market cycle is that individuals assume this means the markets will crash immediately. When such an outcome does not occur, the analysis is presumed wrong.
2015-09-09 00:00:00 A Time to Take Stock – and Advantage of Pockets of Value by Russ Koesterich of BlackRock
Another week, another selloff. Stocks tumbled again last week with the S&P 500 Index falling 3.37% to 1,921 and the Dow Jones Industrial Average declining 3.25% to 16,102. The tech-heavy Nasdaq Composite Index struggled as well, down 3.00% to 4,683. Meanwhile, bond yields were relatively unchanged, with the yield on the 10-year Treasury slipping from 2.18% to 2.13%, as its price correspondingly rose.
2015-09-09 00:00:00 Dividend & Income Builder Celebrates 3-Year with 5 Stars by (Article)
Ben Lofthouse, Co-Portfolio Manager of the Dividend & Income Builder Fund, provides an update on the Fund’s performance and positioning and notes its recent 5-star Morningstar rating. Ben comments that the biggest driver of the Fund’s performance has been stock selection; they have seen improving economic growth from a low base in the US, UK and Europe. Ben notes they’ve seen good dividend growth; the team continues to focus on dividend growth and cash flow generation. The team believes they are well-positioned for medium term capital growth and importantly, income growth.
2015-09-09 00:00:00 Newsletter - September 2015 by Harold Evensky, of Evensky & Katz / Foldes Financial Wealth Management
Harold Evensky's quarterly letter to his readers.
2015-09-08 00:00:00 Making Sense of Market Volatility by Sponsored Content from Invesco (Article)
• On Aug. 21, the Dow Jones Industrial Average entered a correction and reminded investors what volatility looks like. • Several Invesco senior investment leaders discuss their views of market volatility. • They share how it affects, or doesn’t affect, the opportunities they see.
2015-09-08 00:00:00 That Was Not a Crash by John Hussman of Hussman Funds
To call the recent market retreat a “crash” is an offense to informed discussion of the financial markets. It was merely an air-pocket of the sort that typically emerges once overvalued, overbought, overbullish conditions are joined with deterioration in market internals. It was probably just a start.
2015-09-08 00:00:00 Betting on Japan, Inc.’s Recovery by Vadim Zlotnikov of AllianceBernstein
Japanese stocks have outperformed the past few years, and we don’t think their run is over. Policies to improve profitability, capital use and productivity should provide a stronger foundation for further gains.
2015-09-08 00:00:00 The 2 Keys to the Magic Formula for Long-Term Investment Success by Chuck Carnevale of F.A.S.T. Graphs
Investing in anything comes with a degree of uncertainty because all investing returns happen in the future. And even though the future is unpredictable, the future is what everyone that invests is investing for. These realities present important challenges that every investor must face and deal with in order to succeed.
2015-09-08 00:00:00 Curb Your Mind by Rick Lear of Lear Investment Management
With the recent events in China and Greece causing volatility in the global markets, we think it is more important than ever to take a moment to reflect on how capital markets function. People trade stocks; and an understanding of the human thought processes is at the foundation of markets. The recent gyration of the world’s markets reminds us how quickly greed can turn to fear and how investors can begin to make mistakes. We find that heightened emotions often lead to mistakes that can be easily avoided.
2015-09-08 00:00:00 On My Radar: A Bumpy Ride? How Bumpy? And For How Long? by Steve Blumenthal of CMG Capital Management Group
Volatility and uncertainty are nothing new in financial markets. QE4 may right the ship but that is the bet. No guarantees in this game.
2015-09-05 00:00:00 The Art of Capital Flight by Kenneth Rogoff of Project Syndicate
For emerging-market investors, art has become a critical tool for moving and hiding wealth, which has been a major factor in the spectacular rise in auction prices of the last several years. So, with emerging-market economies from Russia to Brazil mired in recession, and China slowing rapidly, is the art bubble about to burst?
2015-09-05 00:00:00 Meet QT; QE's Evil Twin by Peter Schiff of Euro Pacific Capital
There is a growing sense across the financial spectrum that the world is about to turn some type of economic page. Unfortunately no one in the mainstream is too sure what the last chapter was about, and fewer still have any clue as to what the next chapter will bring. There is some agreement however, that the age of ever easing monetary policy in the U.S. will be ending at the same time that the Chinese economy (that had powered the commodity and emerging market booms) will be finally running out of gas.
2015-09-04 00:00:00 A Hall of Fame Client by Francois Sicart of Tocqueville Asset Management
Over two or three decades, money-management has changed in the same way that medicine and law, for example, have changed. What used to be professions have become businesses, for the sake of cost-cutting, pooling of resources, growth, and operational leverage. In the process, whereas the main goal of professionals used to be to excel at the services they provided, with growth being ancillary, that goal has now been relegated to a spot behind the pressure to “meet the figures.”
2015-09-04 00:00:00 Here’s Your Guide to What the Influencers Are Saying about Commodities by Frank Holmes of U.S. Global Investors
A few legendary influencers in investing are making huge bets right now on commodities, an area that’s faced—and continues to face—some pretty strong headwinds. What are we to make of this?
2015-09-04 00:00:00 Unpopularity Contest by Herbert and Randall Abramson of Trapeze Asset Management
With central banks focused on growth and generating inflation, and their pedals to the metal, we believe the ultimate outcome will be inflationary growth, or even stagflation. But, inevitably, a boost for depressed commodities and the depressed share prices of their currently unpopular producers. A particular opportunity when the correction phase ends and the bull market resumes. Time to be contrarian. And patient value investors should clearly be rewarded.
2015-09-04 00:00:00 Unfazed by the Turmoil by Byron Wien of Blackstone
Overall, my sense of this year’s lunches is that the participants were still basically optimistic, as they generally are. I wonder if there were something big and negative brewing out there, whether the group would be able to anticipate it.
2015-09-04 00:00:00 International Economic Week in Review For Aug. 31-Sept. 4 by Hale Stewart of Hale Stewart
The potential negative impact of China’s slowdown is sinking into policy maker’s decision making process and trader’s analysis. Money is flowing from emerging to developed economies; emerging markets and currencies are underperformers relative to developed markets. The potential for China to export deflation is being discussed. And central bankers are acknowledging the slowdown by lowering growth forecasts and opening speculating about additional monetary stimulus. As we leave the summer doldrums and enter the last four months of trading, the environment has clearly changed.
2015-09-03 00:00:00 12 Questions for a 12% Correction by Burt White of LPL Financial
The recent market downdraft and related uncertainty in China have led to many investor questions. The strong 6.5% rebound in the S&P 500 over the last three trading sessions (August 26, 27, 28, 2015) has cut the S&P 500’s losses from the 2015 peak (2130 on May 21, 2015) to 6.7%. In response to the S&P 500’s recent 12% correction?—?the first decline of more than 10% since 2011?—?we answer 12 investor questions. Bottom line, we do not expect the latest correction and China uncertainty to lead to the end of the U.S. economic expansion or the end of the six-and-a-half-year old bull
2015-09-03 00:00:00 Commodities, China and Currencies Oh My! by Rudolph-Riad Younes of R Squared Capital Management
Recent market events confirm our big picture view. We are and have been bearish on commodities and emerging markets. The spike in commodity prices during the so-called supercycle and the ZIRP (zero interest rate period) in the U.S. created irrationally exuberant conditions in many emerging markets. We are moving from a virtuous circle to a vicious cycle.
2015-09-03 00:00:00 Weight of the Evidence Argues for Caution by William Delwiche of Robert W. Baird & Co.
At this point, cycle lows for the popular averages may well be in place. This is not yet supported by the weight of the evidence, however. Simply put, risks remain elevated and it is too early to sound an all clear.
2015-09-03 00:00:00 Look Out Below? by Jim McDonald of Northern Trust
Are we experiencing a healthy correction or something more? After a long-period of relative calm, risk assets sold off meaningfully in response to global growth concerns. Our Chief Investment Strategist analyzes the fundamental picture in the wake of the recent downturn and what investors should do now.
2015-09-03 00:00:00 Searching for Sustainable Growth in Malaysia by Dilip Badlani of The Royce Funds
As an active manager with a value orientation, Portfolio Manager Dilip Badlani seeks to locate inexpensive companies helmed by management teams that have demonstrated an ability to consistently execute plans to grow their business irrespective of economic conditions. Though not without its challenges, Malaysia's history of perseverance makes it an attractive market for disciplined and patient investors.
2015-09-03 00:00:00 The Next Financial Crisis May Be Already Unfolding by Stefan Gleason of Money Metals Exchange
Is an epic financial meltdown about to commence? Predictions that a crash will occur in the fall of 2015 have been gaining traction. They are bolstered by some of the market events of this summer, which suggest that something big is indeed unfolding.
2015-09-02 00:00:00 Equities Endure Intense Volatility, but the Bull Market Survives by Robert Doll of Nuveen Asset Management
U.S. equities experienced extreme volatility last week. Prices plummeted on Monday morning due to concerns over slowing growth in China as well as uncertainty surrounding Federal Reserve policy. The sell-off was likely exacerbated by trading halts, liquidity pressures and systematic investing programs. Markets recovered later in the week as investors viewed conditions as oversold, and as oil and other commodity prices stabilized and advanced. For the week, the S&P 500 Index gained 1.0%. The energy, technology and consumer discretionary sectors led the way while utilities sold off sharply.
2015-09-02 00:00:00 Bremmer’s Choices by Bill O'Grady of Confluence Investment Management
Last week, we wrote our first formal book review as a Weekly Geopolitical Report. The book, Superpower: Three Choices for America’s Role in the World, is a recently published book by Ian Bremmer in which he discusses three models for American foreign policy. In our closing comments last week, we promised to take a deeper look at Bremmer’s foreign policy models to examine their costs and benefits. In this report, we analyze his three models of exercising the superpower role, Indispensable America, Independent America and Moneyball America, and discuss which model is the most likely choice.
2015-09-02 00:00:00 The Smartphone Banking Revolution: Leaders of the Pack by Julian Wellesley of Loomis Sayles
By 2020 it is projected that 70% of the world’s population will own a smartphone - 1.2 billion smartphones were sold worldwide last year alone. Users increasingly rely on their smartphones for conducting a variety of daily activities including banking transactions. As retail banks respond to this shift toward mobile reliance, winners and losers are quickly emerging in the internet and app-based banking space.
2015-09-02 00:00:00 Market Reset, Not Recession by John Calamos of Calamos Investments
In our view: Neither the U.S. or global economy is headed for recession; instead, we are seeing a market reset that is not entirely unexpected. Markets are likely to be extremely choppy over these next months, and we may see additional corrections. Over the near term, energy and commodity prices will remain volatile, with global interest rates and currency turmoil adding to the headwinds. Market dislocations are providing us with select opportunities to establish and build positions in fundamentally strong companies, worldwide—including in emerging markets.
2015-09-02 00:00:00 August 2015 Commentary by Joe Becker of Milliman Financial Risk Management
As August wound down and families enjoyed the last few lazy days of summer, financial markets clearly had another idea in mind. After trading in a relatively tight range for most of the summer, the last two weeks of August were marked by volatility, the likes of which haven’t been seen since 2011. We attribute this heightened volatility to the confluence of global macro conditions with technical factors.
2015-09-01 00:00:00 China and the U.S. Stock Market by Brad McMillan of Commonwealth Financial Network
Now that things seem to have calmed down a bit, it’s a good time to discuss why the past week has been so turbulent. The usual explanations—the Chinese currency devaluation and stock market crash—are certainly valid, but there’s more to the story. Let's take a closer look at the connection between the news from China and U.S. stock prices.
2015-09-01 00:00:00 Investors Should Not "Buy the Dip" Because Macro and Market Risks Remain Elevated by Don Schreiber, Jr. of WBI Shares
The global market meltdown is turning into a rout as investors who ignored the warning signs of overvaluation, weakening earnings/revenue trends, and deteriorating internal market dynamics may now be heading for the exits. As advisors and investors try to rationalize asset allocation and equity market exposure, they may deem it appropriate to stick with investments in countries with the strongest economies. Reasoning, stronger eco-markets should behave better than markets in countries with economies under pressure.
2015-08-31 00:00:00 Making Sense of Market Volatility by Karen Dunn Kelley of Invesco Blog
On Aug. 21, the Dow Jones Industrial Average entered a correction, falling 10% from its most recent peak, and reminded investors what volatility looks like after almost four correction-free years. While volatility exposes weaknesses in the market, in my opinion it also reveals the strength of high conviction managers who are skillfully navigating the market. Active management and smart beta strategies seek to surpass the “market averages” offered by traditional benchmarks, providing the potential not only for higher returns, but also for a smoother ride.
2015-08-31 00:00:00 Vinson Walden on the Thornburg Global Opportunities Fund by Robert Huebscher (Article)
Vinson Walden is the co-portfolio manager, along with Brian McMahon, of the Thornburg Global Opportunities Fund (THOAX). Within Morningstar’s World Stock category, THOAX ranked among the top-performing funds over the last one, three and five years. I spoke with Vin about how he constructs the fund and his outlook for the future.
2015-08-31 00:00:00 If You Need to Reduce Risk, Do it Now by John P. Hussman of Hussman Funds
The single most important thing for investors to understand here is how current market conditions differ from those that existed through the majority of the market advance of recent years. The difference isn’t valuations. On measures that are best correlated with actual subsequent 10-year S&P 500 total returns, the market has advanced from strenuous, to extreme, to obscene overvaluation, largely without consequence. The difference is that investor risk-preferences have shifted from risk-seeking to risk-aversion.
2015-08-31 00:00:00 On My Radar: We Didn’t Start The Fire by Steve Blumenthal of CMG Capital Management Group
Risk is high. For equity exposure, hedge or raise cash on rallies and let your tactical and alternative strategies follow their processes. Put in place the processes. Now is the time.
2015-08-31 00:00:00 Markets Volatile, Economy Fine by Brian S. Wesbury and Robert Stein of First Trust Advisors
As you woke up this morning, US stock market futures were down again. They say it’s because the Chinese stock market fell, and in spite of this every summary of Fed intentions that we read suggests a rate hike this year (possibly in September) is still very much on the table.
2015-08-31 00:00:00 Dog Days Are Over: What a Week! by Liz Ann Sonders of Charles Schwab
Volatility … and the volatility of volatility … hit record levels last week. We believe this is just a correction; not the beginning of a new bear market. Weeks like last week provide valuable lessons for investors about crowd psychology and the benefits of diversification and rebalancing.
2015-08-30 00:00:00 Weekly Market Summary by Urban Carmel of The Fat Pitch
Waterfall events like the current one tend to most often reverberate into the weeks ahead. Indices will often jump 10% or more higher and also attempt to retest the lows. Volatility will likely remain elevated for several months. But the fall in equity prices, which has knocked investor sentiment to its knees, opens up an attractive risk/reward opportunity for investors. Further weakness, which is quite possible, is an opportunity to accumulate with an eye toward year-end. However, a quick, uncorrected rally in the next week or two would likely fail.
2015-08-28 00:00:00 Why This Time Could Be Different by Lance Roberts of Streettalk Live
In yesterday's post, I discussed the current correction within the context of previous "bull market" corrections. Specifically, the corrections in 1987, 1998, 2010 and 2011. However, today, I want to look at the current correction in the context of previous starts to "bear markets" and subsequent recessions.
2015-08-28 00:00:00 Doodles from an Eventful Summer by Niels Jensen of Absolute Return Partners
This month's Absolute Return Letter is a little different. It was a very eventful summer with many incidents impacting financial markets and we have compiled all these topics into one letter. China is, not surprisingly, a core subject. If the Chinese economy is slowing (and it is), we don't think China is in for a hard landing. If anyone is in the near term - and this may surprise you - we think the U.S. and the euro zone are far more likely candidates.
2015-08-28 00:00:00 Don't Panic: Putting Market Turbulence in Context by Tom Fahey of Loomis Sayles
Sharp declines in China’s equity markets have heightened fears about the country’s economic prognosis and what it might mean for global growth. While concerns center on the emerging markets, the tumult has spilled across global financial markets. Our advice: don’t panic.
2015-08-28 00:00:00 Are You a "Ben Graham Defensive Investor"? by Charles Aram of Research Affiliates
Benjamin Graham’s well-reasoned, rules-based approach to security analysis remains, after more than 80 years, a cornerstone for building a strong, long-term investment program to meet investors’ financial goals.
2015-08-28 00:00:00 On Market Corrections, and Keeping a Calm Head by Mark Mobius of Franklin Templeton Investments
Despite recent market volatility, we consider the long-term outlook for China’s market and economy to be good. We don’t view this recent correction as the start of any sort of economic or market collapse underway, and it doesn’t change our view on investing there.
2015-08-28 00:00:00 12 Attractive Fast-Growing Dividend Growth Stocks for High Total Return by Chuck Carnevale of F.A.S.T. Graphs
The current market environment is presenting many challenges to the conservative retired investor in need of current income. Interest rates are near all-time lows and the valuations of many blue-chip dividend growth stocks have become extended. Consequently, it is becoming very difficult to find quality investment opportunities that can provide safety through sound valuation, attractive yield and the potential to fight inflation.
2015-08-28 00:00:00 Schwab’s Perspective on Recent Market Volatility by Team of Charles Schwab
Global markets may have swung wildly in recent days, but we think the recent selloff in stocks and commodities is not a sign of imminent global recession. However, it may prompt the Federal Reserve (Fed) to postpone raising U.S. interest rates for a while longer. In the meantime, the basics of successful investing remain the same: Sticking to your long-term investment plan and maintaining a well-diversified portfolio should help you weather the market storm.
2015-08-28 00:00:00 If China Lands Hard, It Won’t Be Alone by Carl Tannenbaum of Northern Trust
The news from China has been volatile and disconcerting. There is a general sense that the carnage would be far worse if not for active intervention from Chinese authorities.
