More on Related Themes
2015-11-18 00:00:00 Reform: The Comeback Catalyst for International Equities by Jeff Everett, Dale Winner, Venk Lal of Wells Fargo Asset Management
In the U.S., we see other countries’ economic developments play out in news snapshots or opinion pieces—often focusing on short-term data or what’s perceived to be wrong. But here’s what the headlines may not be telling you: Non-U.S. regions from Asia to Europe are home to economic comebacks and companies that are growing their earnings. Let’s take a closer look at developments in Japan and Italy and then contrast the risk/reward dynamic with the current market environment in the U.S.
2015-11-17 00:00:00 The Paris Attacks by Bob Veres (Article)
Here is a letter you can send to clients in response to the Paris attacks.
2015-11-12 00:00:00 2 Investing Implications of Higher US Rates by Russ Koesterich of BlackRock
Real U.S. rates have been climbing, while rates are falling in much of the rest of the world. As Russ explains, this divergence has a number of implications for investors.
2015-11-10 00:00:00 Digesting the Implications of Higher Rates by Russ Koesterich of BlackRock
BlackRock Chief Investment Strategist Russ Koesterich discusses the implications of higher rates for investors.
2015-11-07 00:00:00 Get Ready for Commodity Liftoff: Global Manufacturing Just Made a HUGE Move! by Frank Holmes of U.S. Global Investors
As Donald Trump might say: This is going to be huge.
2015-10-29 00:00:00 Multi-Asset Model Portfolio Investing: The Evolution Continues by Mark Eibel of Russell Investments
Mark Eibel takes a look at just how far has multi-asset model portfolio investing has come in the last 30 years.
2015-10-22 00:00:00 Four Strategies for Navigating the Equity Environment Ahead by Andrew Pyne of PIMCO
Recent market turmoil suggests we could be at a turning point for equities. After several years of high returns and low volatility as the market rebounded off the lows of 2009, supported by unprecedented monetary policies, investors are faced with broadly full valuations, global growth that is still uneven and the prospect of rising rates in the U.S. In this environment we suggest four simple approaches that could enhance returns while potentially reducing risk.
2015-10-19 00:00:00 Where to Look for Outperforming Active Managers by Bob Veres (Article)
Not all stock-pickers are winners, and winning funds tend to be scattered all over the various sectors of the market. Is there a way to analyze the different segments of the global opportunity set, and determine the best places to look for those outperforming managers?
2015-10-19 00:00:00 Third Avenue Management Defends Its Pursuit of Alpha by Larry Swedroe (Article)
Bloomberg TV recently invited me onto their new show, Bloomberg GO, for a short debate on active versus passive investing with David Barse, the CEO of Third Avenue Management. Barse stated his funds had been able to beat their index benchmark. Let’s go to our trusty videotape to see if Third Avenue has, in fact, been delivering alpha.
2015-10-12 00:00:00 Bob Zenouzi Discusses Delaware’s Dividend Income Fund by Robert Huebscher (Article)
In this interview, Bob Zenouzi, manager of the Delaware Dividend Income Fund (DDIAX), discusses how he strives to provide investors with a yield that is competitive with fixed income, while achieving a premium yield to equities with better downside protection.
2015-10-08 00:00:00 Third Quarter 2015 Newsletter - Corrected Market! by Jim Tillar, Steve Wenstrup of Tillar-Wenstrup Advisors
The US stock market finally succumbed to selling pressure that has been affecting financial markets across the globe. For over a year volatility has been a feature of the world's currency, credit and commodity markets. In addition, many world stock markets have been in correction mode, especially emerging markets. Financial markets are interconnected so as poor economic news piled up last quarter all stock markets headed lower.
2015-10-06 00:00:00 Equity Outlook Fourth Quarter 2015 by Neuberger Berman Asset Allocation Committee of Neuberger Berman
The Committee upgraded our view on U.S. large cap equities following the recent correction, and maintained a slightly overweight view on European equities. Our view on MLPs has also improved following a challenging year.
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 Bear Case: "Before And After" by Doug Ramsey of Leuthold Weeden Capital Management
While our gut instincts and quantitative disciplines aren’t always in agreement, that conflict doesn’t exist today. The evidence comes down decisively in the “bear market” camp. The action leading up to the S&P 500 bull market high of May 21st traced out a “textbook” top in many ways.
2015-09-16 00:00:00 September 2015 Economic Update by Team of Cambridge Advisors
In August, stocks started out trading within the range they had traded in for most of the year. Mid-month, investors were shaken when stocks stumbled and posted their worst monthly decline since August 2011.
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.
2015-08-17 00:00:00 A Study of Real Real Returns Now in its Third Decade by Team of Thornburg Investment Management
If generals always fight the last war, investors all too often chase past performance and mistime the market. Despite the age-old admonition to buy low and sell high, few actually do, to the detriment of their portfolios and wealth. Why? No one wants to be the first to the party or the last to leave. Yet upswings in one asset class may not be all that apparent until well under way. By the time many market analysts and financial media notice, relative valuations may already have reached lofty levels. Loathe to miss out, investors pile in anyway, hoping there may be some steam left.
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?
2015-08-06 00:00:00 Do Your Alternative Investments Have the Right Fit? by Richard Brink, Christine Johnson of AllianceBernstein
Investors who chose alternatives for downside protection in recent years have been frustrated with their performance. We think the problems were an unfavorable market environment and the unique challenges of manager selection for alternatives.
2015-08-05 00:00:00 Earnings Update: Corporate Resilience by Burt White of LPL Financial
Once again, earnings season highlights corporate America’s resilience. Investors were braced for an earnings decline in the second quarter of 2015 but will almost certainly end up with another quarterly earnings gain despite the significant drags from the oil downturn and strong U.S. dollar, largely thanks to effective cost controls that have propped up profit margins. With more than two-thirds of S&P 500 companies having reported second quarter 2015 results, we provide an earnings update.
2015-07-28 00:00:00 Are Managed-Payout Funds Better than Annuities? by Joe Tomlinson (Article)
Managed-payout funds promise to meet retirees’ need for sustainable lifetime income without relying on annuities. To see whether this promise can be fulfilled, I’ll answer three questions: What’s the best design for such funds? How do they compare to annuities? Can retirees do even better by combining managed-payout funds and annuities?
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 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.
2015-07-16 00:00:00 Five Portfolio Moves for the Second Half by Russ Koesterich of BlackRock
After a relatively calm few months, market volatility is back. In recent weeks, stocks have swung between ups and downs, as investors have attempted to digest the latest news out of Greece, the recent bear market in China and the growing likelihood that the Federal Reserve (Fed) will hold off on raising rates until after its September meeting.
2015-06-25 00:00:00 Global Investing is Changing by Richard Bernstein of Eaton Vance
International investing was easy for U.S.-based investors for many years because the U.S. dollar was either declining in value or was stable. U.S. dollar-based investors’ non-US equity and fixed-income returns were generally enhanced by the falling dollar so that U.S. investors actually tended to outperform the local currency benchmarks. Of course, investment managers took credit for the resulting “alpha” despite that out performance was more likely attributable to currency than to asset selection.
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.
2015-06-16 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 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.
2015-06-11 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.
2015-06-09 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.
2015-06-04 00:00:00 Why Oil Price Rally Isn’t a Surprise, but Iron Ore’s Price Should Stay Low by Tucker Scott of Franklin Templeton Investments
While oil has dealt with a relatively recent increase in supply, iron ore has been suffering through a long-term glut. And, based on our analysis of future supply/demand trends, we expect the abundance of iron ore to continue—and possibly increase.
2015-06-03 00:00:00 Faded Photographs: Obituary Of The Bull Market by Doug Ramsey of The Leuthold Group
We’re always impressed with those lengthy, and unnaturally eloquent, obituaries that pop up online within minutes of the passing of an elderly celebrity or public figure. Such an exercise might be fun when applied to another subject, specifically, the cyclical bull market in stocks (b. 2009—d. 20XX). How will today’s bull market be viewed through the eventual clarity and objectivity of hindsight? We’ve pulled together several still frames…to maximize the effect, run each page through a fax machine to produce the nicely faded, black-and-white images that might accompany an obituary.
2015-05-28 00:00:00 How Much Should We Invest in Emerging Markets? by Dr. Burton Malkiel of WaveFront Capital Management
Investors today are significantly underexposed to emerging markets; fortunately, the opportunity to correct this flaw is the best in years.
2015-05-28 00:00:00 Tantrum Potential at Home, Opportunity Overseas by Russ Koesterich of BlackRock
U.S. equities continue to climb, but BlackRock Global Chief Investment Strategist, Russ Koesterich, discusses why the best opportunities may reside outside the United States, which, in fact, has been the case so far this year.
2015-05-28 00:00:00 Half Full or Half Empty by Herbert Abramson, Randall Abramson of Trapeze Asset Management
The ultimate question for investors. Is the glass half full, that is to say are economic backdrops improving to support attractive valuations, or to the contrary, half empty, deteriorating and threatening full valuations?
2015-05-27 00:00:00 Moment of Truth For Non-U.S. Markets by Mark Ungewitter of Charter Trust Company
The FTSE All World Ex-US index (VEU) is testing multi-year resistance in both dollar and gold terms. (See Chart 1 below.) Dollar-based investors are obviously interested in dollar thresholds, but why monitor relative strength in gold terms? Because gold provides an alternative base “currency” that measures confidence in the institutions of money and credit. A market making higher highs versus gold is exhibiting organic strength independent of local-currency devaluation or unsound credit expansion.
2015-05-23 00:00:00 Northern Trust Perspective by Jim McDonald of Northern Trust
Our monthly Perspective newsletter keeps you apprised of current market and economic conditions across an array of topics including: US, European and Asian markets, global real estate and commodities.
2015-05-21 00:00:00 Global Review and Equity Commentary: April 2015 by Team of Thomas White International
As expected, the global economy slowed during the first quarter but should gain momentum in the coming months. The U.S. economy almost came to a standstill during the first three months of the year as adverse winter weather limited activity. Consumer spending moderated and construction activity slowed, while lower oil prices discouraged businesses in that sector from capital investments. The stronger dollar and labor disputes at some of the seaports limited export gains, and led to a widening of the U.S. trade deficit.
2015-05-21 00:00:00 Our May 2015 Market Commentary by Adam Jordan of Paul R. Ried Financial Group
We could spend this letter going into detail on the topics du jour, such as if/when we think the Fed will finally raise interest rates (they will...eventually). Or whether Greece will leave the Euro (they probably will...eventually). Or what we think of China’s growth (It will continue slowing...Slowly).
2015-05-20 00:00:00 Economy is "Good Enough" for Stocks by Russ Koesterich of BlackRock
With economic data remaining mixed, BlackRock Global Chief Investment Strategist, Russ Koesterich, discusses why investors should continue to favor stocks over bonds.
2015-05-16 00:00:00 Align the Design: Considering and Evaluating Target-Date Glide Paths by Stacy Schaus and Ying Gao of PIMCO
Few responsibilities are as important to defined contribution (DC) plan sponsors as selecting a default glide path that best maximizes a participant’s odds of retiring on time and with sufficient lifetime income. The goal, put simply, is to maximize asset returns while minimizing volatility relative to the retirement liability – precisely what Objective-Aligned Glide Paths aim to achieve.
2015-05-08 00:00:00 Global Economic Overview and Equity Commentaries: March 2015 by Team of Thomas White International
The global economy is facing subdued growth in the short term, as adverse weather and a stronger currency have slowed the pace of U.S. expansion. Unusually severe winter weather on the U.S. East coast restricted business and consumer activity during the first three months of the year.
