This letter will cover the philosophical underpinnings of my thinking. I’ll also introduce some investment tools (which I will give you access to through a link later on in the letter) that express that philosophy, but you could also design a different answer that fits your own (or your client’s) portfolio construction.

The Fed story may well command attention. I classify it as an important story, but not an urgent one. I have some strongly-held viewpoints:

1. The exact timing of rate hikes is not important for long-term investors. The Fed has been following a policy of rate increases in line with economic data. While many do not believe this, the data are supportive. Tim Duy on recent strength.
   
2. That said, the rate increases have second- and third-order effects. The perception of the pace of hikes impacts exchange rates. The weaker dollar affects major corporate earnings – in both directions. This makes the Fed news worth watching.
   
3. Current data are stronger than widely thought, but much depends upon how one views the Q1 softness—meaningful or aberrant. Recent Fed speeches suggest a moderation in the rate-hike path.
   
4. Rates will be increased more slowly, but the balance sheet will be reduced.

The defined contribution (DC) community has been buzzing about lifetime-income products lately. It’s a topic that’s been dormant for several years, but there are good reasons for renewed interest.

K2 Advisors’ Founding Managing Director David Saunders is speaking at the prestigious SALT conference this month in Las Vegas, where he’ll discuss the liquid alternatives landscape and why he thinks now’s the time for investors to consider this asset class.

Investors have a tendency to prefer home cooking when it comes to their stock portfolios. In the latest GMO Asset Allocation Insights, Rick Friedman writes that US-based investors are paying steep prices for domestic equities. but straying from their home market presents more attractive prices.

When looking to help diversify a multi-asset portfolio, one of our experts presents the case for when and why an investor might consider senior loans.

Fund managers have become more bullish, but not excessively so. Cash balances at funds remains high, suggesting lingering doubts and fears. Of note is that allocations to US equities are near their lowest level in 9 years: this is when US equities typically start to outperform.

Russ talks about why bond yields remain low this year, despite expectations of a rise.

Volatility is remarkably low today, but it’s not likely to stay that way. Alternatives have the potential to provide diversification and reduce risk when markets get stormy again. But what’s the best way to design an alternatives allocation?

After stumbling out of the gate, a 2.5% rally in the second half of April left the broad-market S&P 1500 1% higher on the month.

There is a really big crisis coming. Think about it this way. After 8 years and a 230% stock market advance the pension funds of Dallas, Chicago, and Houston are in severe trouble. But it isn’t just these municipalities that are in trouble, but also most of the public and private pensions that still operate in the country today.

When Ronald Reagan entered office in 1981, forward return expectations were a high 18.91% (see chart below: green line, left-hand side). Equally important was that risk of loss was a low -4.29% (red line, left-hand side). The prior bear market reached its end, yet few knew it. Scream as one might, clients weren’t buying.

We have a very quiet week for economic reports. The housing data are quite important, but it will be a Tuesday story without legs. The White House drama will be compelling for the media. Whether investors like the idea or not, we should expect another week of news that is mostly political.

In this issue, Research Affiliates offers insight into its CPI-based secondary return benchmarks, its business cycle modeling and continued opportunities in emerging markets.

Driverless cars may be the wave of the future. But when it comes to bond investing, it’s best to keep your hands on the wheel. Anything less could do serious damage to your fixed-income portfolio.

Doubt can be a pesky thing. Once you’re infected, it’s hard to shake off. It makes you second guess what you thought you were sure of, it’s contagious, and there’s no vaccine for it.

Russ discusses the important trends that emerged from a compelling conference of finance, business and political leaders.

It’s hard to say how healthcare reform will affect the broad municipal bond market. But any new law with the potential to cause millions to lose insurance would be a bitter pill for hospitals. Investors should tread carefully.

The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for April came in at 104.5, a decrease of 0.2 from the previous month's 104.7. The index is at the 97th percentile in this series. Today's number came in above the Investing.com forecast of 104.0.

DALBAR’s report is commonly cited as “proof” that mutual fund investors have historically made poor market-timing decisions. While DALBAR does not publicly disclose its approach, in this article I use a transparent and industry-accepted methodology, based on publicly available data, to demonstrate that investors’ returns have not been nearly as bad as DALBAR claims.

I presented at a recent advisor conference alongside a famous economist. He told a story about an investment manager who told him, “You know… it is easy to pick out the investment amateur in any room.” He said, “He’s the person who says, ‘it’s different this time’.”

We have a quiet week for data. The ObamaCare drama is finished for now. The Fed meeting is over. Earnings season is past the peak. Don’t worry! The punditry will find something new. Analysts will look deeply into the charts and ask: What is the message of the market?

US equities rose for a third week in a row, to new all-time highs. Trend persistence like this normally leads to higher highs in the weeks ahead. It's true that volatility has dropped to significant lows and that volatility risk is to the upside.

Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $18,319 for an annualized real return of 12.17%.

During the first four months of 2017, we were relatively active on the buying and selling front. With a reasonable amount of information to report on individual positions, we will dispense with any broad economic and asset class commentary and dig right into each of the transactions that occurred between January and April.

A bottom-up look at major industries around the world reveals significant potential for productivity growth.

With risks abounding in the markets, Russ discusses the case for health care as a defensive sector.

A spending rate is a key factor for retirees' success. Just as budgeting and savings discipline are bedrocks to reach your retirement objectives, having a personal spending plan during your retirement is critical to prevent you from potentially outliving your dollars.

In a new quarterly letter to GMO's institutional clients, head of asset allocation Ben Inker addresses "perhaps the most common question I get from clients: What keeps you up at night?" ("Up At Night").

Political risk may have ratcheted lower after the first round of the French presidential election. But the latest jump in asset prices across Europe appears to have tailwinds well beyond politics.