2015-08-28 00:00:00 China’s Economy Is Undergoing a Huge Transformation That No One’s Talking About by Frank Holmes of U.S. Global Investors
Misconception and exaggeration are circling China’s economy right now like a flock of hungry buzzards. If you listen only to the popular media, you might believe that the Asian giant is teetering on the brink of economic disaster, with the Shanghai Composite Index’s recent correction and devaluation of the renminbi held up as “proof.”
2015-08-27 00:00:00 Solidifying a Case for Liquid Alternatives by David Saunders of Franklin Templeton Investments
Skeptics may be surprised to learn that the majority of hedge fund managers focus on providing capital appreciation with lower volatility than the broad markets.
2015-08-27 00:00:00 Superpower by Bill O’Grady of Confluence Investment Management
Our subject is a new book titled Superpower: Three Choices for America’s Role in the World, by Ian Bremmer, a political scientist who writes often on geopolitical issues. At some point, the US will need to select a workable foreign policy for the post-Cold War era and determine how to handle the superpower role. In this report, we review Bremmer’s book, starting with his premise that no president since the fall of the Berlin Wall has developed a coherent foreign policy.
2015-08-27 00:00:00 Trying to Restore Order by Carl Tannenbaum of Northern Trust
It has been an unsettling month for the financial markets. The challenges faced by China, which have been amplified by inconsistent responses from policy makers, have heightened uncertainty.
2015-08-27 00:00:00 Global Market Chaos Amidst Worries About China, Etc. by Gary Halbert of Halbert Wealth Management
There is so much to write about today it’s hard to know where to start. Equity markets around the world are plunging on worries about China, a possible Fed interest rate hike next month, the worsening bear market in commodities, economic and currency weakness in emerging markets, etc., etc.
2015-08-26 00:00:00 A Macro View of Recent Market Volatility by Michael Hasenstab and Sonal Desai of Franklin Templeton Investments
When we look at how much market panic there has been, you’d be under the impression China is headed full-speed into full-blown recession. That is not our call. We expect moderation in China’s growth and continue to see it as healthy.
2015-08-26 00:00:00 China Commentary by John Calamos: Market Reset, Not Recession by John Calamos Sr. of Calamos Investments
The global market selloff of these past days has tested the mettle of many investors—particularly as the turmoil has followed an unusual period earlier this year, where equities delivered healthy advances with very little volatility. While we’ve gone on record saying that we expected volatility to persist (including in our most recent Outlook), we have been surprised by how severe the downturn has been. However, experience teaches that there can be many opportunities in volatile markets.
2015-08-26 00:00:00 Earnings Voids and the Emergence of Plausible Risk by Doug MacKay, Bill Hoover of Broadleaf Partners
We had put the finishing touches on a market update celebrating our first ten years in business, but were rudely interrupted by the first violence in the markets we’ve seen in nearly a year. Yes, a year.
2015-08-25 00:00:00 Building Corridors to the Future in Pakistan by Mark Mobius of Franklin Templeton Investments
We have been investing in Pakistan for a number of years, and see it as an overlooked investment destination with very attractive valuations due to negative macro sentiment.
2015-08-25 00:00:00 China and the Submerging Market Outlook by Scott Brown of Raymond James
China’s economic slowdown may not be much of a direct drag on U.S. growth. While U.S. exporters will have a tougher time, the drop in commodity prices should help consumers and domestic producers. However, the country’s difficulties need to be considered in the broader view of emerging market troubles.
2015-08-25 00:00:00 The Correction May Not Be Over, but the Bull Market Should Persist by Robert Doll of Nuveen Asset Management
The S&P 500 Index fell 5.7% last week, its biggest weekly pullback since September 2011. Equities have been under pressure for some time, and it appears that investors finally gave in.
2015-08-25 00:00:00 This Correction is Technical, Not Fundamental by Brian Wesbury, Robert Stein of First Trust Advisors
The only people more giddy with anticipation are the stock market pundits looking for The Big Short – II. It’s an eagerly anticipated sequel of the Panic of 2008. The S&P 500 is tumbling again today, more than 10% below the peak in May.
2015-08-25 00:00:00 On My Radar: An Optimist Sees The Opportunity In Every Difficulty by Steve Blumenthal of CMG Capital Management Group
“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” – Winston Churchill
2015-08-24 00:00:00 Risk Turns Risky: Unpleasant Skew, Scale Dilation, and Broken Lines by John Hussman of Hussman Funds
Over the years, I’ve observed that overvalued, overbought, overbullish market conditions have historically been accompanied by what I call “unpleasant skew” – a succession of small but persistent marginal new highs, followed by a vertical collapse in which weeks or months of gains are wiped out in a handful of sessions.
2015-08-24 00:00:00 Equities: Enhancing Your Small Cap Allocation by Laura Schlockman, Steve Jones of PIMCO
Our New Neutral outlook is generally supportive of equities: Low discount rates, recovering but muted inflation and a drawn-out business cycle argue for positive equity performance. However, full valuations and uneven growth suggest returns may be significantly lower than long-term averages. This means that capturing equity alpha will be critical for investors to meet their return objectives.
2015-08-24 00:00:00 US Equity and Economic Review For August 17-22 by Hale Stewart of Hale Stewart
For the last several months, I have expressed three concerns regarding the markets. The high current and forward PEs of the major averages were the first. This was followed by the declining top line revenue of the S&P 500 companies. And third were deteriorating market technicals; a weakening advance/decline line, fewer stocks participating in rallies and various averages (the transports, IWCs and IWMs) declining. All of those factors came home to roost this week as the markets sold-off in a fairly sharp manner.
2015-08-24 00:00:00 Weekly Market Summary by Urban Carmel of The Fat Pitch
Strong downward momentum usually has follow through. US indices are mostly within a few percent of significant support levels. The selling this week registered noteworthy extremes in breadth, volatility and sentiment. Friday probably will not mark the low, but risk/reward over the next month looks favorable.
2015-08-21 00:00:00 Shrugging Along by Brooks Ritchey of Franklin Templeton Investments
From our point of view, trying to predict market declines or rallies is not as important as preparing for incipient shocks smartly and strategically; it is about being vigilant.
2015-08-21 00:00:00 Gold Glimmers as Global Market Fear Grips Investors by Frank Holmes of U.S. Global Investors
Gold this week broke above its 50-day moving average as a fresh round of negative news from around the globe rekindled investors’ interest in the yellow metal as a safe haven. The Fear Trade, it seems, is in full force.
2015-08-21 00:00:00 Is a Stronger U.S. Dollar Really Bad News? Three Myths about Emerging Markets by Michele Mazzoleni of Research Affiliates
A strengthening U.S. dollar threatens emerging market economies—owes its plausibility to three myths. Let’s examine them.
2015-08-21 00:00:00 International Economic Week In Review For Aug. 17-22 by Hale Stewart of Hale Stewart
The most important overarching story of the week was the emerging market capital flight, which is occurring at startling pace.
2015-08-21 00:00:00 Schwab’s Perspective on Recent Market Volatility by Team of Charles Schwab
Global financial markets endured their worst week of the year this past week amid concerns over slowing economic growth and currency woes in China and other emerging markets, among other reasons. At times like these it is easy to start thinking short term, but keep in mind that the foundations of investing success are well established (have a plan, keep a close eye on expenses, stay diversified, and make sure your portfolio composition is lined up with your tolerance for risk and the timetable for when you’ll need to start drawing down the portfolio).
2015-08-20 00:00:00 Emerging Markets Equity Commentary: July 2015 by Team of Thomas White International
Emerging market equity prices declined further in July, as concerns about slower growth in China as well as lower energy and commodity prices hurt investor optimism. Chinese equity markets, which had seen significant gains over the last one year, corrected despite the government’s efforts to stabilize the market.
2015-08-20 00:00:00 Commodities: A Crude Awakening by Jim McDonald of Northern Trust
Commodities investors face numerous short-term challenges – falling demand, falling prices and a strong dollar – but this may present long-term opportunities for patient investors. Our Chief Investment Strategist, Jim McDonald, explains in his latest Investment Strategy Commentary: Commodities – A Crude Awakening.
2015-08-20 00:00:00 Unattractive ‘Glamour Stocks’ Lead the Way in Asia Pacific by Brent Bates of Invesco Blog
Economic growth continues to decelerate across the Asia Pacific region. Domestic economies have not been robust enough to offset weakness in commodities and exports, and both revenue and earnings expectations were adjusted downward by 1% during the second quarter. Because growth is scarce, investors have been crowding into the highest-growth and highest-quality stocks; within Asia and Japan, this group of stocks is now trading at the highest premium to the rest of the market that we’ve seen in the past 20 years.
2015-08-19 00:00:00 APViewpoint Presents Global Macro Outlook: The Real Vision Perspective from Grant Williams and Raoul by APViewpoint (Article)
A live, CFP/IMCA CE-eligible webinar presented by APViewpoint on Tuesday, August 25, at 4:15 pm ET. The major strengthening of the US dollar is changing the global investment landscape. In this live Q&A session conducted by Advisor Perspectives CEO Robert Huebscher, Real Vision founders Grant Williams and Raoul Pal will discuss key macroeconomic drivers of asset price movements in international markets, focusing on how advisors can help their clients profit from opportunities created by favorable U.S. currency rates.
2015-08-19 00:00:00 Global Economic Perspective: August by Franklin Templeton Fixed Income Group of Franklin Templeton Investments
We believe sound headline job creation figures point to rate increases by a [US] Fed that would like to begin to ‘normalize’ monetary policy when possible. The US economy is no longer in the emergency room, as it was in December 2008.
2015-08-19 00:00:00 The One Percent by Jeffrey Saut of Raymond James
I don’t need to defend Mr. Landry. Mr. Landry does just fine on his own. But coming from me – someone who is my own biggest critic as well as a critic of Wall Street – you best realize that Mr. Landry is in the top 1% of people on Wall Street. He is clear, he is concise, and he is right more than he is wrong. AND more importantly, when he is wrong he doesn’t just sit there and fight the tape. He adjusts unlike [many] of the bonehead strategists on Wall Street; stop reading and listening to him at your own risk.
2015-08-19 00:00:00 Global Economic Overview: July 2015 by Team of Thomas White International
While some of the emerging economies continue to face slow growth from lower commodity exports, the outlook for most developed economies has brightened in recent months. The U.S. slowdown during the first half of this year was not as bad as thought earlier, while economic trends from the Eurozone remain stable. Helped by sustained labor market gains, U.S. consumer sentiment is picking up again and should help aggregate growth during the second half of the year.
2015-08-19 00:00:00 Donald and Bernie by Bill O’Grady of Confluence Investment Management
In this report, we recap the economic and political factors that led us to conclude in previous reports from last year that the next presidential cycle could be unusually significant. From there, we look at the unlikely rise of Donald Trump and Bernie Sanders and what their success thus far signals about the electorate and the next presidential election. Finally, we analyze their potential impact on the election, including the possibility that each might mount an extra-party candidacy. As always, we conclude with market ramifications.
2015-08-19 00:00:00 Fundamental Truths by Scott Minerd of Guggenheim Partners
When policymakers tell you one thing and the data tell you something different, heed the data. Markets that are in the midst of transition do not behave according to script, despite the best efforts of policymakers to script them. Last week, China loosened control of its currency, resulting in its biggest one-day loss in two decades, compounded by additional losses over the following days. As of this writing, the renminbi (RMB) has depreciated by close to 3 percent since the start of last week.
2015-08-19 00:00:00 Strong Dollar: A Headwind for Trade by Milton Ezrati of Lord Abbett
A stronger U.S. currency likely will continue to weigh on exports and boost imports. What does this mean for future U.S. growth?
2015-08-19 00:00:00 One man’s weed... by Jerry Wagner of Flexible Plan Investments
I spent time at the Woodward Dream Cruise this week in my brother Charlie’s 1985 Ford Mustang convertible (his first new car which he bought and has maintained since that year). I think the Cruise is the largest annual assemblage of classic cars on the planet. What a great time for anyone who enjoys historical vehicles and the memories they bring back, especially here in the Motor City.
2015-08-19 00:00:00 Why the Yuan Devaluation Does Not Erode China’s Long-Term Investment Potential by Nick Niziolek of Calamos Investments
In his blog post, titled “Why the Yuan Devaluation Does Not Erode China’s Long-Term Investment Potential,” SVP and Senior Co-Portfolio Manager Nick Niziolek discusses the opportunities the Calamos team sees in China.
2015-08-18 00:00:00 Global Manufacturing Not Too Hot, Not Too Cold by Eric Bush of GaveKal Capital
Industrial production in the US in July surprised to the upside in the release today. IP rose 0.6% MoM (June was revised slightly lower, however) and is 1.3% higher YoY.
2015-08-18 00:00:00 International Economic Week in Review For Aug. 10-14 by Hale Stewart of Hale Stewart
This weekend was my summer vacation, when I (try) to completely unplug from news, internet and other variety of my daily routine. I was pretty successful at the task, although I did keep up with general events thanks to CNN. With the exception of China’s devaluation, there was little meaningful economic news, making my catch-up column a bit easier. But perhaps more importantly, when I returned I was struck just how little things had really changed in a 7 day period.
2015-08-18 00:00:00 China’s Currency Moves Spark Volatility and Uncertainty by Robert Doll of Nuveen Asset Management
U.S. equities endured high levels of volatility last week, dropping sharply in the first few days of trading before recovering to end the week slightly higher. The main focus was China’s surprising decision to devalue the yuan, which raised concerns about a weaker global growth backdrop, deflationary trends, the prospects of a currency war and what the move would mean for the U.S. Federal Reserve and U.S. monetary policy.
2015-08-18 00:00:00 China Surprise by Christian Thwaites of Brouwer & Janachowski
Ouch! August is often a month of surprises. In 2011, the S&P 500 lost nearly 7% at the height of the European debt crisis (yes, it’s been going on that long). In 2013, the NASDAQ closed for three hours sending stocks into a mini tailspin. This week’s “I didn’t see that coming” was the devaluation of the Chinese renminbi by nearly 3%.
2015-08-17 00:00:00 Chinese Yuan Depreciates Further: What is the Endgame? by Rob Waldner of Invesco Blog
After China’s surprise devaluation of the yuan by 1.9% last Tuesday, the Chinese currency was devalued by another 1.6% on Wednesday. Policymakers appear to be following a pattern of setting the daily fix, which sets the center point for trading during that day, with reference to the market price at the close of the previous day. Invesco Fixed Income believes that further devaluations are likely as the People’s Bank of China (PBoC), the country’s central bank, acquiesces to market pressure and price movements over time.
2015-08-17 00:00:00 Debt-Financed Buybacks Have Quietly Placed Investors On Margin by John Hussman of Hussman Funds
When corporations and even developing countries experience debt crises, one of the primary means of restructuring is the debt-equity swap. This sort of transaction involves canceling out debt of the company or government in return for equity of the company, or privatization of some of the assets of the country. Corporate debt-equity swaps typically result in severe dilution of the equity claims of existing shareholders, and in some cases, can wipe those claims out as creditors take control of the company.
2015-08-17 00:00:00 Charts for the Beach 2015 by Richard Bernstein of Richard Bernstein Advisors
We’ve put together five of our favorite non-consensus charts that are perfect reading material for a sunny day at the beach.
2015-08-17 00:00:00 On My Radar: China’s Surprise – Power To The Dollar by Steve Blumenthal of CMG Capital Management Group
“Something is deeply wrong if an economy is not growing, because it means these natural processes are impeded. That is why around the world, since the Dark Ages, lack of growth has been a signal of political oppression or instability. Absent such sickness, growth occurs.”– Adam Posen, “Debate: The Case for Slower Growth”
2015-08-17 00:00:00 Big Data Analytics: Investing in Technology Themes by Paul Meeks of Saturna Capital
With big data analytics we can quickly and efficiently comb through a mammoth store of data for many business insights that just keep coming.
2015-08-14 00:00:00 On the Winners and Losers of the Great Chinese Rebalance by Bryce Coward of GaveKal Capital
Change can be hard, but change can also be good. At this very moment we are living through one of the largest and potentially destabilizing periods of economic change in the last century. It is the mirror image and reversal of the last great economic paradigm shift. It is China’s shift from an investment driven growth model to a consumption driven growth model. For some it is painful. For others who are correctly positioned it is extremely lucrative. It is affecting all of us whether we know it or not. But most of all, it is inevitable.
2015-08-14 00:00:00 An Unsentimental Approach to Finding Value by Brad Evans of Heartland Advisors
Sentiment has been a driving force for investor returns the past few years, but we believe a focus on valuations, management and balance sheets is still the surest path to superior performance over a full market cycle.
2015-08-14 00:00:00 The Shot Not Heard Around the World by Peter Schiff of Euro Pacific Capital
China’s recent move to devalue the yuan has sent shock waves through the global financial markets and has convinced most observers that a new front in the global currency wars has begun. The move has caused...
2015-08-14 00:00:00 China Not Immune to Contagious Quantitative Easing and Massive Printing of Cheap Money by Frank Holmes of U.S. Global Investors
First it was the U.S. Federal Reserve. Then, in 2013, Japan launched what became known as Abenomics. The European Central Bank (ECB) followed suit in 2014. And now the People’s Bank of China has joined the parade. All of them in some way stimulated economic growth by initiating monetary quantitative easing (QE) programs.
2015-08-14 00:00:00 Three Steps to "Good Enough" - In Praise of Simplicity, Common Sense, and Stubbornness by Francois Sicart of Tocqueville Asset Management
The plain truth is that in the practice of investment, “good enough,” combined with a solid dose of common sense, usually beats precision and faith in mathematical models. So, if a careful analysis has given us a “good enough” idea of a company’s worth, we can assume that its market-traded shares will fluctuate – sometimes wildly – around that fundamental value. And that may be the value investor’s salvation.
2015-08-13 00:00:00 Exit from Wonderland: Change Is Now on the Horizon by Ed Easterling of Crestmont Research
Many investors and advisors are unsure about the current financial market environment. They have been wrestling with how to weight equities and whether to include alternative investments. Although equities have performed well in recent years, many alternatives have lagged expectations. This should not be surprising: the financial world is operating just as the Fed has intended.