2015-05-06 00:00:00 International Equities: Another Turn of the Wheel by David Ruff of Forward Investing
It’s a truism that markets move in cycles and that the ideal time to invest is right at or near the start of an upswing. Diversification is another key tenet of Investing 101. Yet inertia and the pull of the crowd often lead investors to concentrate assets in markets that may be nearing their peak while ignoring potentially more promising opportunities.
2015-05-01 00:00:00 After the Market Crisis: Does Diversification Still Work? by Russ Koesterich of BlackRock
Diversification may not have worked during the last market crisis, but this isn’t an argument for skipping exposure to international stocks.
2015-04-25 00:00:00 Why International Diversification Matters Today by Russ Koesterich of BlackRock Investment Management
The tendency of U.S. investors to invest close to home is understandable, but it’s not optimal. Russ has three reasons why international diversification matters now more than ever for U.S. investors.
2015-04-16 00:00:00 Three Portfolio Moves to Consider Now by Russ Koesterich of BlackRock
While the first quarter largely played to script, there were a few surprises. Russ explains, noting three portfolio moves to consider as the second quarter kicks off.
2015-04-14 00:00:00 The Case for Not Currency Hedging Foreign Equity Investments: A U.S. Investor’s Perspective by Catherine LeGraw of GMO
In a new white paper, Catherine LeGraw of GMO's asset allocation team explains GMO's approach to currency hedging, a topic which has gained relevance as the U.S. dollar has strengthened.
2015-04-11 00:00:00 Slip Sliding Sideways by Liz Ann Sonders, Brad Sorensen & Jeffrey Kleintop of Charles Schwab
Volatility will likely continue and more sideways action could be in store for the US equity market. We believe US economic data will start to rebound, helping push stocks higher in the second half of the year. The Fed remains in focus, but a rate hike is not likely until the latter half of 2015, which has helped slow the dollar’s upward momentum; potentially comforting the market and letting businesses better react. Better near-term opportunities may exist overseas as the Eurozone economy is improving and Japan seems poised to rebound from soft data.
2015-04-07 00:00:00 Behind Arnott's Strategy for PIMCO's All Asset Funds by John Coumarianos (Article)
If you thought a stretch of subpar performance would shake a fund manager's confidence, you'd be wrong in the case of Rob Arnott. Through Research Affiliates, his Newport Beach firm most famous for its fundamental indexing strategies, Arnott manages PIMCO's All Asset funds. These include PIMCO All Asset (PAAIX) and PIMCO All Asset All Authority (PAUIX).
2015-04-07 00:00:00 Currencies Are a 2-Way Street by Jerry Wagner of Flexible Plan Investments
Humans are funny animals. There are many events, experiences, environments, and data points in the world shaping our perception. There is a psychological phenomenon called the recency effect, although it is known in the investment world as recency bias. Without delving into the psychological science as to why this happens, I think you will agree that most people tend to place a greater emphasis on more recent events.
2015-04-02 00:00:00 1Q15 Market: Slow Start Leads to Solid Gains by Jack Fockler of The Royce Funds
A bearish January gave way to solid first-quarter gains. The small-cap Russell 2000 was the leader among the broad-based domestic indexes, up 4.3% versus gains of 1.6% and 1.0% for the large-cap Russell 1000 and S&P 500 indexes, respectively. The more tech-oriented Nasdaq Composite was also strong with a 3.5% first-quarter return.
2015-04-02 00:00:00 Optimism amid a global view of equities by Todd A. Bassion of Delaware Investments
The Organization for Economic Cooperation and Development (OECD) reported on Wednesday that it expects India’s economy to grow by 7.7% in 2015, making it the fastest-growing major economy in the world. This puts India in a position to possibly outpace China, where growth is slowing to the government’s official target of approximately 7%.
2015-03-28 00:00:00 International Equity Commentary: February 2015 by Team of Thomas White International
International equity prices gained during February on expectations that the central banks in Europe and Japan would continue their quantitative easing programs, while the U.S. Federal Reserve could possibly delay its interest rate hikes. At the same time, economic trends from most major economies remained relatively stable. After two quarters of robust gains, the U.S. economy expanded at a slower pace during the fourth quarter of 2014, as expected.
2015-03-26 00:00:00 Dove or Ivory? A Case Study on Currency Impacts by Jeremy Schwartz of WisdomTree
Given the divergence of central bank policies, currencies are among the most important investment topics today. If the U.S. dollar continues to strengthen, it may be a headwind to U.S. multinationals earning revenue abroad, while boosting foreign companies that are earning revenue in the United States.
2015-03-25 00:00:00 The Dollar Isn't the Peso Anymore (Part II) by Richard Bernstein of Eaton Vance
In May 2013, Richard wrote a report titled “The Dollar isn’t the Peso anymore.” He rebutted the argument that the U.S. dollar (USD) was weak. The data showed that the USD had actually troughed in the spring of 2008. For seven years now, the USD has been gaining strength and is today a standout among the world’s currencies.
2015-03-24 00:00:00 An In-Depth Look at Fidelity's Contrafund by Larry Swedroe (Article)
Fidelity's largest actively managed fund is the Contrafund (FCNTX). It's also among Fidelity's top performers, making it their flagship fund, a status previously accorded to the Magellan Fund under Peter Lynch. Will Contrafund investors continue to enjoy outperformance or will they face flagging returns like Magellan's investors did following Lynch's departure?
2015-03-10 00:00:00 'Cheating' for Alpha with Beta by Ryan J. Lehman (Article)
In a recent white paper, our colleagues at GMO very appropriately asked, "Is Skill Dead?" In this paper they examined the results of the large-cap blend peer group, and offered an optimistic outlook for active managers despite recent underperformance. In this article, I expand upon their work and our own by discussing how managers "cheat" for alpha by taking positions in out-of-benchmark risk premia and beta exposures, and how those bets have compromised recent results.
2015-03-10 00:00:00 Stock and Bond Funds Grow with the Flows by Milton Ezrati of Lord Abbett
No redistribution here: Even as equity fund flows have turned positive, bond funds continue to see inflows. Here’s a closer look at the trend—and what it means for investors.
2015-03-05 00:00:00 The Dollar Is Breaking Out Again And What That Means For Stocks by Team of GaveKal Capital
The ICE US dollar index looks to have broken out of what has been a rather short-lived consolidation after the massive move since the middle of 2014. If this is in fact the start of another round of dollar strength, then stock investors should carefully consider where in the world to deploy cash into stocks. For a variety of cyclical and structural reasons, certain regions of the world tend to outperform in periods of USD strength and others lag. We'll try to shed some light on that with the below charts.
2015-03-03 00:00:00 Are DFA's Funds Active or Passive? by John Coumarianos (Article)
Larry Swedroe's recent critique of Graham and Dodd value investing mischaracterized DFA's value funds as "passive." Beyond that, he misread James Montier's discussion of "perfect" value investors, made unfair comparisons among funds and didn't measure risk properly.
2015-03-03 00:00:00 The Return of the Comeback: Is 2015 the Year for International Stocks? by Zachary Karabell of Envestnet
For several years, many professional investors and advisers have been bullish about the prospects for investing outside the United States. Calls to overweight European stocks or global stocks have been typical each January for the past years, and this year is no different.
2015-03-02 00:00:00 The Return of the Comeback: Is 2015 the Year for International Stocks? by (Article)
Will 2015 finally be the year for international stocks? Year-to-date performance suggests yes, as do proclamations by renowned market experts. But the case is far from clear or settled.
2015-03-02 00:00:00 Markets Pause While Awaiting Federal Reserve Activity by Robert Doll of Nuveen Asset Management
U.S. equities were mixed last week, with the S&P 500 declining -0.2%. The Federal Reserve (Fed) had a busy week, as the nuanced debate continues around when to begin policy normalization. The global policy divergence grabbed headlines, but the focus was mainly on negative yields in Europe and inflows to non-U.S. equities.
2015-02-24 00:00:00 Finally, At Least One Financial Media Person Gets It by Jerry Wagner of Flexible Plan Investments
I spent the last two weeks on a Caribbean island (as I always say: Timing is everything!). We rented a house and had lots of visitors from “Up North” (my wife will be there a month and during that time we will have had seventeen people staying in the house!).
2015-02-20 00:00:00 The Case for Global Investing by Team of Litman Gregory
As U.S. stocks have outperformed developed international and emerging-markets stocks in recent years, we’re starting to hear more people question the benefit of investing outside of the United States. This is an important question, and we acknowledge that owning foreign stocks has been an unsatisfying experience over the past couple of years. Moreover, given some of the current economic and geopolitical forces, it can appear likely to continue this way.
2015-02-19 00:00:00 February 2015 Economic Update by John Richards of Bronfman E.L. Rothschild
Consumers in the U.S. are showing their optimism by pushing a key consumer sentiment indicator to its highest level in over a decade. Despite a drop-off in Q4 GDP to a 2.6% annualized growth rate and three consecutive months of slowing manufacturing expansion, the U.S. economy still seems to be on strong footing.
2015-02-17 00:00:00 U.S. Dollar Strength Continues to Impact U.S. Multinationals by Jeremy Schwartz of WisdomTree
S&P 500 Index has traded inversely to the currency moves over recent years, and it has become increasingly negatively negatively correlated. One reason, we believe, is that a growing share of revenue and profits for U.S. corporations comes from overseas—and that share seems likely to increase with the globalization of the economy.
2015-02-12 00:00:00 Is Skill Dead? by Neil Constable, Matt Kadnar of GMO
As investment boards and committees gather to discuss performance for 2014, eyebrows will most certainly be raised as people review the performance of many of their equity managers. Depending on which database they are looking at, between 80% and 90% of active U.S. equity managers will have underperformed their benchmark this year, making it one of the worst years for active management in the recent past.
2015-02-10 00:00:00 Riding An Aging Bull (Market) by Rick Vollaro of Pinnacle Advisory Group
The year has begun in roller coaster fashion, and our team has been busy reading and digesting the many 2015 outlooks that come across our desks. But reading is the easy part, and now it’s our turn to distill the many facets of our process into a workable thesis that allows us to generate attractive risk-adjusted returns in this maturing market cycle.
2015-02-06 00:00:00 Global Opportunities: The Next Leap Forward for Defined Contribution Investment Menus by Charles Roth of Thornburg Investment Management
Under ERISA, fiduciaries are obligated to ensure plan menus provide diverse investment options to help minimize the risk of long-term losses in account values. Global, non-traditional equity and fixed income options are sorely lacking in Defined Contribution (DC) plan menus. These op-tions can offer both lower correlation to U.S. markets and potentially strong returns, which par-ticipants increasingly need given the uncertainty surrounding Social Security’s future benefit levels.
2015-02-06 00:00:00 Should I Stay or Should I Go: Global Diversification Could be 2015’s Winner by Liz Ann Sonders of Charles Schwab
Last year ended on a weak note for US equities; and January continued the trend; Divergences will remain a theme and likely keep volatility elevated; US investors haven’t felt the need to diversify globally…they should
2015-02-06 00:00:00 After the Perfect Storm in US Smaller-Cap Stocks by Bruce Aronow of AllianceBernstein
Last year was a tough one for US small- and mid-cap stocks, but there’s reason to think 2015 may be different. For investors who trimmed their smaller-cap allocation last year, we think it may be time to consider taking it back to its long-term target.
2015-02-05 00:00:00 Your Alpha is My Beta by Adam Butler, Mike Philbrick and Rodrigo Gordillo of Butler|Philbrick|Gordillo & Associates
A couple of weeks ago, I had the pleasure of a short correspondence with Lars Kestner, a well known quant and derivatives trader, and creator of the thoughtful K-ratio as a measure of risk adjusted performance. We connected on the definition of alpha, and how the term has been so abused in media and marketing as to become almost meaningless.