2015-08-13 00:00:00 Putting Adaptability to Work by Roger Nusbaum of AdvisorShares
In our last post we looked at the importance of adaptability to overcome obstacles that impede retirement plans. This may also turn out to be especially important for portfolio management going forward, more so than in the past.
2015-08-13 00:00:00 How Smart Should Smart Beta Be? by Vadim Zlotnikov of AllianceBernstein
Smart beta strategies are growing in popularity, and investors have a lot of forms to choose from. One key question to ask is: How proactive should smart beta be in avoiding unintended risks?
2015-08-12 00:00:00 Turkey’s Predicament by Bill O’Grady of Confluence Investment Management
It is our view that over the next few decades Turkey is well positioned to return to its status as a dominant regional power; however, the situation is much less clear in the near term. Turkey has been trying to run a foreign policy of having “no problems” with its neighbors. This stance has become impossible to maintain. Unfortunately for President Erdogan, Turkey is encircled by instability and is struggling to develop a response.
2015-08-12 00:00:00 Walls are Not Perfect by Jerry Wagner of Flexible Plan Investments
I spent part of this summer on a family vacation in four of the six nations that were once republics of the socialist state of Yugoslavia. Many have asked me “Why,” and I simply replied that I had heard it was beautiful and had always wanted to go there. It didn’t hurt that my barber of 40 years and my employer during law school, Marv Esch, a congressman from Ann Arbor, MI, were both of Yugoslavian heritage.
2015-08-12 00:00:00 The Dollar Is Marching Higher Again And This Has Consequences by Eric Bush of GaveKal Capital
The real trade-weighted USD exchange rate (using a narrow and a broad definition) moved to 12.5-year highs in July after the exchange rate moved above March’s level. The more timely nominal trade-weighted USD exchange is basically at March’s high level as of 8/7 and given the currency moves of the last couple of days should be breaking out to a new multi-year high over the next several days.
2015-08-12 00:00:00 10 Dividend Growth Stocks for Your Retirement Portfolios Aggregate Yield 4.3%: Part 2 by Chuck Carnevale of F.A.S.T. Graphs
After an exhaustive search of the dividend growth stock universe I identified 20 dividend growth stocks that I felt were currently worthy of consideration for retirement portfolios based on valuation. In part 1 of this 2-part series found here I discussed the current level of the S&P 500, and offered some important principles about valuation. Additionally, I offered the first group of 10 of what I consider the highest quality members of the 20 screened research candidates I uncovered.
2015-08-11 00:00:00 Did Barron’s Number-One Ranked Fund Family Add Value for Its Investors? by Larry Swedroe (Article)
If any actively managed fund family were able to deliver superior results, surely it would be the one chosen by Barron’s as its top performer during the last decade. Thus, we clearly should expect to see Waddell & Reed’s funds outperform relative to passively managed alternatives.
2015-08-11 00:00:00 Why You Should Allocate to Value over Growth by John Alberg and Michael Seckler (Article)
The state of this current cycle supports a decision to move capital away from growth-oriented strategies and into value-focused investments.
2015-08-11 00:00:00 Commodities Remain a Valuable Portfolio Allocation by Bransby Whittion, Klaus Thuerbach, Kate Botting of PIMCO
While the last few years of commodity returns are not an aberration, they are also not the norm.
2015-08-11 00:00:00 The Idolatry of Interest Rates Part II: Financial Heresy by James Montier, Ben Inker of GMO
In many ways this is perhaps my most personal essay, not because I’m about to share some deep and dark personal revelation (I can almost hear the collective sigh of relief), but rather because this essay reflects my views and mine alone. Others at GMO should not be tarred with the brush of my beliefs, and I have no doubt that many will disavow any association with the views I express here. In fact, my colleague Ben Inker’s “rebuttal” follows this piece.
2015-08-10 00:00:00 An Alternative Asset Class You May Take for Granted, Part 2 by Darin Turner of Invesco Blog
Infrastructure is an integral part of your daily life. You drive on it, depend on it for electricity and water, and use it to communicate on your cell phone. But have you considered investing in it? Infrastructure investment can offer several potential benefits to an overall portfolio.
2015-08-10 00:00:00 Thin Slices from the Top of a Bubble by John Hussman of Hussman Funds
“You need to know very little to find the underlying signature of a complex phenomenon…. This is the gift of training and expertise – the ability to extract an enormous amount of meaningful information from the very thinnest slice of experience.” Malcolm Gladwell, Blink
2015-08-10 00:00:00 The Emerging Markets Best Positioned to Withstand a Fed Hike by Russ Koesterich of BlackRock
Russ explains why not all emerging markets are created equal when it comes to weathering capital outflows associated with higher U.S. interest rates.
2015-08-10 00:00:00 Is the Small-Cap Market Out of Joint? by Chuck Royce, Chris Clark, Francis Gannon of The Royce Funds
While results for most stocks in the first half were decidedly bullish, the primary drivers of performance continue to be unsettling—especially for those with an active, risk-conscious approach who’ve lagged in an environment that has often shown favor to highly levered, non-earning, and more speculative businesses. The question is—when will the speculative bubble burst?
2015-08-10 00:00:00 On My Radar: Margin Debt, Valuations and Vacation by Steve Blumenthal of CMG Capital Management Group
Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do, so throw off the bowlines, sail away from safe harbor, catch the trade winds in your sails. Explore, Dream, Discover.” – Mark Twain
2015-08-07 00:00:00 China’s Secret Gold Hoarding Strategy by Stefan Gleason of Money Metals Exchange
China’s recent stock market gyrations have some analysts now calling China the biggest bubble in history. But those who write off China because of market volatility are missing a more important long-term trend of Chinese geopolitical and monetary ascendancy. That trend shows no signs of abating.
2015-08-07 00:00:00 Closing the Sausage Factory by John Mauldin of Mauldin Economics
Anything you do attracts bureaucratic oversight now. We may laugh at “helicopter parents” hovering over their children at school, but we all have a helicopter government looking over our shoulders at work.
2015-08-07 00:00:00 20 Dividend Growth Stocks To Buy Today For Your Retirement Portfolios: Part 1 by Chuck Carnevale of F.A.S.T. Graphs
Assuming an equal investment in each of the 20 research candidates provides an average aggregate dividend yield of 3.66%. Although each candidate was primarily suggested based on the merit of fair or attractive valuation, the 10 research candidates in this article was primarily focused on quality. In part 2, the 10 candidates presented were focused primarily on either yield or total return.
2015-08-06 00:00:00 Global Growth Forecast - Q3 (Infographic) by Rick Harrell of Loomis Sayles
Every quarter, we update our forecast map. What's different this time? We have shaved our US GDP forecast down to 2.3% from 2.9%, mostly on account of weaker exports, a strong dollar and the decline in oil prices. In emerging markets, we still believe Asia Pacific is currently a bright spot - but we expect China to slow further as easing measures fail to gain traction.
2015-08-06 00:00:00 3 Warnings For Market Bulls by Lance Roberts of Streettalk Live
3 Things: Major strategist sees bull market coming to an end in 4-6 months, Tom McClellan sends a warning and M&A activity is sounding an alarm.
2015-08-06 00:00:00 The Three Gluts by Joachim Fels of PIMCO
While the global savings glut is likely the main secular force behind the global environment of low growth, lowflation and low interest rates, both the oil glut and the money glut should help lift demand growth, inflation and thus interest rates from their current depressed levels over the cyclical horizon.
2015-08-06 00:00:00 Are Frontier Markets the Emerging Markets of Tomorrow? by Mike DuCharme of Russell Investments
Russell Investments’ Mike DuCharme examines investment opportunities in frontier markets.
2015-08-05 00:00:00 How to Navigate Today’s Bond Markets by Russ Koesterich of BlackRock
Bond markets today present investors with multiple challenges, including lower yields and more risk than in the past. In this environment, these bond funds are worth considering, explains Russ.
2015-08-05 00:00:00 Reflections on the Iran Deal by Bill O’Grady of Confluence Investment Management
Last month, the P5+1 and Iran concluded negotiations on a nuclear deal. In this report, we will offer some reflections on the agreement, including why it occurred, and the major reason why the U.S. negotiated this agreement and the underlying issues. As always, we will conclude with market ramifications.
2015-08-05 00:00:00 Market Review by Rick Vollaro of Pinnacle Advisory Group
The summer heat has finally arrived, and it’s naturally coincided with lower volume markets that are prone to the rumor mill and news flow. The second quarter of 2015 was choppy, but included some reversals in behavior across asset classes. Domestic equity markets bounced around in a flat range, while broad emerging equity markets declined slightly on the quarter.
2015-08-05 00:00:00 The Case for Hedge Fund Strategies in a Rising-Rate Environment by Dr. Sudhir Krishnamurthi, Ronald van der Wouden, Kenneth LaPlace of Wells Fargo Asset Management
Dr. Sudhir Krishnamurthi, Ronald van der Wouden, and Kenneth LaPlace from The Rock Creek Group, LP explain why hedge funds may outperform traditional fixed-income investments in a rising-rate environment.
2015-08-04 00:00:00 What Drives Risk Tolerance by Daniel Solin (Article)
To be a successful advisor, you need to understand how risk affects the decisions investors make and what you can do to make those decisions more objective and responsible. Demonstrating value at a time when investments are becoming more of a commodity is a popular topic in advisor-industry circles.
2015-08-04 00:00:00 Reasons to Stay with an Equity-Focused Investment Stance by Robert Doll of Nuveen Asset Management
A number of issues garnered attention last week, including falling oil prices, a sell-off in Chinese equities, ongoing corporate deal activity and mixed economic and earnings data.
2015-08-04 00:00:00 On My Radar: The Fed – Between a Rock and a Hard Place by Steve Blumenthal of CMG Capital Management Group
Now look at them yo-yo’s that’s the way you do it.You play the guitar on the M.T.V. That ain’t workin’ that’s the way you do it. Money for nothin’ and your chicks for free.” Money For Nothing – Dire Straits
2015-08-04 00:00:00 China: Are You Missing The Opportunities In The Market Noise? by Team of Thomas White International
In March, spring was upon the Chinese equity markets — they soared with the promise of a summer of good cheer and bounty. But come June, the markets plunged, just as dramatically as they had surged less than two months back. And now, with the sell-off continuing, many investors are wondering if it is indeed the beginning of a long period of hibernation for Chinese stocks.
2015-08-04 00:00:00 Is This A Defensive-Led Market? Or A Knowledge-Led Market? by Eric Bush of GaveKal Capital
Much has been made of the fact that defensive sectors, or counter-cyclicals as we prefer to call them, have been leading the market higher. This is very much out of the norm for a bull market, even for a cyclical bull market within a structural bear market, as cyclicals tend to lead equity markets higher while counter-cyclicals help investors play defense when the market breaks lower.
2015-08-04 00:00:00 China’s Command Economy: The Gift That Keeps on Giving by William Smead of Smead Capital Management
With Beijing being selected to host the 2022 Winter Olympics, we at Smead Capital took a moment to reflect on China. We concluded that posturing against China’s attempt to defy business cycles could be one of the best decisions we have made and could be the gift that keeps on giving. Warren Buffett once observed that you get to make approximately 20 major business decisions in your life. As long-duration common stock pickers, we think what you avoid can be just as important as what you select.
2015-08-03 00:00:00 US Equity and Economic Review: Weaker Breadth Indicators, Edition by Hale Stewart of Hale Stewart
The Fed’s policy statement was the main economic event this week; its opening paragraph began, “Growth in household spending has been moderate and the housing sector has shown additional improvement; however, business fixed investment and net exports stayed soft.”
2015-08-03 00:00:00 Schwab Market Perspective: The Calm Between the Storms by Liz Ann Sonders, Brad Sorensen, Jeffrey Kleintop of Charles Schwab
Peak earnings season is behind us, Greece is not in imminent danger of exiting the euro, Europeans have headed out on vacation and the US Congress won’t be far behind. After a volatile start, the US market appears to be settling into a more typical summer pattern—for now.
2015-08-03 00:00:00 A Bad Equilibrium & How Speculative Distortion Ends by John Hussman of Hussman Funds
In economics, we often describe “equilibrium” as a condition where demand is equal to supply. Textbooks usually depict this as a single point where a demand curve and a supply curve intersect, and all is right with the world.
2015-08-03 00:00:00 Bridging the Gap in Global Infrastructure Funding, Part 1 by Darin Turner of Invesco Blog
Infrastructure is the backbone of every economy, providing essential public services such as water supply, energy and mobility. And for investors, infrastructure also has the potential to provide unique benefits.
2015-08-03 00:00:00 The End of U.S. Sovereign Debt as a Near Perfect Protection Asset by Michael Winchell of Larkin Point Investment Advisors LLC
For the past 30 years, the paradigm portfolio holding 60-percent stocks and 40-percent government debt seemed to exhibit a reasonable mix of both growth and protection, being a simple allocation the market beta of two very liquid asset classes with low (occasionally negative) correlation.
2015-08-02 00:00:00 International Economic Week in Review: Emerging Market Exodus, Edition by Hale Stewart of Hale Stewart
One of the biggest stories to emerge has been the decline in Emerging Market Currencies. The IMF noted this in their latest World Economic Outlook.
2015-08-02 00:00:00 Is Now the Time to be Bearish on China? by Andy Rothman of Matthews Asia
One of the world’s largest hedge funds has turned bearish on China, arguing that the recent stock market correction means ‘‘there are now no safe places to invest’’ in that country. I disagree. I respect Bridgewater as an investment house and their views require serious attention. But I think it worthwhile to explain some areas where my views differ.
2015-08-02 00:00:00 China's Dilemma: Is it 1987 or 1929? by Scott Minerd of Guggenheim Partners
If Chinese policymakers don’t alter course soon, the current Chinese equity market correction could turn into a stock market plunge similar to what happened in the United States in 1929.
2015-08-02 00:00:00 What’s Next For The Dollar? by Doug Ramsey of The Leuthold Group
The U.S. Dollar Index has recovered about half the losses from a two-month, -7% setback from the 12-year peak it established in March. We expect continued dollar strength over the next year as monetary policies in the rest of the developed world remain even looser than in the United States.
2015-08-02 00:00:00 When China Stopped Acting Chinese by John Mauldin of Mauldin Economics
Much of the world is focused on what is happening in Greece and Europe. A lot of people are paying attention to the Middle East and geopolitics. These are significant concerns, for sure; but what has been happening in China the past few months has more far-reaching global investment implications than Europe or the Middle East do. Most people are aware of the amazing run-up in the Shanghai stock index and the recent “crash.” The government intervened and for a time has halted the rapid drop in the markets.
2015-08-01 00:00:00 Gold on Sale, Says the Rational Investor by Frank Holmes of U.S. Global Investors
The leveraged gold futures derivatives market is knocking down the precious metal, yet in massive contrast, this drop has ignited a shopping frenzy according to gold coin dealers. I spoke with several friends and industry experts this week who confirmed the record sales numbers for the month. In fact, American Gold Eagle sales reached 161,500 ounces in July, the highest monthly figure since April 2013. What gives?
2015-07-31 00:00:00 Aligning Beliefs: 7 Tenets of Russell Investments Target Date Funds by John Greves of Russell Investments
Russell Investments’ John Greves examines 7 tenets in constructing target date funds.
2015-07-31 00:00:00 The Danger in "Debalancing" by John West, Brandon Kunz, Amie Ko of Research Affiliates
Eat a balanced diet. Drilled into our brains since preschool, this advice falls squarely in the “duh, everybody knows that” camp. But it’s not just kids who need reminding. Parents and grandparents, as role models and dietary enforcers, do too. Common sense alone tells us this universally applicable dictum is the right way to eat. Different foods have different nutritional and caloric values. If we eat a wide variety of food groups, or as a five-year-old child is taught, “Eat a rainbow,” good nutrition is likely to take care of itself.
2015-07-31 00:00:00 Say A Little Prayer by Bill Gross of Janus Capital Group
I’m not what you would call a “prayerful” type of guy. Even at 30,000 feet, when the air gets rough, I never invoke the “God” word, settling instead for promising myself that if I ever get back to terra firma, I will never fly again, which I promptly forget days or even hours later. It’s not that I’m a non-believer in prayer’s ultimate destination, but more of a cynical take on why the Lord would hand out party favors to everyone that asked, or to those that asked most intently.
2015-07-31 00:00:00 3 Questions to Check Yourself Before You Wreck Yourself by Adam Butler, Michael Philbrick, Rodrigo Gordillo of BPG & Associates
A few simple questions one should ask oneself before making any decisions in public markets.
2015-07-30 00:00:00 How Hemlines Affect The Market by Tyler Howard of Saturna Capital
George Taylor's "Hemline Index Theory" has persisted since 1926, but is it true? If you search long enough, or mine enough data, you are bound to find correlations that, while statistically robust, have no meaningful explanatory power.
2015-07-30 00:00:00 Minimum Wage Hikes: Fast Food for Thought by James Tierney, Jr. of AllianceBernstein
The minimum wage is rising across the US, and fast-food companies are feeling the pinch. In our view, watching how companies cope reinforces the importance of a selective approach to stockpicking.
2015-07-30 00:00:00 Greece and China: The New Not Ready For Primetime Players by Chris Richey of Neosho Capital
A paper on the present Greek and Chinese capital market crises, which have their roots in policies carefully crafted over the past two decades meant to bring about the integration of their respective economies into that of the wider world.
2015-07-30 00:00:00 Is it Time to Buy Commodities? by Russ Koesterich of BlackRock
Russ Koesterich explains what's behind the recent commodity rout and whether it represents an opportunity for investors.
2015-07-29 00:00:00 Price-Insensitive Sellers by Ben Inker of GMO
In a new quarterly letter to GMO's institutional clients, co-head of asset allocation Ben Inker examines the impact on a range of global asset classes of "price-insensitive market participants" who may "buy assets for reasons other than the expected returns those assets may deliver."
2015-07-29 00:00:00 Ten Quick Topics to Ruin Your Summer by Jeremy Grantham of GMO
Chief investment strategist Jeremy Grantham reviews "10 topics that really matter, at least in my opinion. They can all be viewed as problems: potential threats to our well-being"
2015-07-29 00:00:00 Laudato Sí by Bill O’Grady of Confluence Investment Management
Last week, the Vatican held a meeting of the mayors of some of the world’s largest cities to discuss climate change. This meeting was part of Pope Francis’s efforts to add to the discussion of climate change, which was the subject of a recent encyclical, Laudato Sí. In this report, we will begin with our position on climate change, discuss the encyclical and try to measure its potential impact on the direction of climate change policy. As always, we will conclude with market ramifications.
2015-07-28 00:00:00 Is Sovereign Debt Sacrosanct? by Paul DeNoon of AllianceBernstein
Many governments face large and seemingly insurmountable levels of debt. Headline mainstays Greece, Ukraine and Puerto Rico have recently been the subjects of debate over the necessity or suitability of receiving debt relief. Other governments may soon find themselves under the same spotlight.
2015-07-28 00:00:00 Greed and Genius?! by Jeffrey Saut of Raymond James
Greed is always hard to measure. Certainly we have seen some signs of it in the Big Bio-Bubble and the new issue market.
2015-07-28 00:00:00 The Song Remains the Same? Higher Rates Don’t Typically Kill Bull Markets by Liz Ann Sonders of Charles Schwab
Because we don’t anticipate any fireworks—or even notable news—out of the July Federal Reserve meeting, we are not publishing a dedicated report on the meeting or the accompanying statement. However, we are keenly aware of the attention on the Fed and the likelihood it begins raising short-term term interest rates this year. Our view remains that September is the most likely month, barring any significant change in the trajectory of job growth in the next two months.
2015-07-27 00:00:00 Screens vs. Windows: Why Choosing a Fund Manager Requires Both by Tracy Fielder of Invesco Blog
Choosing the right fund manager is an important decision for investors, and many rely on data screens to help them sift through mountains of performance numbers. But screens alone don’t tell you the whole story. To get a clear view of how a fund might fit into your portfolio, you also need a window into the mind of the manager.
2015-07-27 00:00:00 On My Radar: Grantham, HY and the Cyclical Bear in Gold by Steve Blumenthal of CMG Capital Management Group
If you’re young, take the whack [and] if you’re old, pray for the Fed to keep going.”– Jeremy Grantham
2015-07-26 00:00:00 Memorize This, Earn a Dollar by John Hussman of Hussman Funds
As a kid growing up in the 1960’s, I earned my allowance the usual way; cutting grass and raking leaves. When there was no grass to cut or other work to do, my parents – who deeply valued education – would give us things to commit to memory. I figure I squeezed more than 30 bucks out of memorizing the multiplication tables up to 12. My brothers were better at memorizing poetry, but I was pretty good at song lyrics, which put me in good position to learn the words to countless 70's songs (e.g. "This really blew my mind.
2015-07-25 00:00:00 International Economic Week in Review: IMF Lowers Growth Projections, Edition by Hale Stewart of Hale Stewart
At the macro level, the IMF lowered their global growth outlook. The first quarter slowdown in the developed world (largely the US but to a lesser extent Canada) led to decreased 2H15 projections, while the commodity slowdown will negatively impact the developing world. As further evidence of this, note that Latin American currencies are broadly selling off. Low inflation gives central banks plenty of policy room. The wild cards continue to be the cumulative impact of the Chinese slowdown along with certain geopolitical factors such as the Middle East turmoil and Greek situation.
2015-07-25 00:00:00 3 Reasons Why Gold Isn’t Behaving Like Gold Right Now by Frank Holmes of U.S. Global Investors
The last time the metal descended this quickly was 18 months ago, on January 6, 2014, when someone brought a massive gold sell order on the market before retracting it in a high-frequency trading tactic called “quote stuffing.”
2015-07-24 00:00:00 Don’t Let the Noise Keep You Up at Night by Carl Kaufman, Simon Lee, Bradley Kane of Osterweis Capital Management
Three subjects have concerned the markets recently: a Greek debt default and possible exit from the European Union (Grexit), the Federal Reserve’s (the Fed’s) normalization of interest rate policy and potential bond market illiquidity following a rise in interest rates. The first two are binary outcomes, which have been debated in the marketplace for years. While discussing these possible outcomes ad nauseam may be a palliative to some, in our view it doesn’t really provide much meaningful, incremental information until more definitive actions are taken.
2015-07-24 00:00:00 Sector Insights-Financial Services by Mark Dawson of Rainier Investment Management
The financial services sector is unique. Unlike other sectors, it is essentially the lifeblood of the economy. When it’s healthy, it provides businesses and consumers with access to the credit, capital and investments that are vital to a healthy and growing U.S. economy. But when it’s sick, as we saw during the financial crisis in 2008, it can weaken the whole system. Severely damaged in 2008, the U.S. financial system - in particular banks - have been healing. Now is a good time to seek out investment opportunities in financial stocks.
2015-07-23 00:00:00 Tocqueville Gold Strategy Investor Letter: Q2 2015 by John Hathaway of Tocqueville Asset Management
What is required to restore investor interest in gold? In our opinion, a prolonged bout of financial-market adversity would suffice. After all, the cornerstone of coordinated central-bank policy since 2008 has been the levitation of financial assets via Zero Interest-Rate Policy (ZIRP) and Quantitative Easing (QE) by forcing investors into risky assets. We believe that nothing would serve better to undermine confidence in central bankers than a bear market in bonds and equities. The roof above the dollar gold price has been built brick by brick from confidence in central bankers.
2015-07-23 00:00:00 Mid-Year Market Outlook - July 2015 by Team of Thomas White International
At the end of 2014, “why international?” was the prevailing investor sentiment. After all, foreign stocks had lagged U.S. equities yet again, underperforming four out of the five years between 2010 and 2014. The consensus outlook was that U.S. markets would outperform their foreign peers in any case, and so, would it really serve any purpose to hold international equities in a portfolio? Many investors followed the crowd.
2015-07-23 00:00:00 Summer Quarterly Commentary by John Prichard, Miles Yourman of Knightsbridge Asset Management
Greece is much in the headlines again. As we stated in our Spring 2013 letter, “The European debt crisis will not be over until either: 1) the debt goes away (read: default or substantial inflation) or 2) these governments start producing actual surpluses with which to pay the debt down.” So far, every subsequent deal has failed to produce either of these two scenarios, and so each time news media builds up another weekend summit or referendum, the running joke around here is, “Don’t worry, it will all be resolved this weekend.”
2015-07-23 00:00:00 Mid-Year Outlook: Global Economy Likely to Withstand China, Greece by John Calamos, Sr. of Calamos Investments
The global markets and economy should be able to move higher for the remainder of the year, with accommodative monetary policy and well-contained inflation providing tailwinds. The U.S. looks set to extend its not-too-hot, not-too-cold recovery, while Japan is benefiting from stimulus and pro-market reforms. Although economic conditions in Europe remain fragile and uneven, growth looks to be accelerating overall, and we believe the European Union has the tools to prevent a broader Europe contagion should the Greek bailout resolution fall apart.
2015-07-22 00:00:00 Are Stocks Overvalued? A Survey of Equity Valuation Models by Chris Brightman of Research Affiliates
In the latest piece from Research Affiliates, Chris Brightman, Chief Investment Officer, revisits the most commonly used equity valuation tools, comparing their respective strengths and weaknesses—and no metric is without its shortcomings. He explains Research Affiliates' approach to valuation, combining both absolute value and relative value. No matter the measurement, U.S. equity prices are high and long-term expected returns are low.
2015-07-22 00:00:00 Quarterly Review and Outlook Second Quarter 2015 by Van Hoisington, Lacy Hunt of Hoisington Investment Management
From the cyclical monthly high in interest rates in the 1990-91 recession through June of this year, the 30-year Treasury bond yield has dropped from 9% to 3%. This massive decline in long rates was hardly smooth with nine significant backups.
2015-07-22 00:00:00 Who's Right - Commodities Or Fed? by Lance Roberts of Streettalk Live
I have been suggesting for quite some time that the Federal Reserve is stuck in a "liquidity trap" which makes it very difficult for monetary policy to be effective. More importantly, beginning in January of this year, I have suggested that the Fed is being forced to choose between the "lesser of two evils."
2015-07-22 00:00:00 The Upside to Low Liquidity Bond Markets by Multisector Full Discretion Team of Loomis Sayles
As structural and cyclical factors reduce bond market liquidity, the Multisector Full Discretion team explains how they are positioning portfolios.
2015-07-21 00:00:00 Searching for Natural Hedges Against Interest-Rate Risk by Eric Takaha of Franklin Templeton Investments
We have found that historically over time, interest-rate moves don’t often play as large of a role in a broadly diversified fixed income portfolio as one might think.
2015-07-21 00:00:00 Secular Outlook: Implications for Asia-Pacific Investors? by Eric Mogelof, Alan Isenberg of PIMCO
We hope you have had the opportunity to review the summary from our secular forum in May: “The New Neutral Revisited,” written by PIMCO’s Group CIO Dan Ivascyn, Global Fixed Income CIO Andrew Balls an?d Global Strategic Advisor Rich Clarida. In this analysis, the authors identify the six key themes that emerged from our discussion, as well as six risks.
2015-07-20 00:00:00 Two-Tier Markets, Full-Cycle Investing, and the Benefits and Costs of Defense by John Hussman of Hussman Funds
“The Nifty Fifty appeared to rise up from the ocean; it was as though all of the U.S. but Nebraska had sunk into the sea. The two-tier market really consisted of one tier and a lot of rubble down below. What held the Nifty Fifty up? The same thing that held up tulip-bulb prices long ago in Holland - popular delusions and the madness of crowds. The delusion was that these companies were so good that it didn't matter what you paid for them; their inexorable growth would bail you out.” Forbes Magazine during the 50% market collapse of 1973-74
2015-07-20 00:00:00 US Equity and Economic Review For the Week of July 13-17; Earnings Season Begins, Edition by Hale Stewart of Hale Stewart
The Federal Reserve issued two important documents last week: the Beige Book and Chairperson Yellen’s latest Congressional testimony. The Beige Book was largely positive. Non-financial service growth is moderate. Real estate is growing and the employment picture was generally positive. Strong demand for autos sales helped increase consumer spending. The only negative was manufacturing which was uneven due to the strong dollar and weak energy sector.
2015-07-20 00:00:00 On My Radar: Black Widow Returns by Steve Blumenthal of CMG Capital Management Group
“When it does happen, it’s usually not the first-derivative event that people are caught off guard by. They’re caught off guard by the second, third and fourth derivative events. It’s ‘Oh yeah, when interest rates go up, that happens.”– Gary Cohn, Goldman Sachs’ President and COO
2015-07-20 00:00:00 Release the Condor! by Jeffrey Saut of Raymond James
A long time ago in a galaxy far, far away, there was an advertising company trying to come up with a video commercial to introduce Buick’s new car. After a number of the ad company’s proposals were turned down, they came up with the idea of the car cruising on a road down the side of a mountain with an eagle superimposed flying over it. Buick loved it! There was, however, one problem; you cannot capture, or tame, an eagle. Therefore it was decided to use a condor.
2015-07-20 00:00:00 Understanding “Liquidity” by Payson Swaffield of Eaton Vance
In the U.S., the consumer economy is strengthening, while the industrial economy continues to struggle. What does it mean for equities?
2015-07-17 00:00:00 Schwab Market Perspective: Slow Summer?! by Liz Ann Sonders, Brad Sorensen, Jeffrey Kleintop of Charles Schwab
Summer is supposed to be a time of slow trading, light news, and an opportunity for vacations. But the past several weeks have been anything but slow. Greece—a country representing 0.38% of the world economy based on gross domestic product (GDP), has dominated attention; China’s recent stock market plunge also dented sentiment among US investors. It’s meant the “running to stand still” characteristic of this year’s first half is persistent. In fact, the first half of the year saw the S&P 500 trade in its narrowest range in history.
2015-07-17 00:00:00 Crude Oil Is the Best-Performing Commodity of 2015 So Far by Frank Holmes of U.S. Global Investors
The widest expansion this year was made by none other than crude oil, the worst-performing commodity of 2014. As of June 30, oil posted gains of over 11 percent, rising to $59.47 per barrel. After falling more than 50 percent since last summer, though, it had little else to go but up. That oil claimed the top spot just highlights the reality that commodities are in a depressed state right now.
2015-07-17 00:00:00 International Economic Week in Review: Kicking the Greek Can Down the Road, Edition by Hale Stewart of Hale Stewart
Obviously, the big news this week was the Greek deal. This only delayed the inevitable. The plan calls for additional austerity measures, which have been completely ineffective. Greek unemployment is over 25%; the economy is in the middle of a depression, and the debt/GDP ratio increased from 105% in 2008 to 177% currently. The country will simply continue on this path for the foreseeable future, leading to another inevitable conflict with the lending troika. The ECB also issued its policy statement this week, which kept rates unchanged.
2015-07-17 00:00:00 Northern Trust Perspective by Jim McDonald of Northern Trust
Last month we said that the odds favored some sort of “kick the can down the road” agreement between Greece and its creditors, and it looks like that may be coming to pass. While there’s still much work to be done, the tone of the current agreement seems focused on avoiding a euro exit and debt write-downs, while ignoring growth-oriented policies. With the hard decisions yet again put off for another day, this should be euro-weakening, all else equal.
2015-07-17 00:00:00 China's Rebalancing Continues by Andy Rothman of Matthews Asia
The rebalancing of China’s economy continued in the second quarter of this year, as services and consumer spending drove more growth than industry and construction. The inevitable deceleration of most year-on-year (YoY) growth rates also continued, but a booming stock market provided a temporary lift to headline GDP growth.
2015-07-17 00:00:00 ECRI Weekly Leading Index: "Recoveries Remain Resilient" by Doug Short of Advisor Perspectives (dshort.com)
ECRI currently features an article suggesting that concern over negative trend growth is no reason to panic. Recession is not imminent as we are not yet in a "window of vulnerability." The article also discusses Spain's recent cyclical upturn and warns that one shouldn't assume that a cyclical upturn also means positive long-term trend growth. The overall message is not to "fret about recession just yet".
2015-07-16 00:00:00 U.S. Economy Slouches toward Recession as Eurozone Crisis Widens by Stefan Gleason of Money Metals Exchange
Federal Reserve chair Janet Yellen may have missed her window of opportunity to raise interest rates. The economic data no longer paint a picture of even a tepid recovery. Since the start of the year, key indicators for the economy began pointing toward recession.
2015-07-16 00:00:00 Sometimes Waterfalls Aren’t Beautiful by Jerry Wagner of Flexible Plan Investments
Over 25 years ago I took my family (my wife, Pat, and two sons, Michael and David) to the big island of Hawaii. It was a dream comes true. We’d been to Honolulu, Kauai, and Maui, but not to the Big Island. Our family spent two weeks in a car circumnavigating the isle on our own. It was a joy not to be forgotten. Early on in our trip, it became apparent that the major island attractions (after the live volcano that is) were the waterfalls. We seemed to race from one waterfall to another as we circled the island.
2015-07-16 00:00:00 Market Overview Q215 by David Robertson of Arete Asset Management
Massive interventions by central banks over the last several years have created a “game of Chicken” that has fundamentally changed investing into an exercise that more closely resembles gambling. Until the game resolves investors will do well to recognize this “game” as largely unwinnable and await better opportunities later.
2015-07-16 00:00:00 China: Searching for a New Equilibrium by Michael Hasenstab of Franklin Templeton Investments
Overall, based on our detailed analysis, we believe China will remain on course … while the economy shifts toward consumption, services and higher value-added manufacturing. This could have important implications for the global economy.
2015-07-15 00:00:00 China’s Market Correction in Three Easy Charts by Frank Holmes of U.S. Global Investors
The sheer size and importance of China’s equity markets cannot be overstated. Second in size only to the New York Stock Exchange, the combined value of the Asian country’s stock markets is $14 trillion and change. Or at least it was, before they fell 30 percent, wiping away nearly $2 trillion in value. To put this in perspective, the gross domestic product (GDP) of debt-troubled Greece is around $200 billion.
2015-07-14 00:00:00 GTAA Delivers Solid Returns at Lower Risk. Period. by Adam Butler, Michael Philbrick, Rodrigo Gordillo of BPG & Associates
We recently came across a couple of articles making the sensational claim that TAA is nothing more than a repackaged and dressed-up version of market timing. Both articles – and others, we’ve subsequently learned – point to a Morningstar study showing that TAA has underperformed the Vanguard U.S. 60/40 balanced fund over the past few years. We have several problems with the original study and the referencing posts, but it all boils down to these points of difference.
2015-07-14 00:00:00 Greece: Chaos or Orderly Resolution? by Brent Schutte of BMO Global Asset Management
Greece has found itself in dire financial straits for the last few years (its first bailout was back in 2010), but the situation has become critical in recent weeks. The impetus for this was the election in January 2015 of a radical left government that wished to reopen negotiations with creditors. Much of the response and commentary that we have seen from European politicians and central bankers has been political posturing that has masked the harsh reality: without significant debt restructuring, Greece will never be able to pay back its debts.
2015-07-14 00:00:00 Innovation – Too Much, or Too Little of a Good Thing? by Michael Lebowitz (Article)
New innovations save us a lot of time and effort but, believe it or not, they do little to generate sustainable economic growth. Sustainable economic growth depends on productivity. Despite these new innovations, domestic productivity is flat lining.
2015-07-14 00:00:00 How Likely is Hyperinflation in the U.S? Part Two by Seaborn Hall (Article)
My previous article covered hyperinflation's history, process, effects, definition, types and causes. Part Two answers the questions of how to gauge the likelihood of hyperinflation in the U.S., what the emerging dangers are, how it might happen here and how to prepare if it does.