2015-02-05 00:00:00 Ditch the Good, Buy the Bad and the Ugly by Ben Inker of GMO
In a new quarterly letter to GMO's institutional clients, co-head of asset allocation Ben Inker provides background on why, "as the New Year begins, we in Asset Allocation find ourselves slowly selling down even our beloved U.S. quality stocks in favor of the various problem children of the investing world" ("Ditch the Good, Buy the Bad and the Ugly").
2015-02-03 00:00:00 Seeking Value Amid Volatility by Russ Koesterich of BlackRock
Stocks struggled last week, and once again the losses were most pronounced in the United States. Financial markets remain highly volatile, with violent swings in the oil price and interest rates adding to the angst. With the Fed likely to start removing monetary accommodation, 2015 was bound to be a more volatile year than last.
2015-01-29 00:00:00 3 Things - Fed Mistake, ECB QE, Housing by Lance Roberts of Streettalk Live
On Wednesday, the Federal Reserve made their latest monetary policy announcement. Janet Yellen, the current Chairwoman, made several statements that led the markets to believe that they remain on course for increasing the overnight lending rate this year.
2015-01-29 00:00:00 Momentum X 2: Unleashing the True Power of Momentum by Gordon Nelson of Keystone Wealth Advisors
Momentum is one of the most researched market anomalies and has become widely accepted and used in a variety of ways for investment management. When used in practice is it most commonly referred to as relative strength or relative momentum. What happens if we combine the power of relative momentum with absolute momentum?
2015-01-28 00:00:00 Why European Euphoria Isn?t Likely to Last by Russ Koesterich of BlackRock
The ECB took definitive action against deflation fears with a broad asset purchase program that impressed the markets. Here is a quick analysis of its impact on stocks and bonds beyond the short term.
2015-01-27 00:00:00 Europe: A look at what lies ahead by Stephen Peak (Article)
Stephen Peak, Director of International Equities, comments on the recent ECB action of quantitative easing and how it provides another necessary ingredient for Europe to progressively improve during 2015. He sees the ECB action as a necessary component of what lies ahead for Europe – with the other components already in place that occurred through the second half of last year. He notes that while it has been a dramatic start to the year, the overall case for international markets looks decent and he believes that Europe will defy the doubters.
2015-01-22 00:00:00 Fixed Income in 2015: Lower for Longer? by Jonathan Heckscher of Pennsylvania Trust
2014 surprised many bond investors as interest rates fell dramatically on the longer end while they rose as expected on the short end. The result was another solid year of returns for investors that remained in longer-duration bonds, and was adequate for most investors that shortened their duration.
2015-01-20 00:00:00 Seeking Strong Int'l Growth Stocks Amid Mixed Macro Signals by Sponsored Content from Invesco (Article)
Previously stretched valuations have become reasonably constructive in Europe's stalled economy. China's structural reforms and corruption crackdown could be positive in the long term. The commodity cycle downturn hurts resource-dependent emerging markets but benefits net commodity importers.
2015-01-13 00:00:00 "Divergent" Markets by Jim Tillar, Steve Wenstrup of Tillar-Wenstrup
We expressed some concern about financial markets in last quarter's client letter and stated the theme of the letter was volatility. That characteristic carried over into the fourth quarter and caused our concern to heighten considerably.
2015-01-12 00:00:00 A Five-Year Global Financial Forecast: Tsunami Warning by John Mauldin of Mauldin Economics
It is the time of the year for forecasts; but rather than do an annual forecast, which is as much a guessing game as anything else (and I am bad at guessing games), I?m going to do a five-year forecast to take us to the end of the decade, which I think may be useful for longer-term investors.
2015-01-07 00:00:00 Keeping Track of Changing Values by Matt Collins of Source
Stock prices keep moving, even after the exchanges close.
2015-01-06 00:00:00 An In-Depth Look at Two Dodge & Cox Funds by Larry Swedroe (Article)
For investors looking to choose a U.S. large-value fund, The Dodge & Cox Stock Fund (DODGX) is an excellent candidate. Given its outstanding record, let's take a look at the fund's performance.
2015-01-05 00:00:00 Tips for Navigating The Market in 2015 by Russ Koesterich of BlackRock
As the calendar turns to 2015, its time to assess the investing landscape and your investment portfolio to ensure youre well positioned for the New Year. The BlackRock List can help.
2015-01-03 00:00:00 Flying High in the Sky, Looking for Opportunities in 2015 by Frank Holmes of U.S. Global Investors
Savvy investors know to be patient with their holdings and not easily give in to the prevailing culture of instant gratification. Ive run multiple marathons over the years and am intimately familiar with the personal rewards of going the distance. A similar investing strategy can come with the same rewards.
2014-12-18 00:00:00 Why We Expect Japan to Regain Favor with Investors by Robert Sharpe of Heartland Advisors
Despite the consensus view that Japanese stocks are inexpensive, investors have generally avoided the space, perhaps because Japan has disappointed in the past. We think the tide is about to change, and Portfolio Manager of the Heartland International Value Fund Robert C. Sharpe explains why.?
2014-12-10 00:00:00 Lessons Learned in 2014 by Seth Masters of AllianceBernstein
In 2014, US stocks forged ahead, international developed and emerging-market stocks lagged, bonds did better than expected, and the IRS took a bigger bite. Here are some lessons for US investors to carry forward into 2015.
2014-12-09 00:00:00 Designing Balanced DC Menus: Considering Equity Investments by Stacy Schaus, Ying Gao of PIMCO
Defined contribution investment lineups typically provide numerous equity choices but still may lack adequate diversification and return potential. Participants may benefit by accessing high-growth markets such as emerging markets and tapping in to dividend-paying stocks. Retirement outcomes could improve further by including portfolios structured using fundamental measures rather than market capitalization.
2014-12-09 00:00:00 An Improving Economy Justifies a Pro-Growth Investment Stance by Robert Doll of Nuveen Asset Management
U.S. equities advanced again last week with the S&P 500 Index climbing 0.4%, extending its winning streak to seven weeks. Investors responded well to improving economic data and focused on the positive aspects of declining oil prices. In China, equities moved sharply higher and notched their best weekly performance in seven years as investors speculated that Chinese officials were on the verge on enacting additional policy support.
2014-11-14 00:00:00 Investment Update October 2014 by James Klein of Meritage Portfolio Management
Coming off a strong second quarter, stocks turned in a mixed performance for the three months ending September 30. The fundamental backdrop for stocks remained relatively stable, with interest rates drifting slightly lower and generally supportive news flow around corporate earnings, economic growth, inflation and Fed policy. While this familiar combination of factors has been hospitable for stocks, this past quarter reflected a growing unease about the prospects of further upside.
2014-11-14 00:00:00 Global Investing: Are Foreign Stocks Attractive? by Mark Ungewitter of Charter Trust Company
One of todays most glaring inter-market divergences is the relative performance of US versus non-US equities. For dollar-based investors, non-US stocks have underperformed US stocks by a whopping 40% over the past five years. But are foreign stocks attractive at current prices? And if so, how much of my portfolio should I allocate abroad?
2014-11-07 00:00:00 Knowing What You Can't Know, Knowing What You Don't Know, and Staying Disciplined in Your Investment by Team of Litman Gregory
In our investment analysis and decision-making, we try to focus on what is knowable with a reasonable degree of certainty or within a reasonable range of outcomes. We also recognize the importance of staying within our circle of competency, which means not investing in things we don't fully understand. And while our investment discipline requires us to adapt and change our views if the facts and circumstances change, it also protects us against getting swept up in the short-term noise and emotions of the markets.
2014-11-05 00:00:00 Japan's Kaput?! by Axel Merk of Merk Investments
Japans economy is down but not yet out. The worlds third largest economy wont go quietly. Both these statements are merely my opinion, but if you believe theres a risk that Im right, you may want to pay attention to what the implications may be.
2014-11-05 00:00:00 What a Rising Dollar Means for Your Stock Portfolio by Jeremy Schwartz of WisdomTree
Typically, if a companys home currency is weakening compared to the currency where the companys sales are generated, this will have a positive effect on sales and profitability, and if the home currency is strengthening, it could negatively impact sales and profitability.
2014-11-04 00:00:00 Double Dose of Stimulus Sending Japan Stocks Up, Yen Down by Jeremy Schwartz of WisdomTree
On October 31, the Bank of Japan (BOJ) unleashed a surprise round of further stimulus to its monetary policies. This additional monetary easing occurred the same week that the U.S. Federal Reserve (Fed) completed its monetary policy program, showing a transition in global central bank accommodation leadership.
2014-11-04 00:00:00 Rhyme and Reason by John Mauldin of Mauldin Economics
We?ll revisit the phenomenon of October as a month of negative market surprises. It actually has its roots in the interplay between farming and banking.
2014-11-03 00:00:00 Clarifying Confusion: American Depository Receipts (ADRs) Have Currency Risk by Jeremy Schwartz of WisdomTree
It is a common misconception that, because an ADR is traded in U.S. dollars in the United States, there is no exchange-rate risk. But thats not the case. Heres why.
2014-10-28 00:00:00 Third Quarter Review 2014 by Clark M. Blackman II (Article)
The following is a letter to clients that readers may adapt for their own use.
2014-10-22 00:00:00 Despite Volatility, This Bull Is Likely to Charge Higher by John Calamos, Gary Black of Calamos Investments
As the fourth quarter begins, the market has found itself engulfed in anxiety. Volatility has surged in the equity markets while the 10-year Treasury yield has dropped to 2%-leading some to question whether this bull market is breathing its last breath. We believe: * Global GDP growth will likely be in the 2.0%-3.0% range. * The U.S. is in the 5th or 6th inning of recovery, with slow but improving growth. * Despite the surge in volatility, this bull market has more room to run. * A balance of secular and cyclical growth companies presents the most attractive portfolio for this mid-cycle phase.
2014-10-10 00:00:00 Divergent Returns by Jim Tillar, Steve Wenstrup of Tillar-Wenstrup
The theme for this newsletter is volatility. Not only are we seeing volatility in financial prices, but also in economic data and in some indicators we use to gauge the market's risk level.
2014-10-08 00:00:00 Nervous Investors, Choppy Markets by Richard Michaud of New Frontier Advisors
It was a choppy third quarter for global asset classes. Domestically, Large Cap equities rose slightly but Small Cap US stocks fell.
2014-10-07 00:00:00 How We See Europe Panning Out by Stephen Peak (Article)
Stephen Peak, Director of International Equities, notes that overall, it's been an interesting year so far for European markets and economies. He adds that what started out as a reasonable start to the year, later began to look more doubtful as we hit mid-year. As to the markets themselves, Stephen believes good valuation opportunities exist in Europe - and notes that principally, he takes comfort in the attractiveness in multiples in Europe, specifically on a cyclically adjusted basis.
2014-10-03 00:00:00 5 Things To Ponder: Motley Cognizance by Lance Roberts of Streettalk Live
It has been an interesting week in the financial markets as the current correction process has continued. As shown in the chart below, the correction has primarily occurred in the mid, small and international equities as money has rotated into mega-large cap stocks for safety.
2014-09-22 00:00:00 Two Themes Investors Should Focus on Now by Russ Koesterich of BlackRock
With countries growth, monetary policy and market performance increasingly diverging, Russ shares two themes investors should focus on as year-end approaches.
2014-09-16 00:00:00 Economic Update by Team of Cambridge Advisors
After a rocky month in July, stocks resumed their march higher in August. The S&P 500 was up 4.0% for the month and is up 9.9% year-to-date. The small cap Russell 2000 index also performed well for the month, up 5.0%. Year-to-date, small cap stocks have lagged and are up only 1.75% as of the end of August. International stocks continued to struggle in August and year-to-date with performance of -0.4% and +2.93% respectively.