2015-07-14 00:00:00 Risks from China Overtake Concerns About Greece by Robert Doll of Nuveen Asset Management
U.S. equity volatility spiked last week, driven by escalating concerns over Greece’s debt problems and a sharp volatility in Chinese equities. The Chinese stock market experienced a dramatic sell-off in recent weeks before staging a comeback toward the end of last week. Early last week, the possibility of additional Greek defaults and a potential messy exit from the eurozone intensified. By the end of the week, however, Greek officials and policymakers seemed to be approaching an agreement.
2015-07-13 00:00:00 Greece and the King of Asteroid 325 (and The One Lesson to Learn Before a Market Crash) by John Hussman of Hussman Funds
Last week, the price of Greek government debt soared on hopes of an 11th hour stick-save bailout by the European Union. Unfortunately, that price jump still left Greek bonds priced to reflect a default probability of 100% at every maturity. The jump only reflected an increase in the amount that bondholders evidently expect to recover in default, raising the implied recovery rate from the recent low near 30% to something closer to 50%. Put another way, the bond market has fully priced in the likelihood of a default coupled with a major haircut on Greek debt.
2015-07-13 00:00:00 US Equity and Economic Review For the Week of July 6-10: The Fed Speaks, Edition by Hale Stewart of Hale Stewart
Aside from two Federal Reserve releases, the only major news announcement was the ISM services index, which printed a very strong 56% headline number. New orders were a bullish 58.3 while employment was 52.7.
2015-07-13 00:00:00 54% of All EM Stocks Are In A Bear Market Even As The MSCI EM Index Is Off Only 7% by Eric Bush of GaveKal Capital
Two weeks ago we noted how more stocks than you might think are in a correction. At that time, 42% of the constituents in MSCI World Index were at least 10% off its 200-day high. As of yesterday, that number has increased to 57%.
2015-07-13 00:00:00 The Black Widow Returns by Richard Bernstein of Richard Bernstein Advisors
Strategies based on stretching for yield have a long history of surprising investors with unanticipated risks.
2015-07-13 00:00:00 On My Radar: High Probability of a Global Recession by Steve Blumenthal of CMG Capital Management Group
Economists have a number of different ways to measure over and under valuation. Most measures currently show an overvalued equity market. Let’s just say the market is expensively priced.
2015-07-11 00:00:00 It’s Not Over Till the Fat Lady Goes on a P/E Diet by John Mauldin of Mauldin Economics
The answer to the seemingly arcane question of whether we are in a secular bull or bear market makes a great difference in the proper positioning of your portfolios. And getting it wrong can have serious consequences.
2015-07-11 00:00:00 Global Investors: You Should Be Paying Attention to this Economic Indicator by Frank Holmes of U.S. Global Investors
In addition to our own macro models, BCA Research , a highly respected independent research company, pointed out that PMIs in developing economies have plunged to new lows. The International Monetary Fund also revised downward its global growth forecast for 2015. On this account, bad news is good news, as central bankers are scrambling to stimulate economic growth.
2015-07-11 00:00:00 China Market Update by Andy Rothman of Matthews Asia
China’s equity markets have steadily declined for weeks, raising a torrent of questions and concerns. Given that China accounts for more global growth than the U.S., Europe and Japan combined, this week Andy Rothman, Investment Strategist at Matthews Asia, answers some of your most pressing questions.
2015-07-10 00:00:00 More Evidence of China Slowing Permeating Asia by Bryce Coward of GaveKal Capital
Yesterday and today were host to a few more macro data points all signaling basically the same thing – a synchronized slowdown in Asia which appears to be driven by China. In the five charts below we show that Chinese CPI remains anemic while PPI just made a new cycle low, Australian unemployment ticked up, Japanese bank loans appear to be topping/rolling over, the Japanese economy watchers survey is rolling over, and Japanese machinery orders excluding ships keeps weakening.
2015-07-10 00:00:00 China Has Tools to Manage Stock Sell-Off by Anthony Chan, Stuart Rae of AllianceBernstein
Chinese equities are undergoing a sharp correction, and the volatility could last for some time. But we think policymakers have both the tools and the resolve to support the broader Chinese economy.
2015-07-10 00:00:00 Volatility as an ‘Opportunity Class’ by Rick Chan of PIMCO
Is volatility an asset class? It’s a question we often debate, internally and with clients. There’s no simple answer. Either way, though, it’s an academic point that matters less than our belief that volatility is an “opportunity class” – one with a variety of tactical and macro implications.
2015-07-10 00:00:00 China Market Update by Andy Rothman of Matthews Asia
China’s equity markets have been in steady decline for several weeks, raising a lot of questions about the potential impact on the world’s second-largest economy. Given that China accounts for more global growth than the U.S., Europe and Japan combined, this is an important topic for investors.
2015-07-10 00:00:00 What Do High-Yield Maturities Tell Us About Timing the Credit Cycle? Another Take on the Wall by Ara Lovitt of GMO
Not only did the maturity wall tell investors to be complacent right before the market was about to sell off, it told investors to be more cautious just as the market was about to rebound. The point is not that debt maturities are irrelevant. Rather, based on the experience of the last three credit cycles, there seems to have been much larger forces at work that ultimately caused the cycle to turn. From the perspective of an investor trying to formulate a high-yield outlook, it seems to GMO that focusing too much on the maturity wall is probably unhelpful.
2015-07-09 00:00:00 CIO Newsletter by Ritesh Jain of Tata Asset Management
In this edition of my newsletter, I have tried to address one of the most common questions that investors have been asking me these days; what to make of the noise surrounding us and how India is placed to weather this volatility. Let me tell you, it's not going to be a smooth ride. In the last 6 months, there has been too much going on worldwide.
2015-07-08 00:00:00 How We View the Big Picture by Team of Litman Gregory
We are regularly asked for our take on the broad macroeconomic topics of the day. Two of the more noteworthy big-picture subjects we have been asked about recently are the Greek debt crisis and the timing of the U.S. Federal Reserve rate hike. In most cases, we don’t believe we have new insights to add beyond the reams of commentary these topics typically inspire, and given the dynamic nature of these two topics, it is quite possible that new information will unfold as we publish this or shortly thereafter.
2015-07-08 00:00:00 Shareholder Activism Continues to Attract Assets and Boost Activity by Francis Gallagher, Peter Drippé of Visium Funds
While shareholder activism has been maligned in the past by the corporate world as a way to reap short-term gains at the expense of long-term shareholders, the practice is now enjoying an increasingly positive reputation. This change in perception is based on the beneficial long-term results of activist campaigns and the current view of activists as champions of shareholder value. Accordingly, the recent performance of activist-related investments, as well as their role in providing low-correlated returns has drawn significant interest from the institutional investment world.
2015-07-07 00:00:00 A First-Half Letter to Clients: Robert Shiller on the Valuation Quandary by Dan Richards (Article)
Since 2008, I have posted a template for a client letter each quarter as a starting point for advisors who want to send clients an overview of the period that just ended and some thoughts looking forward. This quarter’s letter addresses one of today’s most taxing questions for advisors and investors alike: How to deal with the quandary presented by today’s valuation levels on U.S. stocks.
2015-07-07 00:00:00 Asia Better Positioned to Handle a Hike by Sponsored Content from Invesco (Article)
It’s no surprise investors are concerned about whether a Fed rate hike will cause a replay of 2013’s taper tantrum meltdown in Asia. In our view, Asian markets are better positioned today to withstand short-term deterioration in global sentiment when the Fed decides to hike rates.
2015-07-07 00:00:00 Predicting The Future Is Difficult by Lance Roberts of Streettalk Live
Predictions of the future are indeed very difficult, and yet individuals are challenged every day with doing precisely that. For traders, it is what the market, or a particular investment, will do in the next few minutes to days. For longer-term investors, those predictions move out to months or years.
2015-07-07 00:00:00 Weighing the Week Ahead: Will FedSpeak Interrupt the Lazy, Hazy, Crazy Days of Summer? by Jeff Miller of NewArc Investments, Inc.
In one sense, the week ahead should be a quiet, dull semi-vacation. As Nat King Cole explained, the Lazy-Hazy-Crazy days of summer – pretzels, beer, and bikinis that never got wet. It is the lull before earnings and includes a light economic calendar. Will the A-Team need to return from the beach because of Greece? Or will it be a quiet week, disturbed only by an avalanche of FedSpeak and consequent punditry? One way or another, I think we will (finally) put the Greek drama behind us and resume the familiar debate about the Fed.
2015-07-07 00:00:00 Emerging-Market Stocks: Back on the Map by Milton Ezrati of Lord Abbett
After the volatility of the past few years, conditions once again appear favorable for this asset class.
2015-07-07 00:00:00 Historical Stock Market Analysis by Eric Bush of GaveKal Capital
According to our work, the US stock market is currently in the longest running cyclical bull market that has ever taken place in a structural bear market. We are currently in the 6th year of the cyclical bull market. No other cyclical bull in a structural bear has ever made it past five years (the prior longest was from October 2002 – October 2007).
2015-07-06 00:00:00 Judging the Future at a Speculative Peak by John Hussman of Hussman Funds
With valuations still extreme and deterioration in market action continuing to indicate a shift toward risk-aversion among investors, we are less concerned about specific factors such as Greece than about much more general pressures that threaten to force an upward spike in compressed risk-premiums. We’ve often noted that a market collapse is nothing other than that phenomenon: razor-thin risk premiums that are then pressed abruptly to higher levels.
2015-07-06 00:00:00 Exporting the “Bacon Genie” and Other Reasons to Be Bullish by Brooks Ritchey of Franklin Templeton Investments
From “Bacon Genies” to “Snuggies,” there’s little doubting Americans have a thirst for consumer goods, even those that don’t always appear to serve much practical purpose. Brooks Ritchey, Senior Managing Director at K2 Advisors®, Franklin Templeton Solutions®, explores how an evolving consumer culture is spreading throughout the globe, and how he and his team are positioning their portfolios with these types of macro considerations in mind.
2015-07-06 00:00:00 The Best Way to Judge Past Performance: Part Two by Chuck Carnevale of F.A.S.T. Graphs
On virtually every financial website on the planet there is a never-ending daily stream of stock tips and recommendations. Consequently, the investing public is literally flooded with information and advice regarding what stock to buy today or not to buy. Some of what is offered is supported by factual information and logic, but unfortunately, much of what is offered is merely based on the opinion of the author. This presents quite a challenge to the prudent prospective investor seeking sound advice or guidance.
2015-07-06 00:00:00 The Big Picture by Peter Schiff of Euro Pacific Capital
The past four years or so have been extremely frustrating for investors like me who have structured their portfolios around the belief that the current experiments in central bank stimulus, the anti-business drift in Washington, and America's mediocre economy and unresolved debt issues would push down the value of the dollar, push up commodity prices, and favor assets in economies with relatively low debt levels and higher GDP growth. But since the beginning of 2011, the Dow Jones Industrial Average has rallied 67% while the rest of the world has been largely stuck in the mud.
2015-07-06 00:00:00 Strategic Income: Positioning & Opportunities by (Article)
John Pattullo, Co-Head of Retail Fixed Income, discusses the Strategic Income Fund’s positioning and the current market environment. He notes the macro environment remains benign with some volatility spikes which can provide opportunities. John adds the deflation scare is broadly out of the way and Europe now in a better place with some growth coming through, which is encouraging.
2015-07-03 00:00:00 International Economic Week in Review For June 29-July 30; Greece and Canada Creating Problems, Edit by Hale Stewart of Hale Stewart
Greece is obviously the big wild card going into next week. And while the damage appears to be contained for now, there is no guarantee we won't see a negative feedback loop filter out into the market and EU economy. Canada's four months of GDP contraction are also getting a bit concerning. Even though we knew this was coming, it's still a most unwelcome development. However, other economies are at least holding their own for now.
2015-07-02 00:00:00 Investor Outlook: Trends are Looking Neutral by Andrew Pease of Russell Investments
Russell Investments’ Andrew Pease highlights insights from the investment strategists’ latest investor outlook and explains what may be in store for investors next quarter.
2015-07-02 00:00:00 Investors Take Shelter as Greek Referendum Nears by Frank Holmes of U.S. Global Investors
American industrialist J. Paul Getty once said: “If you owe the bank $100, that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.” And when the amount is $1.73 billion, it’s everyone’s problem. Greece is officially in arrears for missing its scheduled payment Tuesday to the International Monetary Fund (IMF). Expecting this, American stocks had their largest one-day drop of 2015 on Monday. Market volatility, as measured by the VIX, spiked sharply.
2015-07-02 00:00:00 Eurozone Contagion Fears Flare as Greek Crisis Enters Crucial Phase by David Zahn of Franklin Templeton Investments
Whatever the outcome of the Greek referendum on Sunday (July 5), the result is likely to mean more uncertainty and possibly pain for the people of Greece. So far, according to David Zahn, head of European Fixed Income, Franklin Templeton Fixed Income Group, the economic fallout of the crisis appears to be mostly contained within Greece, and the likelihood of longer-term contagion to other eurozone economies seems to be limited.
2015-07-02 00:00:00 Looking for Income in All the Right Places by Morgan Harting, Martin Atkin of AllianceBernstein
Investors and advisors know they can’t depend solely on the old standbys—bonds, high-dividend stocks and cash—to produce income today, and they’re ready to try a new approach. But which one?
2015-07-02 00:00:00 Home of the Free, Land of the Entrepreneur by Frank Holmes of U.S. Global Investors
Where else but in America can a startup such as Uber be valued at $50 billion, higher than 80 percent of the companies in the S&P 500 Index, only six years after its founding? Where else but in America can someone reach billionaire status by inventing a new type of hosiery, as Sara Blakely did with Spanx? Before her now-ubiquitous undergarments were worn by women—and now men—all over the globe, Blakely was so broke that she had to write her own patent without the help of an attorney.
2015-07-01 00:00:00 The 2015 Mid-Year Geopolitical Outlook by Bill O’Grady of Confluence Investment Management
As is our custom, at mid-year, we update our geopolitical outlook for the rest of the year. This report is less a series of predictions as it is a list of potential geopolitical issues that we believe will dominate the international situation into year’s end. It is not designed to be exhaustive; instead, it focuses on the “big picture” conditions that we believe will affect policy and markets going forward. They are listed in order of importance.
2015-07-01 00:00:00 Investing in Lake Wobegon: Where all the returns are above average by David Robertson of Arete Asset Management
The implicit assumption of many funds is that returns will be attractive over the investor's time horizon. Increasingly, this assumption appears to be invalid and many long term investors would be better served by taking an "absolute return" approach to investing.
2015-07-01 00:00:00 The Whole Story: Factors + Asset Classes by Jason Hsu of Research Affiliates
Every year we invite some of the investment industry’s most creative thinkers to speak about their work at the Research Affiliates’ Advisory Panel conference. Along with Nobel laureates Vernon Smith and Harry Markowitz, the speakers at our 14th annual meeting included Campbell Harvey, Richard Roll, Andrew Karolyi, Bradford Cornell, Andrew Ang, Charles Gave, Tim Jenkinson, and our very own Rob Arnott. The richness of the speakers’ presentations beggars any attempt to summarize them; I’ll limit myself to the points I found most intriguing and illuminating.
2015-07-01 00:00:00 Data Dependence Is Not a Monetary Policy, But Are the Dots? by Richard Clarida of PIMCO
At its June meeting, the Fed emphasized data dependence in setting monetary policy. Although a data-dependent Fed is one that appears to retain a great deal of optionality on the timing and pace of future rate moves, data dependence itself is not a monetary policy. The Fed’s reaction function to evolving data will likely determine the path of policy normalization. The “dot plot” provides some insight, but the dots alone don’t tell us how policy will play out if the macro data evolve differently from the baseline.
2015-07-01 00:00:00 A Return to Fundamentals? by Niels Jensen of Absolute Return Partners
June was a very eventful month, in particular here in Europe. Greece went from bad to worse, and the Greek people have now been asked to vote on their own destiny in a referendum scheduled for Sunday 5 July, which we expect to return in a 'Yes' vote. However, Greece is not the only subject in the July Absolute Return Letter. Financial markets have in many ways behaved oddly since the near meltdown in 2008. The objective of this month's letter is to look at whether we are finally beginning to see some sort of normalisation - as in a return to the conditions we had prior to 2008...
2015-07-01 00:00:00 More Volatility: A Positive Environment for Active Managers by Chuck Royce, Francis Gannon of The Royce Funds
Dating from the year-to-date low for the 10-Year Treasury on January 30 through the end of the first half, we have observed promising signs that the market may be taking greater strides toward normalization. CEO Chuck Royce and Co-CIO Francis Gannon discuss how higher rates might benefit bottom-up stock pickers, the potential for quality companies to regain leadership as volatility increases, the possible consequences of global economic recovery for both domestic and non-U.S. small-cap stocks, and the favorable landscape for consumers and its effect on our portfolio positioning.
2015-06-30 00:00:00 Greece Isn’t the Only Problem U.S. Stocks Face by Russ Koesterich of BlackRock
Several factors are dampening investor sentiment, including Greece and an emerging bear market in China. However, for U.S. markets, a longer-term problem may be one closer to home. Russ explains.
2015-06-30 00:00:00 Independence Day?: “Greferendum” on July 5 Rocks Markets by Liz Ann Sonders of Charles Schwab
“Greferendum”… the new “it” word of the day. In the United States, we celebrate Independence Day on July 4; but investors today are more interested in whether the following day will mark an independence day for Greece. As last week came to a close, Greek Prime Minister Alexis Tsipras walked away from talks with his country’s creditors and announced a referendum scheduled for July 5.
2015-06-30 00:00:00 It Never Rains in California by Bill Gross of Janus Capital Group
Ted Cruz recently suggested praying for rain in Texas, and apparently someone did a few weeks ago, producing a deluge resembling a modern day Noah’s Ark of sorts. California’s Governor Brown on the other hand, has taken a more secular approach. He believes that Mammon, not God, bears responsibility for the Golden State’s record drought and that I, we, all of us simple folk should cut back water usage by a minimum of 25%.