2014-09-11 00:00:00 Diversifying With the Yen? Not if Japanese Equities Are Involved by Jeremy Schwartz of WisdomTree
The discussion of currency-hedged strategies has shaken some of the core beliefs of investors. Traditional investment vehicles that package equity risk plus a secondary currency risk on top of the equity risk have been referred to as the traditional plain vanilla exposure because they were the first to the market, and it is what investors have been using for so long.
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.
2014-08-27 00:00:00 From the Alps to the Tetons by Brian Andrew of Cleary Gull
Central bankers seem to be the focus once again. If the global economy were strong enough to stand on its own, we wouldnt spend every waking moment worrying about what Fed Reserve Chair Janet Yellen and her European Central Bank counterpart Mario Draghi are going to do next. The fact that these bankers are front and center again in investors minds, is a function of both how sluggish the global economy is and how persistent the hangover from the mid-2000s real estate party continues to be.
2014-08-19 00:00:00 How to Choose the Right Fixed-Income Strategy by Joe Tomlinson (Article)
The fixed-income portion of retirement portfolios is just as important as the equity allocation, yet far less research has been devoted to it. Advisors must decide whether to pursue active or passive strategies and which types of bonds to recommend. I'll address those strategic choices and argue that the best approach is the simplest, lowest-cost one.
2014-08-05 00:00:00 Avoiding the Unintended Migration from Investor to Speculator by Bob Andres of Andres Capital Management.
The identification of value/price in the allocation of capital is essential to successful investing. Assets purchased at levels above intrinsic value reflect an approach based on hope and momentum not sound risk/reward analysis and normally portend negative results.
2014-08-01 00:00:00 Second Quarter 2014 Investment Commentary by Team of Litman Gregory
Overall, our macro view and assessment of the risks and returns across the major asset classes has not changed meaningfully since last quarter. We continue to see the U.S. and global economies on a slow path of recovery from the 2008 financial crisis. ... Despite our more positive fundamental outlook, we also continue to view the markets as too dependent on central bank largesse, too short-term focused, and too complacent about the risks and imbalances that remain in the global economy in the aftermath of the financial crisis.
2014-07-31 00:00:00 Opportunities in Developed International Equities by Christopher Gannatti of WisdomTree
Each year, WisdomTree screens the universe of dividend payers in developed international markets so that we can refocus the weights of constituents back to relative value and away from simply holding increasing amounts of stocks that have performed well. The rebalance was recently completed, suggesting that this is an opportune time to review the positioning of our broad developed international Indexes.
2014-07-30 00:00:00 High Stock Dividends: A Competitive Retirement Income Solution by C. Thomas Howard of AdvisorShares
Sufficient yield, keeping up with inflation, and outliving the funds available are three major concerns facing investors who are building a retirement portfolio. A high dividend yield equity portfolio can provide a competitive approach to addressing each of these concerns.
2014-07-29 00:00:00 How to Blend In a Currency Hedge by Jeremy Schwartz of WisdomTree
Looking across developed markets today, a common thread is that central bank policies have pushed interest rates to very low levels to support their economies.
2014-07-23 00:00:00 Does Active Management Succeed in International Small-Caps? by Team of The Royce Funds
Divergent conclusions about the relative success of active management in the international small-cap universe prompted us to do our own examination, which stresses the importance of choosing the appropriate benchmark and evaluating the consistency of a fund's performance over long-term time periods.
2014-07-22 00:00:00 2014 Another Ho Hum Year from Hedge Funds by Ryan Davis, Brian Payne of Fortigent
Through the first six months of the year, hedge funds have generated a positive, albeit somewhat modest return. According to data compiled by Hedge Fund Research, the Fund Weighted Composite of hedge funds in their universe had generated a 3.2% return, compared to the S&P 500s 7.1% gain. While not terrible on a standalone basis, many investors had greater hopes for the asset class following five straight calendar years of underperformance versus the broad equity markets.
2014-07-21 00:00:00 A Farmland Investment Primer by Julie Koeninger of GMO
Farmland is a real asset that combines solid investment fundamentals with the potential for attractive cash yields, inflation hedging, and consistent returns from biological growth. Furthermore, farmland total returns tend to be uncorrelated with financial asset returns, offering genuine portfolio diversification for institutional investors.
2014-07-15 00:00:00 The Fed Announces Its Intentions by Chris Maxey, Ryan Davis of Fortigent
Minutes from the mid-June FOMC meeting were released last week, offering keen insight to the Federal Reserves current thinking on the economy. While the Fed suggests that the economic outlook is benign, the minutes offered guidance on the Feds exit path, which is expected to arrive by the end of the year.
2014-07-09 00:00:00 U.S. & European Flows: Potential Opportunity in European Debt? by Bradley Krom of WisdomTree
In discussions with our clients, we often notice their interest in hearing where WisdomTree or the industry is seeing inflows in order to gain new ideas for investment. As the market for global exchange-traded products continues to evolve, we believe that investors will increasingly look to global ETP flows for investment ideas.
2014-07-08 00:00:00 Slow but Steady Growth by Richard Michaud of New Frontier Advisors
In the second quarter of 2014 major asset class performance was positive. The Dow was up 2.4%, the S&P up 4.7%, and the NASDAQ up 5%. International equities nearly kept pace with US equities; the MSCI ACWI ex US was up 3.8%.
2014-07-03 00:00:00 Why Invest in International Now? by Team of AMG Funds
In light of the strong performance from U.S. stocks over the past five years, its reasonable for an investor to ask Why international stocks now?. We are convinced that the reasons for investing internationally are even more compelling today than they were twenty years ago. Permit us to illustrate the most significant reasons for investing internationally today.
2014-07-02 00:00:00 Alternative Investments: The Right Expectations by Roger Nusbaum of AdvisorShares
Every year around this time we hear about the fiscal year investment results for the various college endowments and typically there is much written about the endowments and 2014 is no exception but this year most of the attention seems to be on the extent to which various forms of alternative investments have been a drag on endowment results after years of their having provided outsized gains.
2014-06-24 00:00:00 Are Dividend Stocks Too Expensive? by Geoff Considine (Article)
Dividend strategies tend to have a strong value tilt and lower price-to-book (P/B) and price-to-earnings (P/E) ratios than the market as a whole. But those strategies can become overvalued. When this occurs - we are currently in such a period - building a high-dividend, low-risk portfolio requires extra care.
2014-06-11 00:00:00 US Regional Banks Attractiveness Jumps in June by Erik Kobayashi-Solomon of YCharts, Inc.
Our Sector-level heat map looks much the same as it did last month, save for the fact that the shade of green has deepened for the Utilities and Financial Services sectorsindicating a larger number of companies screening undervalued according to YCharts Value Score.
2014-06-04 00:00:00 Why should clients seek out investable benchmarks? by Jason M. Laurie of Altair Advisers
Benchmarks are fundamental measuring tools that gauge the relative performance of securities, investment managers and portfolios. They help answer the question, How are my investments performing? Yet despite their importance, they often have inherent shortcomings that can make them less than optimal for evaluating performance.
2014-06-03 00:00:00 Why You Have Way Too Much Invested In U.S. Stocks by Meb Faber (Article)
For U.S. investors, how many of your stocks are in the domestic market? Once you account for the fact that the U.S. is one of the more expensive markets around the globe, it could be a good time to rethink your stock allocation.
2014-05-27 00:00:00 Quality Dividend ETFs by Shundrawn Thomas (Article)
FlexShares Quality Dividend ETFs allow investors to seek to meet income needs with exposure to high-quality dividend-paying domestic or international stocks, across three levels of market risk.
2014-05-16 00:00:00 Why Should Clients Seek Out Investable Benchmarks? by Jason Laurie of Altair Advisers
Investable benchmarks enable clients to see what their returns would have been had they invested in a passive alternative to any actively managed recommendations. They answer the question, How are my investments performing?, with far greater clarity, yet they are still a rarity in the investment world. We believe that is changing.
2014-05-14 00:00:00 Worried about the Downside? by Richard Bernstein of Richard Bernstein Advisors
There have been numerous academic studies that suggest investors reactions to market risk are not symmetric. Investors consistently react more negatively to losses than positively to gains. At RBA, we incorporate this asymmetry in our sentiment work. Data clearly show that no group of investors is currently willing to take excessive US equity risk. Pension funds, endowments, foundations, hedge funds, individuals, Wall Street strategists, and even corporations themselves remain more fearful of downside risk than they are willing to accentuate upside potential.
2014-05-02 00:00:00 April 2014 Pension Finance Update by Brian Donohue of October Three Consulting
April was another down month for pension sponsors, marked by declining interest rates and sluggish stock markets. Both ?model? plans we track lost ground last month, with our traditional ?Plan A? losing about 2% and the more conservative ?Plan B? dropping less than 1% during April. For the year, sponsors have now given back roughly one-fourth of 2013's ?bounty? ? Plan A is now down 5% during 2014, and Plan B is down more than 2%.
2014-05-02 00:00:00 Views of the Insane on Diversification by Kendall Anderson of Anderson Griggs
I recently read this quote from Craig L. Israelsen, a Financial Planning contributing writer in Springville, Utah. Granted, I have never met, nor have I had any conversations with Mr. Israelsen, but he seems to be a competent professional. According to his bio, he is an executive in residence in the personal financial planning program in the Woodbury School of Business at Utah Valley University. However, his statement still bothers me a bit, as he is saying that any other investment approach must be insane.
2014-04-29 00:00:00 Europe: Market Capitalization vs. Smart Beta by James Calhoun of AdvisorShares
A bullish investor consensus for European equities appears to be building. More and more, we are hearing and reading that European equities are attractive and undervalued. It may be the right time for greater exposure to developed international equities, and Europe might be the right place for investors to focus. However, why stop there? Why stop at the regional level?
2014-04-25 00:00:00 ?Cautious? Investors: Saying One Thing, Doing Another by Russ Koesterich of iShares Blog
Five years into an equity bull market, investors say they?re still cautious. However, Americans hold as much risk in their financial portfolios as they did during the tech bubble in 2000. Russ explains what?s behind this trend and what it means for investors.
2014-04-21 00:00:00 Spring Checkup: Five Investment Ideas for Your Portfolio by Russ Koesterich of iShares Blog
As the second quarter of 2014 gets underway, many investors are wondering how they should adjust their portfolios given the events of the first three months of the year. Russ shares five investing opportunities that he and his BlackRock colleagues think are worth considering this spring.
2014-04-17 00:00:00 Equity Outlook by Team of Osterweis Capital Management
Short term, we would not be surprised if the market took a breather after its strong gains last year. Additionally we may see volatility related to news coming out of the Middle East and Russia. But longer term, we remain very optimistic on the outlook for U.S. equities. In addition to the reasons we discussed above we believe U.S. equities are very attractive relative to the alternatives. The great bull market in bonds appears to be over. The great decades of emerging market growth appear to be behind us.
2014-04-15 00:00:00 Does Rebalancing Really Pay Off?? by Michael Edesess (Article)
No investment advice is more universally offered than the advice - originally posited by William Bernstein - to rebalance your portfolio. Yet, the evidence that this practice is beneficial is shockingly meager.
2014-04-08 00:00:00 Do Commodities Belong in Your Allocation? by Geoff Considine (Article)
For much of the last several years, poor performance from commodities has hurt investors’ portfolios, a result of depressed interest rates, low inflation and slow economic growth. Any diversification value they provided was masked by strong equity-market performance. My analysis shows that only a small allocation to commodities is justified, and advisors can obtain most of the same benefits with REITs or individual TIPS.
2014-04-08 00:00:00 On Cruise Control by Richard Michaud of New Frontier Advisors
The first quarter was a relatively calm start to the year. The Dow was down 0.7%, the S&P up 1.3%, and the NASDAQ up 0.5%. International equities were nearly flat as well with the MSCI ACWI ex US down 0.1%. European equities were up 1.5% and Pacific equities were moderately negative, with the MSCI Pacific down 3.3% for the quarter. Emerging market equity indices were down 0.8% for the quarter, with China down 6.7%.