2015-06-30 00:00:00 A Mid-Year Assessment of Our Ten Predictions by Robert Doll of Nuveen Asset Management
We have described 2015 as the year when investors transition from disbelief to belief, or from skepticism to optimism. Sir John Templeton coined the phrase, “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” We believe we are entering the “optimism” phase.
2015-06-29 00:00:00 Durable Returns, Transient Returns by John Hussman of Hussman Funds
Over the course of three speculative bubbles in the past 15 years, I’ve often made the distinction between “durable” investment returns and transient ones. At any point in time, the cumulative long-term return of the stock market equals the gain that investors can reasonably assume will be durable (in that it is unlikely to be surrendered in the future), plus whatever market gain investors should assume will be entirely wiped out over the course of the present or future market cycles. As it turns out, those two components can be identified with surprising accuracy.
2015-06-29 00:00:00 Don’t be Surprised - Speech to CFA Society of Chicago by Stephen Romick of FPA Funds
I’m reminded of a gentleman who discovers a genie in a bottle. Granted one wish only – apparently even genies have pricing power – the man asks for peace in the Middle East. The genie backs away and says, “That’s way too difficult. Give me something easier.” The man ponders his options and asks the genie instead, to help him pick a good mutual fund. The genie quickly responds, “Let me get to work on the Middle East.”
2015-06-29 00:00:00 Grantham: Stocks Will Continue Upward until the Election by Justin Kermond of Advisor Perspectives
Jeremy Grantham says equity valuations are heading toward the “two-sigma” level that is the requisite threshold for a true bubble. At some point – which is not imminent – he says a “trigger” will precipitate the reversion back to mean levels. The market will continue to deliver positive returns until the next election, according to Grantham.
2015-06-29 00:00:00 Grantham: Stocks Will Continue Upward until the Election by Justin Kermond (Article)
Jeremy Grantham says equity valuations are heading toward the “two-sigma” level that is the requisite threshold for a true bubble. At some point – which is not imminent – he says a “trigger” will precipitate the reversion back to mean levels. The market will continue to deliver positive returns until the next election, according to Grantham.
2015-06-27 00:00:00 $8 Trillion Alternative Energy Boom Is a Win for Copper by Frank Holmes of U.S. Global Investors
As the world’s population continues to grow, and as more people in developing and emerging countries gain access to electricity, the role alternative energy sources such as wind, solar and geothermal play should skyrocket. Between now and 2040, a massive $8 trillion will be spent globally on renewables, about two thirds of all energy spending, according to Bloomberg New Energy Finance. Solar power alone is expected to draw $3.7 trillion.
2015-06-26 00:00:00 Shelter from the Storm in Europe by Mohamed El-Erian of Project Syndicate
To secure a prosperous future, Europe must confront three distinct challenges: the Greek crisis, Russia’s incursion in Ukraine, and the rise of populist political parties. While Europe could address each of these challenges individually with relatively little risk, all three must be addressed simultaneously.
2015-06-26 00:00:00 Time to Consider Municipal High Yield? by David Jurca of Russell Investments
David Jurca explains why investors may want to consider municipal high yield to help manage taxes, especially since it can offer strong tax equivalent yields at a historically attractive level of volatility.
2015-06-25 00:00:00 Unconstrained Global Investing in an Extraordinary Monetary Policy Enviornment by Michael Hasenstab of Franklin Templeton Investments
As we see it, it is only a matter of time before US wages start to rise to levels where inflation is triggered. Using the Fed’s own estimates, we are quite close to what’s considered to be full employment. To us, this does not justify 0% interest rates.
2015-06-25 00:00:00 Spectacular Bid, On the Grand Stage by Michael Kayes of Willingdon Wealth Management
Comparisons are central to our society, impacting just about everything we do. Does the current economic environment measure up?
2015-06-25 00:00:00 Batteries Not Included: Midyear Stock Market Outlook by Burt White, Jeffrey Buchbinder of LPL Financial
Expect the bull market to continue through 2015. In the stock market, 2015 has felt like déjà vu. In 2014, the year began with a tough first quarter and finished strong. After a weak start to the year, we believe that corporate America will provide a much needed boost for the second half and 2015 may also finish strong?—?providing the seventh year of positive returns, in the 5?–?9% range we forecast.
2015-06-25 00:00:00 Diversification: A Better Way to Avoid Portfolio Gridlock by Tracy Fielder of Invesco Blog
Every morning as I drive into the office, I see my fellow commuters darting from lane to lane, trying to choose the fastest one. The problem is, traffic in the “fast” lane inevitably slows down as cars crowd into it, and the slower lanes suddenly become the place to be. So in the long run, despite their risky maneuvers, these drivers don’t usually get much farther ahead than anybody else.
2015-06-25 00:00:00 Uncertainty Now; Opportunity Later: 2015 Economic & Stock Market Outlook, Mid-Year Update by Bruce Bittles, William Delwiche of Robert W. Baird & Co.
The message at mid-year is caution now, but opportunity later. It is not difficult to envision a more constructive environment as we move through the second half. If and when the Fed finally raises rates, conviction in a gradual tightening process could raise Fed policy back to bullish, and better seasonal patterns (and perhaps improved momentum) could be in store in the fourth quarter. On the other hand, a quick return of investor optimism and/or further breadth deterioration could add downside pressure in the near term.
2015-06-25 00:00:00 Invest in Tomorrow Today by Lewis Piantedosi, Yana Barton of Eaton Vance
In our view, some of the most attractive equity opportunities these days are tied to several compelling megatrends that are likely to persist over the coming years in the technology, healthcare and consumer sectors.
2015-06-25 00:00:00 “Ye Of Little Faith” What Has It Cost You? Part 1 by Chuck Carnevale of F.A.S.T. Graphs
I believe that one of the most important attributes that a successful investor must possess is optimism. Any serious student of financial history would recognize and acknowledge that economically speaking, things are good much more often than they are bad.
2015-06-23 00:00:00 Equities Gather Momentum on Positive Indicators by Robert Doll of Nuveen Asset Management
U.S. equities finished higher last week as the S&P 500 increased 0.8%, recording its highest weekly gain since April. The dovish message from Wednesday’s FOMC announcement boosted markets. Contagion from Greece appears relatively contained. The sell-off in equities in China did not impact global markets. The health care, consumer staples and utilities sectors rallied. Financials lagged as banking lost momentum and energy underperformed.
2015-06-23 00:00:00 Why VBINX is the Wrong Benchmark For Global Tactical Asset Allocation Strategies by Adam Butler, Michael Philbrick, Rodrigo Gordillo of BPG & Associates
We recently came across a couple of articles making the sensational claim that TAA is nothing more than a repackaged and dressed-up version of market timing. Both articles – and others, we’ve subsequently learned – point to a Morningstar study showing that TAA has underperformed the Vanguard U.S. 60/40 balanced fund over the past few years.
2015-06-23 00:00:00 Getting More from Low Market Volatility by Alex Barenboym of AllianceBernstein
Stocks still seem attractive, but it’s important to guard against a potential spike in market volatility. Today’s low-volatility environment happens to be a good time to shop for downside protection.
2015-06-23 00:00:00 Are Staples and Health Care Poised for More Outperformance? by Bryce Coward of GaveKal Capital
Today’s cyclical jolt aside, it appears from glancing at relative performance charts of growth counter-cyclicals (our code wording for the Consumer Staples and Health Care Sectors) that they could be poised for a relative performance breakout.
2015-06-22 00:00:00 Greece Implications for Global Carry by Alexander Giryavets of Dynamika Capital L.L.C.
At least some large money managers have been seriously concerned about possible Greece implications for global asset dynamics. We briefly present one counter-intuitive and contrarian point of view on possible Greece implications for Global Carry and possible hedges and tail-hedges based on recently emerged link of Global Carry and Dollar.
2015-06-22 00:00:00 Global Review and Equity Commentary: May 2015 by Team of Thomas White International
The decline in U.S. economic activity during the first quarter was more than earlier estimates, and appears to have weakened business sentiment in other parts of the world. Most of the fall in U.S. aggregate output was due to temporary factors such as adverse weather and port disruptions that led to delayed export shipments. The stronger dollar also reduced the earnings growth of large U.S. corporations with a global footprint.
2015-06-22 00:00:00 All Their Eggs in Janet's Basket by John Hussman of Hussman Funds
The financial markets are establishing an extreme that we expect investors will remember for the remainder of history, joining other memorable peers that include 1906, 1929, 1937, 1966, 1972, 2000 and 2007. The failure to recognize this moment as historic is largely because investors have been urged to believe things that aren’t true, have never been true, and can be demonstrated to be untrue across a century of history.
2015-06-22 00:00:00 On My Radar: Three-Way Asset Strategy by Steve Blumenthal of CMG Capital Management Group
“The probability of loss is no more measurable than the probability of rain. It can be modeled, and it can be estimated (and by experts pretty well), but it cannot be known.”– Howard Marks, Chairman, Oaktree Capital
2015-06-19 00:00:00 Global Economic Perspective: June by Team of Franklin Templeton Investments
In spite of lingering concerns about Greece’s fate, the European economy would appear to have hit a sweet spot marked by steadily improving growth and inflation figures along with declining unemployment.
2015-06-19 00:00:00 Gold and Health Care Stocks Get a Clean Bill of Health by Frank Holmes of U.S. Global Investors
Even though the Federal Reserve announced this week that it would wait a little longer to raise rates, spooked investors fled to gold bullion, helping to drive prices above $1,200 an ounce. It was the greatest single-session surge by percentage in nearly a month and a half for the yellow metal, widely seen as a safe-haven investment. As I told MarketWatch yesterday, $1,200 is an important threshold for gold miners because it helps increase profitability and spur production.
2015-06-19 00:00:00 ECRI: "Shifting Patterns in Recessions and Recoveries" by Doug Short of Advisor Perspectives (dshort.com)
ECRI's most recent article presents slides and notes from ECRI's Lakshman Achuthan talk at the Madrid Fund Forum conference. He discussed the relationship between lower trend growth and recessions. "ECRI believes that minimally we're returning to a period of more frequent recessions, as we saw in much of the twentieth century....Going back to at least the 1970s, growth has been stair-stepping down during each successive expansion."
2015-06-18 00:00:00 Picking U.S. Energy, Housing and Other Credit Sectors for the Long Haul by Mark Kiesel of PIMCO
Persistent trends in economies around the world are providing opportunities for focused, long-term investors in the credit markets. Mark Kiesel, Chief Investment Officer Global Credit, discusses promising themes PIMCO sees over the next three to five years, including the U.S. energy revolution, the rising Asian consumer, the ramifications of global banking regulation and latent demand in the U.S. housing market. PIMCO’s global investment professionals gathered in May at our annual Secular Forum to discuss our long-term, or secular, views of economies and markets around the world.
2015-06-18 00:00:00 Concerned About Rising Interest Rates? Consider These Four Alternative Investments by Walter Davis of Invesco Blog
As I travel across the country meeting with financial advisors and their clients, a common concern I hear voiced is “how can I position my portfolio for when the inevitable happens and interest rates start to rise?” In response, I state that certain types of alternative investments are well suited to help prepare portfolios for rising interest rates in the future, while also potentially adding value in the present.
2015-06-17 00:00:00 Weighing the Week Ahead: A Market Message for the Fed? by Jeffrey Miller of NewArc Investments, Inc.
While few expect a change in Fed policy at this week’s FOMC meeting, it will still be the center of attention. With last week’s interest rate jump, I expect the theme to be: Is the market sending the Fed a message?
2015-06-17 00:00:00 Managing Risk by Investing in Dividend-Paying Stocks by (Article)
Small-cap is an asset class that has historically been associated with increased volatility. We have always believed that dividends, plentiful in the small-cap space, can help mitigate some of that risk. But what are we looking for in the dividend-paying companies in which we invest? Portfolio Manager Jay Kaplan and Co-CIO Francis Gannon discuss.
2015-06-17 00:00:00 Concentrated Funds: Benefits of a Focused Approach by Stephen Grant, Cindy Starke of Value Line Funds
Since Value Line Funds launched its first mutual fund in 1950, the investment industry has evolved considerably. To meet the needs of today’s investor, the fund family line-up has retooled in recent years, including re-branding two equity funds as concentrated portfolios of 30-50 positions. In this paper, we highlight research demonstrating the benefits of the focused approach provided by concentrated funds.
2015-06-16 00:00:00 Mid-Year Investment Outlook: 10 Experts on What to Watch by Orla O'Brien of Loomis Sayles
We spoke with 10 Loomis Sayles investment experts about the most pressing issues and provocative investment themes for the remainder of 2015. What are they watching? Read on for their insights.
2015-06-16 00:00:00 Stay with Equities, but Prepare for Turbulence by Robert Doll of Nuveen Asset Management
U.S. equities were up fractionally last week, with the S&P 500 Index up 0.1% as seven out of ten sectors traded higher. Strong retail sales figures kept the focus on the Federal Reserve and the prospect of higher interest rates. Concerns over Greece’s debt problems pushed volatility levels higher. The banking industry performed well, while cyclical areas of the market such as transportation lagged.
2015-06-16 00:00:00 Rising Rates and the Rebirth of Global Stockpicking by John Remmert, Donald Hubert of Franklin Templeton Investments
Once the efforts of various central banks start to bear fruit and the global economy becomes healthier, we expect to see a potential reduction in the pursuit of unconventional monetary policies. That should enable equity markets to return to what we view as a more rational level of behavior.
2015-06-15 00:00:00 Credit Spreads Do Not Predict The Stock Market by Mark Ungewitter of Charter Trust Company
We keep hearing that deteriorating credit spreads are heralding an important stock market top. The chart below, covering nearly a century of market data, does not support this view. While it’s true that credit spreads have widened in 2015, this condition has occurred frequently during healthy bull markets. There are too many false positives to justify a negative outlook based on this indicator.
2015-06-15 00:00:00 Is the European Insurance Sector in a State of Emergency? by Matthieu Louanges of PIMCO
Europe’s insurance industry has responded to profound challenges with a high degree of agility and innovation on both sides of their balance sheets.
2015-06-15 00:00:00 June Economic Update by John Richards of Bronfman E.L. Rothschild
A drop in exports, poor weather, and shipping yard difficulties led the U.S. economy back into negative territory after GDP was revised downward to -0.7%. Many economists believe this is a similar situation to what we saw in 2014 with a drop in GDP during the first quarter, and a subsequent rebound in the following quarters. However, the strong dollar effect has continued into April and May and will continue to provide a headwind for GDP. The preference by consumers to save additional earnings instead of spend is also putting downward pressure on growth.
2015-06-15 00:00:00 On My Radar: Watch Out For Minus Two by Steve Blumenthal of CMG Capital Management Group
The three great essentials to achieve anything worthwhile are: hard work, stick-to-itiveness, and common sense.”– Thomas Edison
2015-06-14 00:00:00 When You Look Back On This Moment In History by John Hussman of Hussman Funds
There are moments in time when durable history is made; history that others observe much later, shaking their heads, at a loss to understand how the events that followed could not have been obvious at the time. When you look back on this moment in history, remember these things. When you look back on this moment in history, remember that spectacular extremes in reliable valuation measures already told you how the story would end.
2015-06-12 00:00:00 What The Great Recession Taught Me About Dividend Growth Investing by Chuck Carnevale of F.A.S.T. Graphs
Ever since I first got interested in investing in stocks circa 1965 I have been confronted with a constant and persistent admonition about the next pending market crash. In those early days I contributed much of the negativity toward stocks to a lingering overhang from the Great Depression. Many of the people I was talking with had been literally traumatized by stern warnings from their parents or grandparents about the risk of investing in the stock market. Stocks were too risky for prudent people to invest in and serious money should never be invested there.
2015-06-12 00:00:00 U.S. Economy Turns on the Afterburners-Is a Rate Hike Next? by Frank Holmes of U.S. Global Investors
So when will rates be raised again? Next Wednesday the world will tune in to see if Fed Chair Janet Yellen can answer that question. Though it's anyone's guess what she'll say, there's no denying that many of the economic indicators the Fed is keeping an eye on have sharply improved lately.
2015-06-12 00:00:00 Are We Mismeasuring the Economy? by Carl Tannenbaum of Northern Trust
The problem may not be with growth but rather the way we measure it.
2015-06-12 00:00:00 Tug of War by Liz Ann Sonders, Brad Sorensen & Jeffrey Kleintop of Charles Schwab
The current stalemate in the US market could continue for some time, with bouts of volatility and pullbacks expected as the market anticipates the initial rate hike. Be prepared by staying diversified and consider buying protection, but we would view such an event as the pause that refreshes and help set up the next sustainable bull run. Investors should also look overseas as the aggressive stimulus measures being taken by the ECB appear to be beneficially impacting the economy, and may help equities perform better in the coming months.
2015-06-11 00:00:00 Using Investment Manager Styles to Navigate Markets by Brian Andrew of Cleary Gull
Investment manager styles, like markets, move in cycles. So as investment advisors, we try to identify where we are in the market cycle to choose the best managers. Decision making should not be binary – “I like the market or I don’t like the market,” with a resulting buy or sell decision. In downturns, the normal reaction is to sell out of the market rather than looking at how to stay in the market and become more defensive. In fact, being out of the market negatively impacts results over time.
2015-06-11 00:00:00 When Following the Herd is Risky, Where is the Safety? by Zachary Karabell of Envestnet
Risk and safety. Safety and risk. In investing, as in life, balancing both is an ongoing challenge. We know intuitively that all of either one or the other rarely yields the results we want, but finding the right mix is easier said than done.
2015-06-10 00:00:00 Bears Gather Around the Goldilocks Eurozone by David Zahn of Franklin Templeton Investments
The eurozone is currently offering what we would regard as an ideal environment to generate growth, so we’d certainly be slightly concerned if the economy there was not growing.
2015-06-10 00:00:00 5 Investing Myths by Lance Roberts of Streettalk Live
One of the biggest myths perpetrated by Wall Street on investors is showing individuals the following chart and telling them over the “long-term” the stock market has generated a 10% annualized total return. The statement is not entirely false.