2014-04-07 00:00:00 First Quarter of 2014 Brings Many Reversals, Regressions to the Mean by Ron Surz of PPCA
Unlike 2013, diversification worked in the first quarter of 2014. As revealed in our 2013 market commentary, U.S. stocks dominated with a 33% return while diversifying assets like commodities lost 10%. As shown in the graph on the right, diversification into real estate and commodities was handsomely rewarded in the first quarter.
2014-04-02 00:00:00 Gain International Exposure with Small-Caps by David Nadel of The Royce Funds
Portfolio Manager and Director of International Research David Nadel discusses our attraction to international small-caps, how our investment approach translates into the international small-cap universe, how we try to avoid value traps, the effect monetary policy has had on our approach and performance, and more.
2014-03-28 00:00:00 Why International Now? by David Garff of AdvisorShares
One of the ongoing challenges that advisors face is determining what percentage of their clients assets should be allocated to international equities. The magnitude of this decision is often amplified when the United States has years of persistent out/under performance. US clients will inherently gauge the success of their portfolio based on the S&P 500, or similar index. The challenge for advisors is explaining why a more diversified exposure to global equities is meaningful in the long-run, despite recent years of outlandish performance.
2014-03-26 00:00:00 Europe is a Land of Opportunity in 2014 by Kevin Mahn of Hennion & Walsh
While we are forecasting a high, single-digit gain for the S&P 500 index over the course of 2014 at this time, we do still contend that U.S. stock market returns will likely be outpaced in 2014 by certain International ? Developed Country stock market returns (notably Europe) as regions such as the Eurozone continue to emerge from their own recession.
2014-03-25 00:00:00 Discovering International Opportunities by Stephen Peak (Article)
Stephen Peak discusses recent geopolitical factors impacting markets and notes opportunities still exist in international equities.
2014-03-25 00:00:00 Will Putin Stop with the Crimea? by Bill O'Grady of Confluence Investment Management
Now that the Crimean referendum has passed in favor of annexation, what will Putin do next? In other words, will he stop with the Crimea? In this report, we will look at the post-Cold War situation from Putin?s perspective. From this viewpoint, we will examine Putin?s likely next steps and how this will affect the U.S. and the rest of the developed world. As always, we will conclude with market ramifications.
2014-03-21 00:00:00 When Will it be Time to Get Back to EM? by David Garff of AdvisorShares
Global investors have been experiencing an ongoing drag on returns to the extent they have had exposure to Emerging Market (EM) equities. It is difficult to abandon the asset class given historical performance, relative economic growth, current valuation discounts, and portfolio management tenets regarding diversification. But the fact that the U.S. has been such a strong performer, along with its size and prominence in the press, creates questions about why any non-U.S. stocks should even be in the portfolio.
2014-03-12 00:00:00 The Goldilocks Conundrum: A Market Review by Rick Vollaro of Pinnacle Advisory Group
When we decided to ride the central bank liquidity wave in 2013, we knew there was a chance the market could have a pretty good year, but like most investors we were pleasantly surprised with the gains that the U.S. stock market delivered. Including dividends, the S&P 500 Index soared by 32%, well in excess of what even the most optimistic prognosticators envisioned at the start of the year.
2014-02-18 00:00:00 From Micro-Caps to Mid-Caps, a Comprehensive Approach to Smaller Companies by Team of The Royce Funds
As the small-cap asset class has grown in size, those companies just beyond the periphery of small-cap have become somewhat orphaned.
2014-02-07 00:00:00 2013 Year-End Investment Commentary by Team of Litman Gregory
We find ourselves with a more sanguine big-picture view, at least over the nearer term, than we have had in some time. U.S. and global economic fundamentals gradually improved over the past year across a number of dimensions, and seem poised for continued improvement or at least stability in 2014. However, as we look ahead, the longer-term risks related to excessive global debt, subpar growth, and unprecedented government policy that we have worried about since the aftermath of the 2008 financial crisis still remain largely unresolved.
2014-02-05 00:00:00 Emerald Economic Commentary by Team of Emerald Allocation Strategies
As Yogi Berra once said, "You got to be careful if you don?t know where you?re going, because you might not get there." As we look back on 2013 and look ahead to 2014,we want to share our thoughts on the road traveled and more importantly, the possible road ahead.
2014-01-28 00:00:00 Expect Higher Volatility to Persist by Russ Koesterich of BlackRock Investment Management
Last weeks selloff can be attributed to EM turmoil, stretched valuations and mediocre earnings. Volatility is likely to move higher to levels closer to long-term averages. We suggest investors adopt overweight positions in European and Japanese stocks.
2014-01-14 00:00:00 The Diversification Obituary by Chris Maxey, Ryan Davis of Fortigent
According to some major media outlets, 2013 was the year diversification died. With the S&P 500 racing to a more than 30% gain (the largest since the late 90s), it seemed as though no other asset class truly mattered last year. While it is true domestic equities had a banner year, one-asset class portfolios will never be robust, and there is reason to believe 2013 is a prime example of why diversification is incredibly important.
2014-01-10 00:00:00 5 Investor Tips for 2014 by Kristina Hooper of Allianz Global Investors
While the winding down of QE signals better times ahead, investors need to be selective and focused in taking smart risks, says US Investment Strategist Kristina Hooper.
2014-01-10 00:00:00 2014 Economic and Investment Outlook by Team of Ivy Investment Management Company
Although the December 2013 U.S. budget pact between House and Senate negotiators was a welcome development, partisan battles over government spending still are possible in 2014. The agreement ends a three-year budget fight and sets government spending through fall 2015, but it does not eliminate the need to raise the nations borrowing limit - the "debt ceiling."
2014-01-07 00:00:00 A Healing Economy by Richard Michaud of New Frontier Advisors
The quarter continued the theme of the year, with U.S. equities continuing their dramatic performance. For the quarter, the Dow was up 9.6%, the S&P 9.9%, and the NASDAQ 10.7%. The years returns substantially exceeded last year"s "expert predictions" and much of this years punditry with the Dow up 26.5%, S&P up 29.6%, and NASDAQ up 38.3%.
2014-01-06 00:00:00 2013: A Review of the Past, the Present and the Future by Ron Surz of PPCA Inc
This commentary is divided into three sections. I begin with a review of current U.S. and foreign stock markets, examining the year 2013 and the past six years, including the crash of 2008. This perspective serves as a launch point into the future, specifically 2014 and the remainder of this decade. I conclude with a review of the past 88 years of U.S. stock and bond markets.
2013-12-31 00:00:00 A Look Ahead at 2014 by Russ Koesterich of iShares Blog
Last week, Russ shared his annual look back at his 2013 economic and investment calls. Now, its time for his annual look forward.
2013-12-20 00:00:00 Five Resolutions for 2014 by David Kelly of J.P. Morgan Funds
Entering 2014, the global investment environment is as challenging as ever. After a super 2013 in returns, U.S. equities can no longer be considered inexpensive and yet still look attractive relative to the prospective returns on savings accounts and long-term bonds. Long-term bond yields are higher than a year ago but could still rise further as the Federal Reserve begins to reduce quantitative easing.
2013-12-15 00:00:00 Lessons Learned in 2013 by Seth Masters of Alliance Bernstein
In 2013, interest rates rose, bonds fell, equities soared, and US income-tax rates climbed higher. Before starting to place bets for 2014, investors would be wise to think about some important lessons from 2013.
2013-12-05 00:00:00 No Silver Bullets in Investing by James Montier of GMO
In a new white paper today, James Montier of GMOs asset allocation team reviews recent "innovation in our industry." He argues, "one of the myths perpetuated by our industry is that there are lots of ways to generate good long-run real returns, but we believe there is really only one: buying cheap assets."
2013-11-19 00:00:00 Asset Class Allocation and Portfolios: Critique and Complication by Adam Jared Apt (Article)
In Part 1 of this essay, I explained that for asset class allocation to become an investment practice, it required a foundation of theory. And Modern Portfolio Theory was that foundation. But today, most financial journalists and investment advisors who proffer advice centered on asset class allocation are?if I may judge from their writings?oblivious of this. And why shouldn’t they be? Theory is abstract and difficult to apprehend.
2013-11-19 00:00:00 Breaking News! U.S. Equity Market Overvalued! by Ben Inker of GMO
In GMOs quarterly letter to institutional clients today, co-head of asset allocation Ben Inker outlines the reasoning behind GMO implementing a new forecast methodology for the U.S. stock market. While the new methodology has slightly increased GMOs seven-year forecast for U.S. equity returns, Ben notes, "The basic point for us remains the same -- the U.S. stock market is trading at levels that do not seem capable of supporting the type of returns that investors have gotten used to receiving from equities."
2013-11-18 00:00:00 Two Investments to Consider when You're Coming off the Sidelines by Russ Koesterich of iShares Blog
For investors on the sidelines of the equity market, Russ offers his take on which market segments to consider now and which to remain cautious of.
2013-11-15 00:00:00 Taper or Not, Stocks and Bonds Could Gain by Scott Minerd of Guggenheim Partners
Both bond and equity markets are well-positioned, regardless of whether the U.S. Federal Reserve tapers its asset purchase program.
2013-11-07 00:00:00 Upgrading Non-U.S. Equities by Jeffrey Knight of Columbia Management
Two performance trends have stood out across world markets during 2013. The first is the strong outperformance by equities over bonds. The second is the strong returns of the U.S. stock market relative to other stock markets around the world. The Table breaks down year to date performance for the S&P 500, Eurostoxx 50, FTSE 100, Topix and MSCI Emerging Market indices. Notice that as of the end of July, equity returns in the Unites States were handily outpacing all other regions except Japan.
2013-10-22 00:00:00 After the Minimalist Debt Ceiling Deal: The Good & Bad News by Russ Koesterich of iShares Blog
Last week, investors cheered that Washington finally reached a last-minute debt ceiling deal. But despite their big sigh of relief, the debt ceiling deal wasnt all good news. Russ provides a quick look at the good, the bad and the investing implications of the compromise.
2013-10-10 00:00:00 Economic and Market Overview: Third Quarter 2013 by Team of Envestnet
The economic environment in the third quarter was one of growth, albeit at a slower pace than most economists, and the Federal Reserve (?Fed?), believe can be self-?sustaining. The slow but steady gains the economy made were enough to buoy the stock market, but likely only because the Fed has seen it necessary to maintain its aggressive monetary policy. While employment gains were anemic during the quarter, the unemployment rate actually declined to 7.3%, largely due to a contraction in the labor force.
2013-10-08 00:00:00 Q3 Brings Plot Twists; Volatility to Continue in Q4 by Russ Koesterich of iShares Blog
Russ reviews how the third quarter shaped up vs. his expectations, noting which calls he got right and which he got wrong, and he updates his outlook for this quarter.
2013-10-05 00:00:00 Pinch Yourself. U.S. Stock Markets Have Grown 145% in Four-Plus Years by Ron Surz of PPCA
Thankfully, 2008 has become a distant memory. Weve made back its 37% loss and a lot more. Things are good, but are they going to stay that way? We still face anemic economic growth, burgeoning debt, global social unrest and more. The S&P 500 has returned 145% in the past 55 months (4.5 years).
2013-10-04 00:00:00 The Economy, the Fed, and Politics by Richard Michaud of New Frontier Advisors
It was a good quarter to invest in equities, and despite a down second quarter, overall a good year as well. The Dow was up 1.5%, the S&P 4.7% and the NASDAQ 10.8%. Year-to-date returns were very positive with the Dow up 15.5%, S&P up 17.9%, and NASDAQ up 24.9%. International equities were also positive for the quarter and year with the MSCI ACWI ex US up 9.4% and up 7.5% year-to-date. While emerging market equity indices were up 5% for the quarter they remained negative -6.4% for the year.