2015-06-09 00:00:00 In Defense of ‘Smart Beta’ by Keith Goddard (Article)
In a recent article, Why Smart Beta is Really Dumb, Michael Edesess encouraged investors to be skeptical of the growing number of factor-based investment strategies being marketed under the moniker of "smart beta." While I applaud Edesess' call for skepticism, I am compelled to play the role of public defender and cross-examine his accusations.
2015-06-09 00:00:00 Four Reasons Why We Do Not Hedge Against Currency Volatility by Sponsored Content from Invesco (Article)
Currency volatility has continued to be a clear theme so far in 2015. Our International Growth strategy doesn't hedge for currency exposure, and never has. In essence, the team is much more concerned with what company managements are doing than central bankers.
2015-06-09 00:00:00 Does It Make My Portfolio Better? by Roger Nusbaum of AdvisorShares
Cliff Asness posted a commentary a few days ago that includes the following; One of the most basic lessons of investing is to think about how each investment impacts your overall portfolio not just its characteristics stand alone. You don’t evaluate your other investment options based on, “Would I trade my whole portfolio for this?” but rather on, “Does it make my portfolio better?”
2015-06-09 00:00:00 Precision in Your Retirement Short Game by Glenn Dial of Allianz Global Investors
Getting the asset allocation right as plan participants close in on retirement is critical, writes Glenn Dial, Head of US Retirement Strategy at Allianz Global Investors. And professional advice can help them find that pinpoint accuracy.
2015-06-08 00:00:00 As the Economy Grows, Bonds Struggle and Equities Tread Water by Robert Doll of Nuveen Asset Management
U.S. economic data last week seemed to confirm that the country is rebounding from a weak first quarter. Manufacturing, construction, sales figures and the labor market all showed signs of improvement.
2015-06-08 00:00:00 Risk Revisited Again by Howard Marks of Oaktree Capital Management
In April 2014, I had good results with Dare to Be Great II, starting from the base established in an earlier memo (Dare to Be Great, September 2006) and adding new thoughts that had occurred to me in the intervening years. Also in 2006 I wrote Risk, my first memo devoted entirely to this key subject. My thinking continued to develop, causing me to dedicate three chapters to risk among the twenty in my book The Most Important Thing. This memo adds to what I’ve previously written on the topic.
2015-06-08 00:00:00 Billions and Billions Pour into India and China by Frank Holmes of U.S. Global Investors
It’s been a little over a year since Narendra Modi took office in India, and so far the results have been mostly positive for the South Asian country and the surrounding region. Among other achievements, Modi’s government has managed to enact important policy reforms, increase public investments in infrastructure, lower food inflation and generally open India up to business on a global scale.
2015-05-19 00:00:00 Do Goldman Sachs' Funds Add Value for Investors? by Larry Swedroe (Article)
Over the last few years, an expanding line of mutual funds created by commercial banks such as Goldman Sachs and JPMorgan Chase have been drawing billions of dollars from investors looking to earn a good return. While the fees these funds have generated are among the few consistent bright spots of growth on Wall Street, the question for investors is whether or not the active mutual funds managed by these banks actually have been good investment choices.
2015-04-12 00:00:00 Valuation and Speculation: The Iron Laws by John Hussman of Hussman Funds
If you genuinely want to learn something from our experience during the recent half-cycle, it’s not to discard the Iron Law of Valuation, but to couple your awareness of valuation with an understanding of where investor preferences toward risk are from the standpoint of the Iron Law of Speculation. I had very vocal concerns about valuation during the tech bubble and the housing bubble, well before they burst.
2015-03-31 00:00:00 The Final Say on Spending Rules by Laurence B. Siegel (Article)
After decades of focused research, why can't finance experts decide on a safe withdrawal rate for retirement? It is time to refocus this debate by asking a slightly different question: Is there a spending rule that retirees can use over a fixed time horizon? There is and I call it "the only spending rule you will ever need."
2015-01-20 00:00:00 What is a Deep Value Investor? by (Article)
Deep value investors have a long-term focus and are not fixated on quarterly earnings. They're looking for companies with the ability to compound wealth over time.
2014-09-09 00:00:00 How Rare are Housing Bubbles? Understanding the Case-Shiller Index and its Counterparts by Cesar A. Orosco and Laurence B. Siegel (Article)
Do house prices experience periodic bull and bear markets like the stock market? Or are they stable in real (inflation-adjusted) terms most of the time, with big disruptions once or twice in a century? Two popular house price series tell these very different stories. Knowing which is better will lead to superior investment outcomes and improved policy decisions.
2014-09-09 00:00:00 Growing Income and Wealth with High-Dividend Equities by C. Thomas Howard, PhD (Article)
High-dividend equities have significant advantages for growing income and wealth: getting sufficient yield, keeping up with inflation and outliving available funds. Such a portfolio produces higher income per dollar invested, growing income and principal over time, higher total returns, lower volatility and a reduced risk of outliving savings.
2014-08-05 00:00:00 The Wealth-Builder Model by C. Thomas Howard, PhD (Article)
While the math of compounding is straightforward, building wealth is difficult. But if you use an approach based on the principles outlined in this article, the accumulation of real wealth is within reach.
2014-07-08 00:00:00 Looking Closer at Morningstar Peer Groups for Fund Analysis by Gunjan Banati and Francis Gannon (Article)
Director of Risk Management Gunjan Banati sits down with Co-Chief Investment Officer Francis Gannon to discuss the results of her Morningstar peer group research whitepaper and suggests ways in which investors can compare funds within peer groups more effectively.
2014-07-01 00:00:00 Chuck Royce on 2Q14: Fundamentals Reassert Their Importance by Chuck Royce of The Royce Funds
Since the May 2013 low for the 10-year Treasury, we have seen the market shift its focus to more fundamentally and financially stronger companies with attractive long-term prospects—qualities that we have always championed at Royce.
2014-06-26 00:00:00 Economic Update by Team of Northern Trust
U.S. real gross domestic product (GDP) fell at an annual rate of 2.9% in the first quarter. However, forward economic momentum is intact.
2014-05-29 00:00:00 A Stealth Recovery by Pamela Rosenau of HighTower Advisors
In the fall of 2010, I had written that several indicators suggested the U.S. was entering “stealth economic recovery” mode. This “stealth” recovery coupled with low interest rates and changing demographics were going to usher us into “the age of the Dividend Darlings -- companies that pay sizeable, sustainable, and growing dividends.” Investors would not only replace their income exposure to lower yielding bonds, but also focus on growing income in the equity market.
2014-05-13 00:00:00 Thomas White's 2014 Market Outlook by (Article)
Assessing the prospects in 2014, 45-year industry veteran Thomas S. White offers his view of the challenges and opportunities ahead in the global economic markets.
2014-04-23 00:00:00 Poker Mentality?! by Jeffrey Saut of Raymond James
have often stated that the rarest trait on Wall Street is ?patience.? I have also repeatedly reprised Charles Dow?s quote that, ?The successful investor/speculator needs to ignore two out of every three potential money making opportunities.?
2014-04-15 00:00:00 Running Backwards to Catch Up by Jerry Wagner of Flexible Plan Investments
Did you ever try to run backwards? I find walking backwards difficult enough. Running in reverse can send you tumbling.
2014-04-05 00:00:00 The Lions in the Grass, Revisited by John Mauldin of Millennium Wave Advisors
Today we explore a few things we can see and then try to foresee a few things that are not quite so obvious. The simple premise is that it is not the lions we can see lounging in plain view that are the most insidious threat, but rather that in trying to avoid those we may stumble upon lions hidden in the grass.
2014-04-04 00:00:00 Do You Think You Can Be Effective in Market Forecasting? by Robert Isbitts of Sungarden Investment Research
It is important to understand that no one can predict the future with certainty. Investors should take so-called expert forecasts with a grain of salt. Effective portfolio management is not about forecasting the future and then clinging to that forecast. It?s about continuously evaluating information and market conditions and then making adjustments when necessary to pursue the ultimate goal. To paraphrase long time market watcher Steve Leuthold, ?Predictions are for show, our decisions within the portfolio are for dough.?
2014-03-16 00:00:00 Inequality and Opportunity by John Mauldin of Millennium Wave Advisors
Today we will continue our thinking about income inequality, and I will respond to some of your letters, as they make good launching points for further discussion of the topic.
2014-03-09 00:00:00 The Problem with Keynesianism by John Mauldin of Millennium Wave Advisors
Keynes himself would appreciate the irony that he has become the defunct economist under whose influence the academic and bureaucratic classes now toil, slaves to what has become as much a religious belief system as it is an economic theory. Men and women who display an appropriate amount of skepticism on all manner of other topics indiscriminately funnel a wide assortment of facts and data through the filter of Keynesianism without ever questioning its basic assumptions. And then some of them go on to prescribe government policies that have profound effects upon the citizens of their nations.
2014-03-04 00:00:00 Malthus, Marx, and Modern Growth by Kenneth Rogoff of Project Syndicate
The promise that each generation will be better off than the last is a fundamental tenet of modern society. But will future generations, particularly in advanced economies, realize such expectations?
2014-02-28 00:00:00 Drug Retail On A Roll by of GaveKal Capital
While the MSCI World consumer staples sector is not the source of scorching growth, there are some decent growth opportunities. Let's start by calibrating the drug retail industry within the consumer staples sector.
2014-02-15 00:00:00 The Economic Singularity by John Mauldin of Millennium Wave Advisors
Today, let’s think about central banks and liquidity traps and see if we agree that central bankers are driving the car from the back seat based upon a fundamentally flawed theory of how the world works. That theory helped produce the wreck that was the Great Recession and will have its fingerprints all over the next one.
2014-01-18 00:00:00 Forecast 2014: 'Mark Twain!' by John Mauldin of Millennium Wave Advisors
The surface of the market waters looks smooth, but the data above suggest caution as we proceed. Perhaps slowing the engine and taking more frequent soundings (or putting in closer stops!) might be in order. The cry should be "Mark twain!" Let’s steam ahead but take more frequent readings and know that a course correction may soon be necessary.
2014-01-04 00:00:00 Forecast 2014: The Human Transformation Revolution by John Mauldin of Millennium Wave Advisors
It is that time of the year when we peer into our darkened crystal balls in hopes of seeing portents of the future in the shadowy mists. This year I see three distinct wisps of vapor coalescing in the coming years. Each deserves its own treatment, so this year the annual forecast issue will in fact be three separate weekly pieces.
2013-12-31 00:00:00 China's Policy Disharmony by Stephen Roach of Project Syndicate
China was hardly lacking in policy pronouncements in the final months of 2013. Given the likely tradeoffs between strategy and tactics - that is, between long-term reforms and short-term growth - can Chinese policymakers really accomplish all of their objectives?
2013-12-21 00:00:00 What Has QE Wrought? by John Mauldin of Millennium Wave Advisors
Now that we have begun tapering, we will soon see lots of analysis about whether QE has been effective. What will the stock market do? The US economy seems to be moving in the right direction, but the Fed has forecast Nirvana (seriously) - do we dare hope they can finally get a forecast right? Or have they jinxed us?
2013-12-07 00:00:00 Interview with Steve Forbes by John Mauldin of Millennium Wave Advisors
For whatever reason, Steve Forbes seems to bring out the passion in me. When I think about what central bank policies are doing to savers and investors, how we are screwing around with the pension system, circumventing rational market expectations because of an untested economic theory held by a relatively small number of academics, I get a little exercised. And Steve gives me the freedom to do it.
2013-12-05 00:00:00 US Corporate Profit Margins Increase Again In The 3Q by Team of GaveKal Capital
US corporate profit margins are at their second highest level ever at 10.14%. The highest level was reached in the 4Q11 when profit margins spiked to 10.27%.
2013-12-04 00:00:00 US Economic Data Round-Up by Team of GaveKal Capital
ADP payroll data surprised to the upside today (215k vs 185k expected). It was the highest reading so far this year. Perhaps most encouragingly the gain was lead by small businesses.
2013-11-24 00:00:00 Game of Thrones - European Style by John Mauldin of Millennium Wave Advisors
The Eurozone crisis is not over, and it will not end quickly or soon. Even if it seems to unfold in slow motion - like the slow build-up in a Game of Thrones storyline to violent internecine clashes followed by more slow plot developments but never any resolution, the Eurozone debacle has never really gone away. The structural imbalances have still not been fixed; politicians and central bankers have still not agreed to solve major fiscal problems; the overall economy still disintegrates; unemployment is staggeringly high in some countries and still rising; and the people are growing restless.
2013-11-17 00:00:00 The Unintended Consequences of ZIRP by John Mauldin of Millennium Wave Advisors
Two recently released papers make an intellectual and theoretical case for an extended period of very low interest rates and, in combination with other papers from both inside and outside the Fed from heavyweight economists, make a strong case for beginning to taper sooner rather than later, but for accompanying that tapering with a commitment to an even more protracted period of ZIRP. We are going analyze these papers, as they are critical to understanding the future direction of Federal Reserve policy. Secondly, we’ll look at some of the unintended consequences of long-term ZIRP.
2013-11-11 00:00:00 The Uncertain Future of Central Bank Supremacy by Mohamed El-Erian of Project Syndicate
Advanced countries’ central banks were among the first to warn that their ability to compensate for other policymakers’ inaction is neither endless nor risk-free. The trouble is that few outsiders seem to be listening, much less preparing to confront the limits of monetary policy’s effectiveness.
2013-10-17 00:00:00 The U.S. Budget Deal: Peace, for a Time by Team of Northern Trust
Less than 24 hours before the U.S. Treasury Department ran out of room to borrow, Congress arrived at an agreement to reopen the government and steer away from debt default. This news came as a great relief, but that feeling may only last a few months. Following are some highlights and an initial analysis of the accord.
2013-10-12 00:00:00 Sometimes They Ring a Bell by John Mauldin of Millennium Wave Advisors
Three items have come across my screen in the past month that, taken together, truly do signal a major turning point in how energy is discovered, transported, and transformed. And while we’ll start with a story that most of us are somewhat aware of, there is an even larger transformation happening that I think argues against the negative research that has come out in the last few years about the reduced potential for growth in the world economy.
2013-10-07 00:00:00 Goose Bump Stuff... by Michael Kayes of Willingdon Wealth Management
Scientific research and discovery has always been an important aspect of American life. This, in itself, should make us hopeful.
2013-09-28 00:00:00 The Renminbi: Soon to Be a Reserve Currency? by John Mauldin of Millennium Wave Advisors
Contrary to the thinking of fretful dollar skeptics, my firm belief is that the US dollar is going to become even stronger and will at some point actually deserve to be the reserve currency of choice rather than merely the prettiest girl in the ugly contest the last currency standing, so to speak. But whether the Chinese RMB will become a reserve currency is an entirely different question.
2013-09-25 00:00:00 Muni Market Resurgent by Andrew Clinton of Clinton Investment Management
In light of the recent recovery in fixed income markets and the outperformance of the municipal bond market in particular, I thought I would send a note to provide a brief update since we last sent our market observations in July and August. As you may recall, we stated in the clearest terms that we felt the recent rise in interest rates provided an attractive entry point for municipal bond investors.
2013-09-07 00:00:00 Unrealistic Expectations by John Mauldin of Millennium Wave Advisors
Two well-respected analysts of pension funds have produced reports this summer suggesting that pensions are now underfunded by more than $4 trillion and possibly more than $5 trillion. I would like to tell you that the underfunding is all the bad news, but when you probe deeper into the problems facing pension funds, it just gets worse.
2013-08-31 00:00:00 How Do I Hate Thee? by John Mauldin of Millennium Wave Advisors
I will list a number of reasons why I hate this market and then suggest a few reasons why that should get you excited. We will look at some charts, and I’ll briefly comment on them. No deep dives this week, just a survey of the general landscape.
2013-08-25 00:00:00 France: On the Edge of the Periphery by John Mauldin of Millennium Wave Advisors
Charles de Gaulle said that "France cannot be France without greatness." The current path that France is on will not take it to renewed greatness but rather to insolvency and turmoil. Is France destined to be grouped with its Mediterranean peripheral cousins, or to be seen as part of the solid North Atlantic core? The world is far better off with a great France, but France can achieve greatness only by its own actions.
2013-08-17 00:00:00 Signs of the Top by John Mauldin of Millennium Wave Advisors
The investment media seems obsessed with the question of whether the Fed will taper. The real question should be not about "tapering" but about credibility. What happens when fundamentals become the narrative as opposed to what the central bank is doing? What happens if the Federal Reserve throws a liquidity party and nobody comes? Today we look at some of the fundamentals. The market is in fact overvalued, but that doesn’t mean it can’t become more overvalued. Is this August 1987 or August 1999?
2013-08-10 00:00:00 We Can't Take the Chance by John Mauldin of Millennium Wave Advisors
What would it have been like to be a central banker in the midst of the crisis in 2008-09? You’d know that you won’t have the luxury of going back and making better decisions five years later. Instead, you have to act on the torrent of information that’s coming at you, and none of it is good. Major banks are literally collapsing, the interbank market is nonexistent and there is panic in the air. Perhaps you feel that panic in the pit of your stomach. This week we’ll perform a little thought experiment to see if we can extrapolate what is likely to happen in when the nex
2013-07-29 00:00:00 Misreading Chinese Rebalancing by Stephen Roach of Project Syndicate
China’s economic slowdown has caused Western pundits to succumb, once again, to the “China Crash” syndrome. But, though the composition of Chinese GDP growth appears disconcerting, the rebalancing of any economy a major structural transformation in the sources of output growth can hardly be expected to occur overnight.
2013-07-27 00:00:00 A Lost Generation by John Mauldin of Millennium Wave Advisors
This week we will briefly look at why weak consumer spending is going to become an even greater problem in the coming years, and we will continue to look at some disturbing trends in employment.
2013-07-16 00:00:00 Deficit? What Deficit? by Brian Wesbury, Bob Stein of First Trust Advisors
Hope that title caught your attention, but, you should know, we are only half joking. In June, the federal government recorded a $116.5 billion surplus! Yep, you read that right surplus! the largest surplus for any June ever. Government spending fell to $170 billion for June, 47% below last year.
2013-07-13 00:00:00 The Bang! Moment Shock by John Mauldin of Millennium Wave Advisors
This week we resume our musings about Cyprus, to see what that tiny island can teach us about our own personal need to engage in ongoing critical analysis of our lives and investment portfolios. Cyprus is not Greece or France or Spain or Japan or the US or (pick a country). I get that. No two situations are the same, but there may be a rhyme or two here that is instructive.
2013-07-10 00:00:00 Stocks v. Bonds: What Happens When Prices Decouple? by Mark Ungewitter of Charter Trust Company
Are today’s falling bond prices a sign of confidence in economic growth and earnings power? Or might higher bond yields derail the current equity bull market? While the answer is far from clear, history teaches us to be cautious when bond prices decline sharply during an extended equity rally.
2013-07-01 00:00:00 "This Country is Different" by John Mauldin of Millennium Wave Advisors
Cyprus is a very small country, some 800,000 people. Among the leadership, everyone knows everyone. There is much to admire, as we will see. But Cyprus has had a gut-wrenching crisis, proportionately more dire than any in other European countries recently; and precedents are being established here for how future problems will be dealt with in the Eurozone and elsewhere.
2013-06-17 00:00:00 Sector Distortions Can Be Costly in Passive Investing by Joseph Paul, Kevin Simms of AllianceBernstein
Passive investing strategies that emulate an index have become increasingly popular. But passive investing can go awry when sector concentrations leave investors exposed to unintended risks.
2013-06-15 00:00:00 Economists Are (Still) Clueless by John Mauldin of Millennium Wave Advisors
The economic forecasts of mainstream economists are quite positive, if not enirely optimistic, reflecting the current data. Should we not take heart from that? Alas, no. This week we look at some of our recent musings on that topic, triggered by a letter from a very serious economist who took umbrage when I wrote disparagingly about economists and forecasting a couple months ago.
2013-06-08 00:00:00 Banzai! Banzai! Banzai! by John Mauldin of Millennium Wave Advisors
In practice it may be harder for Japan to grow and generate inflation than it might be for other major nations. Today we’ll focus on Japanese demographics. While the letter is full of graphs and charts, it does not paint a pretty picture. The forces of deflation will not go gently into that good night.
2013-06-01 00:00:00 Central Bankers Gone Wild by John Mauldin of Millennium Wave Advisors
For the last two weeks we have focused on the problems facing Japan, and such is the importance of Japan to the world economy that this week we will once again turn to the Land of the Rising Sun. I will try to summarize the situation facing the Japanese. This is critical to understand, because they are determined to share their problems with the world, and we will have no choice but to deal with them. Japan is going to affect your economy and your investments, no matter where you live; Japan is that important.
2013-05-25 00:00:00 The Mother of All Painted-In Corners by John Mauldin of Millennium Wave Advisors
Japan has painted itself into the mother all corners. There will be no clean or easy exit. There is going to be massive economic pain as they the Japanese try and find a way out of their problems, and sadly, the pain will not be confined to Japan. This will be the true test of the theories of neo-Keynesianism writ large. Japan is going to print and monetize and spend more than almost any observer can currently imagine. You like what Paul Krugman prescribes? You think he makes sense? You (we all!) are going to be participants in a real-world experiment on how that works out.
2013-04-30 00:00:00 Implementing Behavioral Portfolio Management by C. Thomas Howard, PhD (Article)
Behavioral portfolio management is based on the notion that if the advisor can redirect his or her emotions and mitigate the impact of client emotions, it is possible to build superior portfolios by harnessing market emotions. This article describes how this can be done and presents evidence of the superiority of focusing on investor behavior when constructing and managing portfolios.
2013-04-29 00:00:00 Long Live China's Slowdown by Stephen Roach of Project Syndicate
China doubters around the world have been quick to pounce on slower-than-expected GDP growth in the first quarter of this year. But slower growth is actually good for China provided that it reflects the long-awaited shift to an economic structure that draws greater support from domestic private consumption.
2013-04-24 00:00:00 The Road To Omaha by Bill Smead of Smead Capital Management
We have been discussing keys to the investment success of Warren Buffett and Berkshire Hathaway as we approach the 2013 annual meeting. In this week’s edition, we are considering a company which might make a good “elephant” for Berkshire to buy.
2013-04-20 00:00:00 Austerity is a Consequence, not a Punishment by John Mauldin of Millennium Wave Advisors
Austerity is a consequence, not a punishment. A country loses access to cheap borrowed money as a consequence of running up too much debt and losing the confidence of lenders that the debt can be repaid. Lenders don’t sit around in clubs and discuss how to “punish” a country by requiring austerity; they simply decide not to lend. Austerity is a result of a country’s trying to entice lenders into believing that the country will change and make an effort to restore confidence.
2013-04-08 00:00:00 Can Something Good Be Cheap Too? by Charles Lahr of PIMCO
Over the last eight years, the least volatile components of the MSCI World Index tended to have lower valuations, higher profit margins and higher dividend yields. This anomaly, which appears to be among the most persistent in all of equity space, is rooted in speculative human behavior such as the lottery ticket phenomenon.
2013-03-26 00:00:00 Adapting the Yale Model for Clients by C. Thomas Howard, PhD and Lambert Bunker (Article)
The Yale University endowment fund is one of the most successful in the country, with a 10-year return besting the endowment universe average return by 300 basis points and the Wilshire 5000 return by 400 basis points. David Swensen is the architect of this program, and his guiding principles are widely used to manage large endowments. They are equally useful for client portfolios.
2013-03-21 00:00:00 PMI What Does It Really Tell Us? by Adam Peck of Heartland Advisors
Recently we’ve been seeing positive readings from the Purchasing Managers’ Index (PMI), news that may seem as though it would be good for all stocks. In fact, though, a look at the performance of the S&P 500 and the PMI since 1995 shows that this is not necessarily the case.
2013-03-07 00:00:00 Mexico Breaking Good? by Kenneth Rogoff of Project Syndicate
Mexico is enjoying a manufacturing boom that has boosted its exports to the US after a long secular decline. With China's wages soaring and rising oil prices driving up shipping costs, production in Mexico is suddenly looking much more attractive, even taking security concerns into account.
2013-02-26 00:00:00 The Postman May Not Ring at All by Paul DiGiacomo of Columbia Management
United States Postal Service is technically insolvent. Last year, the agency exhausted its borrowing capacity and failed to pay $11 billion into its retiree health plan. This year, it will not make a $6 billion contribution. While the current cash balance of $2 billion is sufficient for 10 days of operation, management forecasts a $100 million deficit by October. When payments to employees and suppliers end, so too will the mail.
2013-02-06 00:00:00 Where Will Home Prices Rise the Most? Check the Law. by Adam Artunian of John Burns Real Estate Consulting
Inventories have plummeted in Western markets over the last year, helping to spur robust price growth. Our home price index (below) shows just how much price appreciation has occurred (the index is 5+/- months more current than Case Shiller and removes the mix-shift bias).
2013-01-31 00:00:00 Investing in the Robot Revolution: Part 1 by Catherine Wood, Michael Shavel of AllianceBernstein
As robots increasingly take over processes currently performed by humans, we believe that an inflection point in manufacturing automation is imminent. Transport and healthcare will quickly follow, with enormous social, economic and hence investment implications.
2013-01-02 00:00:00 The Unstarvable Beast by Kenneth Rogoff of Project Syndicate
As US President in the 1980's, the conservative icon Ronald Reagan described his approach to fiscal policy as "starve the beast": cutting taxes will eventually force people to accept less government spending. So why has the cost of government not only in the US continued to rise inexorably?
2012-12-11 00:00:00 Fine Wine - Why it's for More than Just Drinking by Mark E. Ricardo, JD, LLM, AAMS (Article)
For many investors, an ideal asset class would combine superior long-term absolute and risk-adjusted returns with a hedge against inflation and stock market volatility. There's a way to get all of that, in an asset class you might never have thought of until now: fine wine. Investment-grade wine deserves careful consideration, particularly now that - unlike other collectibles, such as art and rare books - it can be traded on a regulated exchange.
2012-10-09 00:00:00 High-Dividend Yield Strategy under the Microscope by Michael Nairne (Article)
High-dividend yield stocks have become the favorite recommendation of a host of advisors, but an undue focus on income alone obscures the irreducible fact that long-term investment success is based on the total return of a portfolio including both income and capital growth. This raises two questions. How has the total return of a high-dividend yield strategy fared relative to the market? How does its total-return performance compare to the returns of other possible stock-selection strategies?
2011-09-22 00:00:00 More Focus on Fixed Income by Team of American Century Investments
G. David MacEwen, discusses how volatile market conditions, a population boom in the 65+ years category, and increasingly conservative investment behavior by those in that category as they approach retirement (including growing demand for more predictable outcomes) are shifting the focus of investment strategies toward fixed income. We strongly believe that the scheduled, mostly predictable payments of interest and principal from bonds are becoming progressively more attractive to a growing pool of investors and their advisors.
2011-08-19 00:00:00 Paper Currencies Finally Redeemed for Gold by John Browne of Euro Pacific Capital
The basic unwillingness of politicians to face economic and financial realities has caused the United States and European Union to face currency collapse. The politicians are content literally to paper over the problem with massive amounts of newly printed currency. This means that savvy investors, facing major real losses, are turning increasingly to gold. In essence, even though currencies are no longer on a gold standard, they are increasingly being redeemed for gold in the marketplace.
2011-08-03 00:00:00 Yellow Jerseys by Doug MacKay and Bill Hoover of Broadleaf Partners
As an investor, it is important to realize that while you can win the occasional stage race by going it on your own and betting big on a single stock or perhaps along the outcome of a singular event like the debt ceiling, more often than not, the market like the peloton will usually catch and pass you by, leaving you in the dust. Like the peloton, evidence suggests that few investment managers outperform the market year in and year out, but over time, those that understand the race they are in significantly increase their odds of emerging victorious.
2011-07-14 00:00:00 The Brightening Air by Christian Thwaites of Sentinel Investments
A casual empiricist would conclude that the US economy is troubled: weak GNP, employment, housing and slowdowns in the important ISM and Fed surveys. But a longer perspective shows this is entirely in keeping with a recovery from a deep-seated financial and borrowing crisis. There are many signs that the US is picking itself up: manufacturing productivity, private sector job creation, corporate profitability and household deleveraging. Monetary policy has saved the economy from the insidious threat of deflation. Fiscal policy is meandering. Some of the answers are right in front of us.
2011-03-29 00:00:00 Is There More Room for Growth in US Equities? by BlackRock (Article)
There are risks to not being invested in today's improving environment. Given that equity valuations are fully supported by strong earnings, BlackRock believes that fundamentals argue strongly for an allocation to growth stocks. Read more to learn why.
2011-02-24 00:00:00 Our Five Year S&P 1500 and Sector Forecast by Kendall J. Anderson of Anderson Griggs
We believe that predicting short term swings in the market is an exercise in humility. Longer-term market predictions have value, but they should be based on a form of valuation methodology of the underlying securities that make up the market of choice. A consideration of the current mood of the market participants should also be included in that short term prices are driven by emotions.
2011-02-23 00:00:00 2011 Outlook: Private Equity by NB Alternatives private equity team of Neuberger Berman
As a result of the financial crisis, for the latter part of 2008 and all of 2009, very few new private equity transactions were completed and portfolio company monetization was minimal. However, the operating performance of existing private-equity portfolio companies was better than generally expected and investment returns were superior to public equity benchmarks. Although some of this outperformance can be attributed to the resistance of some private equity firms, we believe the majority of the outperformance was the result of effective cost cutting, cash conservation and debt reduction.
2011-01-28 00:00:00 The RAFI Five-year Scorecard by Rob Arnott of Research Affiliates
When the Fundamental Index concept was introduced, it was met with fierce attacks. Critics decried its backtested results as data-mining or said the approach was just a repackaged value investment process. Five years after the first RAFI indices went live, the proof is in: The methodology has generated superior performance during a period when value has lagged growth all over the world.
2011-01-09 00:00:00 2011 Outlook: U.S. Equities Cyclical and Seasonal Trends (Part 2) by Martin J. Pring of Pring Turner Capital Group
Part II addresses the cyclical and seasonal factors that will be in force during 2011. An analysis of the seasonal aspects will give us a better feel for the expected pattern of price behavior as the year unfolds. Since we do not know when the peak will actually materialize well discuss some indicators that should be monitored from the point of view of confirming when they have taken place. First though, lets take a closer look at some of the seasonal/cyclical patterns and how they might affect 2011.
2011-01-04 00:00:00 2011 Outlook: U.S. Equities Secular Trend (Part 1) by Martin J. Pring of Pring Turner Capital Group
In December 2009 we published an article entitled Are You Prepared for Another Lost Decade that argued the U.S. stock market has been in a secular bear market since 2000. Our objective now is to bring you up- to-date on our current views. Lets begin by outlining the characteristics of secular trends and recapping the case for a secular bear. In Part II we will examine the cyclical and seasonal outlook for 2011 and how this might dovetail into the secular picture.
2010-11-29 00:00:00 A Time to Invest in Africa by Nile Capital Management of Nile Capital Management
In this report, I will summarize my answer to the often-asked question: ?Why is this a good time for investors to focus on Africa?? I also will explain why the best way to participate in African markets and manage their risks is through an actively managed fund that offers ?feet-on-the-ground? expertise in Africa.
2010-08-23 00:00:00 Markets Are Pricing in the 'New Normal' by Charles Gave of GaveKal
Either the upcoming U.S. elections, in a repeat of 1994, will bring about a Congress able to reduce the pace of government spending, thus triggering a massive sell-off in government bonds and a significant rally in equity markets, or the expansion of the U.S. government will continue, in which case investors in U.S. government bond markets will likely thrive in a repeat of what happened in Japan over the past two decades. You can guess which outcome the biggest fixed income investment houses are rooting for.
2010-08-12 00:00:00 Asset Allocation: Volatility, Correlations and Returns in the New Environment by Tom and Rob Boeckh of Boeckh Investment Letter
Slow growth, high unemployment and weak inflation will keep interest rates very low in the short term. Rising government debt levels and heavy reliance on monetary ease from the Federal Reserve, however, suggest rising risks of price inflation later on, possibly much later. The current period of low long-term interest rates should thus be thought of as an extended base-building period for higher rates down the line. Investors should maintain a diversified portfolio, shifting equity exposure to defensive, non-cyclical sectors, and build positions in cash and safe sovereign debt.
2010-07-14 00:00:00 The Battle for Investment Survival and Our Five-Year Forecast by Kendall J. Anderson of Anderson Griggs
The S&P 500 has gained 52 percent since the March 2009 lows. Although this seems extraordinary, the current recovery is still slightly less than average compared to historical bear markets. An average recovery would have the markets appreciate more than 25 percent from this level over the next two years. Meanwhile, the potential return on equities over the next five years is just slightly above the normal returns for U.S. stock markets. All of this, combined with low interest rates, suggests that it would seem logical to remain in common stocks.
2010-05-06 00:00:00 Chipan? by Team of Emerald Asset Advisors
In this commentary, Emerald responds to a reader question about China and Japan. Emerald says that equities in both countries are overvalued, but that this is less important than the fact that buying pressure is still outweighing selling pressure. The long-term ascension of the Chinese economy is one of the most prominent secular themes in today's markets. Japan, on the other hand, like the U.S., faces an obvious mess. The ultimate ruler is price, however, and Japanese stock prices have stubbornly risen for many months without a long-overdue correction.
2010-04-21 00:00:00 Chocolate and the Mathematics of Loss by Doug Mackay and Bill Hoover of Broadleaf Partners
During the depths of the downturn a little over one year ago, many investors were quick to provide a lesson on the mathematics of loss. A 50 percent decline would require a subsequent 100 percent gain - not a 50 percent gain - to get back to even. Such truths, it seemed, were a justification for remaining bearish and a comfort perhaps to some, in making the painful decision to sell. Unfortunately, while the mathematics of loss is indeed an investing truth, it may also be an author of lies by suggesting that the only investor goal worth its salt is 'getting back to even.
2010-03-26 00:00:00 narrative power by tom brakke of the research puzzle
The investment world illustrates the power of narrative. People up and down the informational food chain use stories to enlighten and deceive. For stock investors, many stories originate with companies and their officers, who learn that crafting a narrative that puts everything in the best light is part of their leadership role. Sell side analysts sometimes reinforce those messages by making the telling of certain stories part of their brands. Investors must therefore read widely and read well, and realize that understanding comes from taking nothing for granted and questioning everything.
2010-03-12 00:00:00 Changing Seasons by Doug Mackay and Bill Hoover of Broadleaf Partners
The economy is shifting from its early recovery phase of rapid growth into a late expansion phase of moderate growth. While low interest rates were critical to market success in 2009 during the early stages of the expansion, economic growth patterns tend to have greater influence in later stages. As economic seasons change, it will be necessary for investors to weed out bad stocks, prune healthy ones and transplant names in order to maintain the vitality of their overall portfolios.
2010-02-23 00:00:00 An Analysis of the Risk and Return of Small/Mid-Cap Growth by David Vincent (Article)
In this guest contribution, David Vincent of Fred Alger says investors interested in gaining exposure to the small-capitalization growth equity style should consider the small/mid ("SMid") capitalization style as a way to capture the benefits of small-cap growth.
2010-01-29 00:00:00 GDP Rises to Highest Levels Since 2003 by Team of Bespoke Investment Group
Bespoke comments on the higher-than-expected GDP announcement. They note that earnings announcements so far this season have been strong and ?based on what we've seen so far in terms of guidance,
2010-01-15 00:00:00 Rationalizing with Big Red, Ben Bernanke and Harry Markowitz by Anderson of Anderson Griggs
2010-01-07 00:00:00 Fourth Quarter 2009 Review by MacKay of Broadleaf Partners