2013-10-03 00:00:00 Third Quarter Market Commentary: Let's Reminisce by Robert Stimpson of Oak Associates
US stocks have risen each quarter of 2013, outperforming most other asset classes and emerging markets along the way. In the third quarter, the S&P 500 Index rose 5.24% and pushed the year-to-date gain to 19.79%. All sectors within the S&P 500 have produced positive returns this year, although the pro-cyclical groups have outperformed the defensive ones.
2013-10-02 00:00:00 The Death Knell of Global Synchronized Trade by Bill Smead of Smead Capital Management
At Smead Capital Management, we believe the interest on September 18th in emerging markets, oil and gold are the last gasps of a dying trend. Our discipline demands that you must avoid popular investments and completely avoid investments attached to a perceived new era. We argue that the international investment markets reaction to Bernankes reprieve on September 18th is proof of a vision we have of the future.
2013-09-27 00:00:00 Global Destinations for Yield by Scott Minerd of Guggenheim Partners
While U.S. stocks are increasingly due for a consolidation, the outlook for global equities is improving. Now appears to be a good time for investors to increase allocations toward Asia and Europe.
2013-09-27 00:00:00 How to Strengthen Your Portfolio Core by David Fabian of Fabian Capital Management
In strength training and investing, your core is everything. Its the foundation or base from which you build upon to reach new levels of success. Without a solid core, you are doomed to underachieve because you dont have the right balance needed to attain your goals. By starting from the ground up using concrete core holdings, you can add additional tactical positions from which to enhance your returns. That way you will have a well-rounded portfolio strategy that is easy to understand.
2013-09-17 00:00:00 The Debate on DFAs Research by Various (Article)
We received many responses to Michael Edesess article, Why DFAs New Research is Flawed, which appeared last week. We provide the responses from individuals who disagreed with Edesess findings, followed by Edesess response and then by responses in agreement with his findings.
2013-09-10 00:00:00 Investor Anxiety + Uncertainty = More Volatility Ahead by Russ Koesterich of iShares Blog
As Russ expected, both equity and bond market volatility have risen in recent weeks. Russ explains why this rocky road is likely to continue, and he provides two ideas for potentially insulating portfolios amid volatility.
2013-08-29 00:00:00 Monthly Investment Commentary by Litman Gregory Research Team of Litman Gregory
U.S. stocks resumed their positive streak in July (after a slightly negative June). Large-cap stocks rose in three out of the four weeks and were up 5% for the month. Smaller companies generally outperformed their larger-cap counterparts. After Federal Reserve comments regarding the timing of its stimulus withdrawal upset markets in May and June (particularly the bond market), investors seemed to take comfort in the Feds more recent comments. Among other points, Chairman Bernanke reiterated that a decision to taper bond purchases is different from raising the federal funds rate
2013-08-23 00:00:00 Economic Update: August 2013 by Lori Liffring, Michael Bridgeman, Gaylan Abood, Justin Anderson, Karen Benefiel of Cambridge Advisors
Stocks had another strong month in July with the large-cap S&P 500 index up 5.0% and the small-cap Russell 2000 up 7.0%. International stocks in developed markets were also 5.2% higher as measured by the MSCI EAFE index while emerging market stocks were up less than 1%. Bond prices stabilized during the month resulting in only a slight 0.1% gain.
2013-08-22 00:00:00 Hot Potato: Momentum As An Investment Strategy by Ryan Larson of Research Affiliates
Investors increasingly are attracted to momentum as a key ingredient in their portfolios. But how does momentum fare as a stand-alone strategy? In this issue of Fundamentals, we look at the pros and cons of this important risk factor.
2013-08-14 00:00:00 Focused Only on the US? Here's What You're Missing by Russ Koesterich of iShares Blog
Many investors remain fixated on whats happening in the United States -- and particularly on what the Federal Reserve will do -- but Russ explains why they shouldnt lose sight of whats happening abroad.
2013-07-24 00:00:00 Bursting of the Bond Bubble by Clyde Kendzierski of Financial Solutions Group
Our April newsletter focused on the extreme overvaluation in the bond market. I argued that money market funds (or cash) were likely to outperform bonds and bond funds over the next decade. In May I applied the same logic to US stock prices and the inherent fallacy in the prevailing TINA (there is no alternative to stocks) hypothesis. Although stocks are likely to outperform bonds over the next decade, both asset classes remain seriously overvalued. In a world of overvalued assets, zero return looks much better than large potential losses even when that means foregoing transitory
2013-07-24 00:00:00 D-Day +1 by Jeffrey Saut of Raymond James
I have termed last Friday (7/19/13) as D-Day because for the past few months my work has targeted that date as a potential turning point for the equity markets. Given the upside stampede, my sense was/is that turn would be to the downside for the first meaningful pullback of the year. In past missives I have elaborated on the reasons and clearly the media has listened.
2013-07-22 00:00:00 The Purgatory of Low Returns by James Montier of GMO
This might just be the cruelest time to be an asset allocator. Normally we find ourselves in situations in which at least something is cheap; for instance when large swathes of risk assets have been expensive, safe haven assets have generally been cheap, or at least reasonable (and vice versa). This was typified by the opportunity set we witnessed in 2007.
2013-07-10 00:00:00 Market Perspectives Q2 2013: Fed Fears by Richard Michaud of New Frontier Advisors
Investors have been hypersensitive to the inevitable reversal of the Federal Reserves bond purchasing economic stimulus program known as QE3. Signs of sustainable economic recovery have been closely monitored as a harbinger of a likely end of the program.
2013-06-28 00:00:00 All-Time Record Outflows from Bonds by TrimTabs Asset Management of AdvisorShares
Outflows of bonds arent just catching attention, they are setting new highs not seen since 2008. In contrast, stock buybacks are practically unchanged from the previous quarter. Read this investor insight by TrimTabs Asset Management to review timely fund flow activity that has taken place in the marketplace.
2013-06-26 00:00:00 Win Ben's Money by Bill Smead of Smead Capital Management
From 1997 to 2003 a show called, Win Ben Steins Money ran on the Comedy Central Network. The last five years, investors in the US have been playing a very similar game we are calling, Win Bens Money. The new game stars Federal Reserve Board Chairman, Ben Bernanke. The object is to win the money the Fed creates via Quantitative Easing (QE) through macroeconomic analysis. In this missive, we will look at how these investors chased Bens Money and consider what to do going forward.
2013-06-13 00:00:00 Thinking About Thinking? by Jeffrey Saut of Raymond James
I think a lot about thinking in an attempt to improve my ability to make good decisions. I also work hard to avoid linear thinking, which tends to extend present conditions linearly into the future. Such thinking caused investors to ignore the Dow Theory sell signal of September 1999 with portfolio consequences that are now legend. That same thinking occurred in November of 2007, concurrent with another Dow Theory sell signal, with similar portfolio consternations. Ladies and gentlemen, economic changes, and for that matter stock market changes, tend t
2013-06-12 00:00:00 Cyclical Stocks Appeal After Defensive-Led Rally by Vadim Zlotnikov of AllianceBernstein
This years equity market rally was initially led by defensive stocks, as macroeconomic concerns persisted despite improved risk appetite. With valuations in these sectors looking stretched and cyclically oriented stocks starting to rebound in May, is a bigger shift starting to unfold?
2013-06-11 00:00:00 Bursting the Bond Bubble Babble by Andy Martin (Article)
Interest rates will eventually go up. The 50-basis-point spike in May on the 10-year Treasury bond may have been the beginning. But despite industry and media assertions, history shows that there is nothing to fear from rising rates.
2013-06-06 00:00:00 June Economic Update by Justin Anderson of Cambridge Advisors
Stocks sold off on the last day of the month but still managed to finish higher in May with the large-cap S&P 500 index up 2.2% and the small-cap Russell 2000 up 4.0%. International stocks finished the month lower with the MSCI EAFE index down -2.9%. Bond prices came under significant pressure as yields rose after Fed Chairman Ben Bernanke hinted that Quantitative Easing may be tapered off sooner than the market expected. The 10-Year US Treasury Yield rose sharply to end the month at 2.16%.
2013-05-31 00:00:00 Buying Stampede by Jeffrey Saut of Raymond James
Over the long weekend I decided to type the words buying stampede into Google to see what popped up. To my surprise there were more than 2,000,000 hits on the phrase buying stampede and many of them were attributed to me. While that was a pretty humbling experience, it also was surprising because I would have thought more investors would have used that phrase in connection with the many upside rally skeins that have occurred over the past dozen years.
2013-05-07 00:00:00 Attractive Dividends? Earnings Growth? A Way to Get Both by Team of Lord Abbett
International equities provide broader opportunities for combining appealing divided yields and earnings growth.
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.
2013-04-19 00:00:00 First Quarter Investment Commentary by Team of Litman Gregory
Looking ahead, significant uncertainty surrounds fiscal and monetary policy in terms of what policies will be adopted and their ultimate economic and financial market impacts. More broadly, still-high global debt levels pose an economic headwind. Against this backdrop, our outlook for stocks has not improved. If anything, given the sharp run-up in stock prices, we are getting closer to reducing our U.S. equity exposure further than we are to increasing it.
2013-04-10 00:00:00 Weekly Market Review Notes by Team of Tuttle Tactical Management
The market continues to experience volatility around the new record high. Again, this is to be expected as this is a very psychologically important level so we shouldnt expect the market to blow through this and never look back. There is still a lot of background "noise" in the markets. Last weeks jobs numbers were disappointing, we have had some weaker economic numbers, Cyprus, etc. None of this looks like it can change the fact that money has nowhere else to go but stocks at this point, but the economic numbers bear watching.
2013-04-08 00:00:00 Good Start to 2013. Domestic Stocks Earn 11% In First Quarter. by Ron Surz of PPCA
2013 stock markets started like 2012 stock markets with a bang. U.S. stock markets kicked off 2013 with a very good 10.7% return. Also like 2012s first quarter, foreign markets didnt fare as well, earning only 3.5% in the quarter. If we merely hold onto these gains for the remainder of the year well do fine.
2013-04-03 00:00:00 Spring Economic Commentary by Larry Maddox of Horizon Advisors
The Fiscal Cliff We loudly went over the cliff and received a largely quiet and unexpected market reaction? Risk of rising interest rates After a 30 year period of declining interest rates, caution is in order. Our thoughts on portfolio fixed income positioning. The heightened awareness of uncertainty Despite lingering uncertainty investors should be committed to long term well diversified porftolios.
2013-04-03 00:00:00 Weekly Market Review Notes by Team of Tuttle Tactical Management
After hitting a record close last week the market is showing some warning signs, which is to be expected. You dont typically break through an important resistance point without testing it and re-testing it so some volatility around a record high is normal. We are also slightly concerned that small and mid cap stocks have drastically underperformed the S&P 500 over the past two days.
2013-03-27 00:00:00 Weekly Market Review Notes by Team of Tuttle Tactical Management
The continuing mess in Cyprus and the S&P 500 nearing a record close dominated the news this week. As I said last week, Cyprus is insignificant, the only important aspects of what is going on is timing. If the crisis hit the news during a time when the market was oversold and due for a rally then it would have little, if any, impact. The fact that that market has rallied this year without much of a selloff gives traders an excuse to use something like this to take profits.
2013-03-19 00:00:00 Why Are Emerging Markets Struggling in 2013? by Ryan Davis of Fortigent
Despite one of the sharpest rallies in US equities in recent memory, emerging market equities have been left curiously behind in 2013. Through last Friday, the market segment was down 1.0%, compared to an S&P 500 index that was up 10.0%. This seems to violate the regime that investors have gotten used to over the past 10 years, whereby the emerging markets equity index served as a high beta proxy for the US equity market.
2013-03-14 00:00:00 DC Plan Sponsors: Now's the Time to Get More From Bonds by Stacy Schaus of PIMCO
Long on equities and light on bonds, todays DC plan lineups may expose participants to extreme market risks. Plan sponsors could potentially improve retirement outcomes by trimming choices for stocks and considering additional options for bonds. The inclusion of active fixed income strategies with global exposure or additional income opportunities could help participants reach their retirement goals.
2013-03-05 00:00:00 Is Now the Time to Diversify? by Chris Maxey, Ryan Davis of Fortigent
The use of global diversification in constructing client portfolios has come under fire in recent years due to the underperformance of many risk assets. Traditionalists who stuck to their familiar S&P 500 and BarCap Aggregate Bond index blends generally outperformed their diversified peers in 2011 and 2012, as historic risk premiums failed to materialize and various alternative investment strategies faced headwinds.
2013-03-01 00:00:00 Is It Time to Get Back into Stocksor Too Late? by Seth Masters of AllianceBernstein
After five years of fleeing stocks for the perceived safety of bonds, US mutual fund investors became net buyers of stock funds in January. While some see the return of the retail investor as a negative indicator for stocks, we say, "Better late than never."
2013-02-19 00:00:00 Asset Class Allocation and Portfolios by Adam Jared Apt (Article)
Asset class allocation has been so thoroughly absorbed into the culture of investing that today, most investment guidance is built around it, and you may even have heard that it is the foundation of an investment plan. And like nearly all respectable investment ideas, it is misunderstood and abused. One misconception is that asset class allocation and portfolio management are the same thing. I'll explain why they aren't later, but let's start by considering another misconception.
2013-02-15 00:00:00 International Equity Commentary January 2013 by Team of Thomas White International
International equity prices sustained the uptrend in January, helped by data releases that supported the growing optimism over healthier global economic growth. Though the U.S. and U.K. economies declined unexpectedly during the fourth quarter of last year, the pace of growth improved in several Asian countries, including China, during the period.
2013-02-12 00:00:00 Fixed-Income Insights: When High Yield Loses Some Height by Zane Brown of Lord Abbett
If one sought an indication of how monetary policy and historically low interest rates can influence investor behavior, the high-yield bond market could provide some perspective. In 2012, investors' ongoing demand for income was reflected by the high-yield market's 15.6% return, the $32 billion that flowed into the asset class, andas several headlines pronouncedthe market's record-low yields of less than 6%.
2013-02-05 00:00:00 Fourth Quarter 2012 Equity Market Review by Natalie Trunow of Calvert Investment Management
With the excitement of the QE3 announcement wearing off in the fourth quarter, market participants refocused on the less-than-stellar earnings season in the U.S. and uncertainties surrounding the U.S. presidential election and impending fiscal cliff, while the negative impact of Hurricane Sandy further dampened investor sentiment. Despite a double-dip recession in the eurozone, there was some progress on the European policy front and China's economy continued to show signs of stabilizing, which helped international stocks outperform their U.S. counterparts.
2013-01-30 00:00:00 Expanding Horizons: The Most Difficult Environment for Generating Income in 140 Years by Ehren Stanhope, Travis Fairchild of O'Shaughnessy Asset Management
In the most difficult environment for generating income in 140 years, we survey the landscape of income-generating options, review lessons from the previous bond Bear Market, and demonstrate why we believe global, dividend-paying equities deserve a prominent role in investor portfolios.
2013-01-24 00:00:00 Peak?s peek at the ?crystal ball? ? 2013 Market Outlook by Stephen Peak (Article)
Stephen Peak provides an in depth outlook on anticipated market behavior in 2013 including a detailed focus on international equities. From global GDP growth expectations and details on Emerging Markets and specific stocks, Stephen identifies where he sees potential over the coming year and how he plans to tie those findings back to the International Opportunities Fund portfolio.
2013-01-22 00:00:00 Year-End Investment Commentary by Team of Litman Gregory
Stocks shrugged off numerous worries to log a very good year in 2012, but can markets continue to climb? Certainly the worries remain. The most immediate has to do with the spending side of the fiscal cliff. The cliff deal made permanent the Bush tax cuts for all but high-income taxpayers but it did not address spending. So while the worst case of the cliff was avoided, the work is not nearly done. In this commentary we discuss our current assessment of the investment environment including a detailed look at what could go right, and tie it all back to our portfolio positioning.
2013-01-17 00:00:00 International Equity Commentary December 2012 by Team of Thomas White International
International equity prices made robust gains in December, as further improvement in economic trends across most regions lifted the outlook for 2013. Policymakers in the U.S. managed to put together an agreement at the last minute and averted the 'fiscal cliff', one of the major risks that had restricted investor sentiment during earlier months. In Europe, though economic signals remain largely weak, the further fall in bond yields of the troubled countries has helped sustain optimism about resolving the region's fiscal crisis this year.
2013-01-15 00:00:00 Demographics and the Decline of Equity Mutual Funds by Paul Franchi (Article)
Until the last few years, mutual fund flows followed performance. Recently, however, money has flowed disproportionately into bond funds and out of US equity funds despite a strong rally in the equity markets. Changing demographics explain this shift, which has important implications for advisors and the mutual fund industry.
2013-01-15 00:00:00 From Cliff to Ceiling! by Jim Tillar, Steve Wenstrup of Tillar-Wenstrup
When it was all said and done not much happened in the final quarter of 2012. Anxiety picked up immediately after the election as the bickering over the fiscal cliff escalated. In the end, the worst-case scenario was avoided at least for a couple of months and stocks ended about where they began the quarter.
2012-12-15 00:00:00 The Cost of Viewing the US as a Safe Haven by Russ Koesterich of iShares Blog
Since exiting the recession in mid-2009, US stocks have significantly outperformed international markets. But can the United States still be viewed as a safe port in a storm? Russ K explains why it might be time for investors to consider raising their allocation to international stocks.
2012-10-19 00:00:00 International Equity - Monthly Product Commentary: September 2012 by Team of Thomas White International
International equities made strong gains in September as aggressive policy action from central banks in Europe and the U.S. helped offset concerns over moderating economic growth across the globe. The European Central Bank (ECB) announced a program to buy unlimited quantities of debt issued by troubled countries such as Spain, Portugal, and Greece, provided they adhere to a strict fiscal adjustment timetable.
2012-09-25 00:00:00 How to Build a Portfolio by Adams Jared Apt (Article)
This is the first of a set of three articles intended for the educated layman, in which I will combine the core ideas presented in my preceding articles into a comprehensive description of how to put together a portfolio. In this one, I'll explain what is often called Modern Portfolio Theory.
2012-08-08 00:00:00 Monthly Product Commentary: International Equity - July 2012 by Team of Thomas White International
International equities made modest gains during the month of July on repeated assurances from European policymakers that they will explore all possible steps to prevent a collapse of the monetary union and arrest further economic decline. Developed markets in Europe's Nordic region and the Asia Pacific, excluding Japan, as well as select emerging markets in Asia ended with healthy gains for the month.
2012-07-10 00:00:00 Insights into the First Half of 2012 by Ron Surz (Article)
U.S. stock markets at mid-year have earned a respectable 9.5% return. A euphoric first quarter 12.6% gain gave way to a 2.8% minor setback in the second quarter. Foreign markets have not fared as well, earning only 3.4% over the first half of the year. The graph below provides the details, and adds a look at gold's performance.
2012-06-05 00:00:00 Finding the Best Dividend Fund by Geoff Considine (Article)
Assets are flowing into dividend-stock funds. But many experts are warning that those investors are setting themselves up for significant losses. Using an objective methodology that assesses tradeoff between yield and risk, we can determine those funds that investors should prefer - and a few they should avoid.
2012-06-01 00:00:00 Asia, Europe, and value plays by multiple advisors (Article)
David Herro, CIO, International Equities, Harris Associates, covers these topics on Natixis Global Asset Management?s Market Talk
2012-05-08 00:00:00 Q2 Outlook: "Sell in May" May Not Work This Year by OppenheimerFunds (Article)
Chief Economist Jerry Webman explains why he believes the U.S. economic recovery is real and CIO Art Steinmetz talks about how stocks are as cheap compared to bonds as they have been in decades.
2012-05-01 00:00:00 Q2 Outlook: by OppenheimerFunds (Article)
Chief Economist Jerry Webman explains why he believes the U.S. economic recovery is real and CIO Art Steinmetz talks about how stocks are as cheap compared to bonds as they have been in decades.
2012-04-24 00:00:00 Why a 60/40 Portfolio isn?t Diversified by Alex Shahidi (Article)
Maintaining a balanced portfolio is critical, especially when predictions of growth and inflation vary as widely as they do today. Investors are always better off spreading risk than aggressively betting on one economic outcome, and that's especially true when the range of possible economic outcomes is so wide.
2012-04-20 00:00:00 Monthly Investment Commentary by Team of Litman Gregory
Stocks and other risk assets surged in the first quarter, continuing the strong run that began in the fourth quarter of last year. In each of the past two quarters, domestic stocks gained about 12%, marking one the strongest runs over the October-March span going back to the 1920s. Developed foreign stocks increased nearly 12% in the quarter, emerging-markets stocks gained 14, small-cap U.S. stocks were up 12%, high-yield bonds rose 5%, and emerging-markets local-currency bonds added 8%.
2012-02-10 00:00:00 Missed Opportunities? by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab
Investors eased back into stocks to start the year. This is the start of a sustainable trend, but equities rarely go up in a straight line and near-term caution may be warranted. Another deadline is approaching for Congress and the President to make a deal. Something will get done, but any hopes for substantial action remain dim. Markets appear to be more comfortable with the European debt crisis and the risks associated with it. Central banks around the world are easing, which could help support international stocks in the coming months.
2011-11-22 00:00:00 A Bond-Based Financial Planning Framework by Stan and Hildy Richelson (Article)
Plain vanilla bonds have proven themselves to be the best investments available, and we wholeheartedly agree with Andrew Mellon's prescient late-1920s observation that 'gentlemen prefer bonds.' We believe that ladies should, too.
2011-11-01 00:00:00 The Danger in European Stocks by Geoff Considine, Ph.D. (Article)
European equity prices, depressed by fears of a sovereign debt crisis, are cheap to such a degree that William Bernstein, author of The Intelligent Asset Allocator, called them a true bargain. Income-oriented investors, in particular, may be tempted by 4.2% dividend yields and a market-wide P/E ratio of approximately 11. My analysis, however, contradicts Bernstein's and shows the underlying risk those investments carry.
2011-10-18 00:00:00 Bob Doll: Why the US is Positioned Strongly by BlackRock (Article)
Investor unease has risen dramatically over the past quarter in the face of growing concerns about the world's economic and financial health. The focal point has been the intensifying debt crisis in Europe. The issues facing Europe are highly complex, but essentially are underscored by a single question: Is Europe facing a solvency crisis or a liquidity crisis?
2011-09-01 00:00:00 Q&A with Litman Gregory Research by Team of Litman Gregory
We regularly use a Q&A format to address questions from readers about our investment views and current strategy. This format permits us to address a range of different topics and allows readers to focus on areas that are of interest to them. This Q&A piece was worked on jointly by members of our research team and tackles questions received during the past several weeks. We have grouped the questions into broad categories for convenience. The main topics include the Fairholme Fund, Investment-Grade Bonds, Floating Rate Loans, Municipal Bonds, International Bonds, China and Commodity Futures.
2011-08-23 00:00:00 Strategies for a Rising Rate Environment by Jayant Kumar of Fisher Francis Trees & Watts (Article)
Shortening the duration of a fixed-income portfolio is often considered the default option, but it is not the only way to hedge against a potential rise in interest rates. This article provides investors with a framework to analyze and implement a range of fixed-income strategies, and highlights various investment considerations that should carefully be taken into account.
2011-07-12 00:00:00 Second Quarter Preserves First Quarter Market Gains: We're Still Above Water and Treading by Ron Surz (Article)
In his award-winning commentary, Ron Surz looks at how the US market performed and then how foreign markets fared. He concludes on a lighter note with a couple of videos that address key topics in the investment arena.
2011-06-28 00:00:00 Reducing Risk through Value-Oriented Tactical Strategies by Mark E. Ricardo, JD, LLM, AAMS (Article)
Conventional wisdom was that the best way to reduce portfolio risk is to adopt a diversified long-term strategic asset allocation. That paradigm was challenged - deservedly so - following the 2008 financial crisis. Fortunately, an improved paradigm has emerged: Investors should combine long-term strategic allocations with a value-oriented tactical rebalancing strategy.
2011-06-28 00:00:00 The Diversified Portfolio Index by Charles Fahy, Sr. (Article)
Investment rates of return that are average but consistent are the products of exceptional performance. Over longer time horizons, these returns become increasingly difficult to outperform. One such example is the Diversified Portfolio Index - a buy-and-hold strategy deployed across all major asset classes.
2011-06-07 00:00:00 Low Volatility Equity Solutions ? Is Now The Time? by K.Sean Clark of Clark Capital Management Group
Correlations converging amid the market declines of 2008 called attention to the limits of relying on diversification between assets for portfolio protection. The desire for non-correlated returns among assets had led to a significant reduction in U.S. equity exposures and accelerated flows into non-U.S. equities and alternative strategies. But the correlations of these uncorrelated assets spiked under the extreme market stress of 2007 and 2008. This shows that for downside protection, buying assets with many different risk profiles is not a substitute for buying volatility to manage risk.
2011-04-12 00:00:00 A Top Value Manager Looks Outside the US by Robert Huebscher (Article)
David Winters, manager of the Wintergreen Fund, began his career working for Max Heine, where Seth Klarman and Michael Price also worked. In this interview, Winter discusses the why he believes many of today's best opportunities are outside the US and how he is hedging against the threat of inflation.
2011-01-18 00:00:00 Letters to the Editor by Various (Article)
A number of readers respond to Nancy Opiela's article, Tactical Asset Allocation and Market Timing: What's the Difference?, and one reader responds to Michael Lewitt's article, The Wages of Growth. Both articles appeared last week.
2011-01-04 00:00:00 Think International, Think Small by Wasatch Funds of Wasatch Funds
Outperforming in today?s investment climate requires taking advantage of the wealth of opportunities available globally. Foreign stocks offer strong growth potential and attractive fundamentals, particularly small cap and micro cap companies. In this paper we explore what makes international investing particularly compelling, and the unique advantages of foreign small and micro cap companies, including: higher growth potential, better valuations due to the market inefficiencies of smaller companies and lower correlation with U.S. stocks, and under representation in portfolio allocations.
2010-12-06 00:00:00 The Dangers of Rebalancing by Michael Edesess (Article)
Every portfolio should be rebalanced to its targeted asset allocation, we are taught. Indeed, there may be no other precept as routinely and studiously practiced among financial advisors. But does rebalancing either increase expected return or reduce risk? If so, why? The answers to those questions reveal that it may be prudent to rebalance, but not for the reasons you think.
2010-10-26 00:00:00 An Exceptional Resource for Asset Allocation by Michael Edesess (Article)
Roger C. Gibson's fine and exemplary book, Asset Allocation: Balancing Financial Risk, Fourth Edition, shows that character and conscience-based counseling still exist, even in the financial profession. It is still possible for advisors to look out for their clients' long-term interests.
2010-10-05 00:00:00 A September to Remember by Ron Surz (Article)
In his quarterly market analysis, Ron Surz notes that September has historically been the worst performing month for US stock markets, losing 1% on average over the past 85 years, while the average return in the other 11 months was a positive 1.3%. Not so this September. Surz reviews global market performance and provides his thoughts on peer group analysis and target date funds.
2010-09-07 00:00:00 The Free Lunch Illustrated by Michael Nairne (Article)
One of the most remarkable discoveries in modern finance is the ability to improve the expected return of a portfolio while simultaneously reducing its risk. In this guest contribution, which advisors can share with clients, Michael Nairne explains that the proverbial "free lunch" does exist, its exploitation requires a focus not only on the returns and volatility of the assets in the portfolio but on the degree of covariance between those assets.
2010-08-24 00:00:00 What Investors Really Want by Robert Huebscher (Article)
Using a mean-variance optimizer to construct a retirement portfolio that sits on the efficient frontier is tantamount to dining on a well-prepared meal that was pureed in a blender, believes Meir Statman, a professor of finance at Santa Clara University. Statman's research focuses on behavioral finance, and how advisors can help investors make smarter decisions.
2010-08-10 00:00:00 When Active Management Matters by Kenneth R. Solow, CFP and Michael E. Kitces, MSFS, MTAX, CFP (Article)
Financial planners have eagerly awaited any research that could finally, definitively prove - or disprove - the pesky notion that active management is effective. Though no one has yet risen to that challenge, past academic studies have been improperly interpreted to show that portfolio policy, or asset allocation affects portfolio returns far more than active management. As Ken Solow and Michael Kitces write in this guest contribution, the most recent study to tackle the active management debate, by Yale professor Roger Ibbotson, shares two weaknesses with previous research.
2010-08-03 00:00:00 Letter to the Editor by Various (Article)
In a letter to the editor, a reader responds to Dave Loeper's article, Fake Diversification Exposed: Does Asset Allocation Work?, which appeared on July 13.
2010-06-08 00:00:00 Five Strategies for a Rising Rate Environment by Kane Cotton, CFA and Jonathan Scheid, CFA (Article)
The Federal Reserve can't accommodate forever, and the global stimulus effort will likely lead to inflation. Our growing indebtedness can only result in increased borrowing costs. That much we know. What we don't know is when and how quickly interest rates will rise. In this guest contribution, Kane Cotton and Jonathan Scheid examine five strategies for a rising rate environment.
2010-06-08 00:00:00 Ten Ways to Improve Manager Selection by Nancy Opiela (Article)
Today's emphases on fiduciary responsibility, risk management and increased transparency require better due diligence when selecting managers. Especially in today's turbulent markets, advisors who spend more time and resources to do due diligence well can find themselves at a distinct competitive advantage. While these ten tips won't necessarily help you identify the next active management superstar, they can bolster your manager selection and due diligence program.
2010-05-18 00:00:00 Understanding Recent Negative International Bond Returns by Team of American Century Investments
This year so far has been a challenge for U.S. investors in high-quality, unhedged international bonds, continuing a downtrend for this sector that began in December of last year. Fortunately, the long-term strategic reasons for holding international bonds remain intact, including inflation protection from a potentially weaker dollar as the U.S. budget deficit grows, and diversification benefits versus traditional domestic fixed income.
2010-04-06 00:00:00 Follow-up to the Folly of Peer Group Analysis by Various (Article)
In response to a recent commentary by Research Affiliates, The Folly of Peer Group Analysis, a reader offers his own research on the performance of indices against peer groups, once impurities have been eliminated from those peer groups. John West and Ryan Larson of Research Affiliates provide additional analysis.
2010-04-01 00:00:00 The U.S. Bond Market is Losing Steam by Monty Guild and Tony Danaher of Guild Investment Management
Smart investors will buy stocks on dips, sell their long term bonds denominated in the euro and the U.S. dollar, and shift into shorter maturity bonds or into stocks that can grow. Investors should consider selling all long term bonds of any type. Guild and Danaher favor foreign stocks in Singapore, Thailand, Indonesia, and Malaysia. They also favor export-driven companies in developed countries, and commodity producers globally, especially oil companies that are increasing their production. Gold is in a trading range, and should be bought for below $1090 per ounce.
2010-03-02 00:00:00 Asset Allocation Perspective by Scott Wittman, CFA (Article)
Scott Wittman, Chief Investment Officer for American Century Investments, provides his quarterly review of macro-economic factors and trends which influence the tactical weighting decisions for American Century's asset allocation funds. In the article, Wittman reviews and comments on recent events, trends and expected short-term future changes in monetary, fiscal, industrial, trade, regulatory, political and financial macro economic factors. We thank them for their sponsorship. This is sponsored content.
2010-02-16 00:00:00 How to Squander $170 Billion by Robert Huebscher (Article)
Some of the managers supposed to be among the sharpest have cost their clients $170 billion dollars over the last two decades. These are "plan sponsors" who handle pension funds, endowments, and foundations, and Scott Stewart, a former money manager who now teaches finance at Boston University, has documented their value destruction in a recently published study.
2009-12-15 00:00:00 The Next Black Swan? Underfunded Public Pensions by Robert Huebscher (Article)
The plights of California and other states reveal an ominous threat our economy faces: underfunded public pension liabilities. We examine the size and scope of this problem, focusing on whether the underlying assumptions used to calculate liabilities are realistic.
2009-09-08 00:00:00 Are REITs Now Undervalued? by Geoff Considine, Ph.D. (Article)
The last couple of years have been rough for real estate, but there was a time not too long ago when it seemed that this was a 'special' asset class, with REITs providing valuable diversification benefits and consistently high returns. Do today's low valuations represent an opportunity to buy? Can investors expect a return to low correlations for REITs with the major equity market indexes?
2009-09-01 00:00:00 Additional Thoughts on the ?New Normal? by Geoff Considine, Ph.D. (Article)
A number of readers responded to Geoff Considine's article three weeks ago, What the New Normal Means for Asset Allocation, including Larry Katz, Director of Research at Merriman, whose response we published last week. Katz criticized Considine along a number of dimensions, and in this guest contribution Considine defends his New Normal asset allocation.
2009-08-25 00:00:00 The New Normal and Asset Allocation Merriman?s Response by Larry Katz, CFA (Article)
Larry Katz, Director of Research at Merriman, Inc., responds to Geoff Considine's article two weeks ago, What the New Normal Means for Asset Allocation. He has multiple objections concerning much of Considine's logic, and would not recommend his alternative portfolio to their clients.
2009-08-18 00:00:00 A Crash Course in Investing Six Lessons from the Market Meltdown by Dougal Williams, CFA (Article)
The market decline from October 2007 to early March 2009 was the worst since the late 1930's. Stocks dropped 60%, investor uncertainty skyrocketed, and trust and confidence were shattered. The age-old rules for personal investing are now being questioned: Is Buy-and-Hold dead? Has Asset Allocation outlived its usefulness? Does Diversification still work? In this guest contribution, Dougal Williams provides answers to these questions that can serve as a guide for long-term investment success.
2009-08-11 00:00:00 What the New Normal Means for Asset Allocation by Geoff Considine, Ph.D. (Article)
Bill Gross of PIMCO forecasts a New Normal - slow economic growth, higher inflation, and increasing correlations among asset classes. If this view is correct, what should investors do? Geoff Considine examines the implications for asset allocation and financial planning by stress-testing some well-known asset allocations to see how well they will serve investors in the forecast environment.
2009-08-04 00:00:00 How to Think about Return and Risk at the Same Time by Adam Jared Apt (Article)
In this guest contribution targeted to the educated layman, Adam Apt discusses the relationship between return and risk. Only when you can keep in mind at one and the same time these two concepts can you properly understand how to invest. And you will also understand why you should invest. Without the marriage of the concepts, you will be playing the market-or shunning it-as if it were a casino.
2009-05-19 00:00:00 David Swensen's Ascent by Mebane Faber (Article)
Mebane Faber provides an excerpt from his new book, The Ivy Portfolio, on the ascent of David Swensen and the development of the tools employed to manage Yale's endowment. Faber shows the data Swensen used to determine Yale's aggressive allocation to alternative asset classes.