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26 results found.
Looking Forward - My View on Multinationals
by Pamela Rosenau of HighTower Advisors,
The current election season has been filled with a cross-current of emotion. Anti-Wall Street, protectionist and populist campaigns appear to be the overwhelming themes in trying to persuade the electorate. Additionally, there has been significant friction between the public and private sectors as we are “seeing a tidal wave of corporate merger rejections.”
A Tale of Two Cities – Looking Forward to 2016
by Pamela Rosenau of HighTower Advisors,
The U.S. equity market in 2015 was a tale of two cities. There was a wide divergence of performance within the market, which is reminiscent of the late 1990s. In 1999, tech stocks (per the NASDAQ composite returns) rallied to gain approximately 86% (that’s 86% in one year, not a decade!), while the more prosaic, or “old economy,” stocks (per the S&P 500) gained a mere 21%. In 2015, the divergence was exemplified by the largest ten stocks (by market cap) in the S&P 500 accounting for a 17% return, while the remaining 490 stocks were down in aggregate -5%.
The Swing of the Pendulum: A Snapshot of the Market
by Pamela Rosenau of HighTower Advisors,
In the beginning of the year, I had written a prediction that developed markets would outperform developing (or emerging) markets for 2015. While the prediction may be correct, it has yet to be profitable. Nevertheless, I am encouraged as we approach the end of the year that we will move much closer to positive territory. When we encounter significant volatility in markets, it is always important to separate fact from fiction.
Bullseye: Abe and the Japanese Equity Market
by Pamela Rosenau of HighTower Advisors,
Earlier this year, I articulated my thesis in this publication discussing how the developed markets would outperform the developing markets for the foreseeable future. I have grown to believe that Japan is in the nascent stage of a massive multiyear bull run – the likes we haven’t seen since the US market climbed from the painful declines of 2008-2009.
Shock Therapy: Volatility Spells Opportunity
by Pamela Rosenau of HighTower Advisors,
Over the past six months, the world has seen the price of crude oil decline by over 50%. Other commodities such as copper, gold and iron ore have also suffered declines, as demand from emerging markets has weakened. The supply/demand imbalance has created some uncertainty as to where commodity prices will eventually settle, and the sharp price moves have contributed to some of the volatility in financial markets.
Stay Out of the Echo Chamber Focusing on the Market Fundamentals
by Pamela Rosenau of HighTower Advisors,
In the middle of the recent stock market correction, I read an article emblazoned on the front page of the New York Times reporting on the market volatility and fear. The introductory line read, The party is over. This was the classic contrarian sign that we were forming an interim bottom in the correction.
Banking on the Trends
by Pamela Rosenau of HighTower Advisors,
As the Fed has continued to roll back (taper) its bond purchase program, which will end in October 2014, the question remains: when will the central bank hike rates and what will the impact of monetary tightening be on the broader markets? This uncertainty has contributed to some of the recent market volatility.
A Stealth Recovery
by Pamela Rosenau of HighTower Advisors,
In the fall of 2010, I had written that several indicators suggested the U.S. was entering “stealth economic recovery” mode. This “stealth” recovery coupled with low interest rates and changing demographics were going to usher us into “the age of the Dividend Darlings -- companies that pay sizeable, sustainable, and growing dividends.” Investors would not only replace their income exposure to lower yielding bonds, but also focus on growing income in the equity market.
Waiting for Winter?s End
by Pamela Rosenau of HighTower Advisors,
Undoubtedly, the long cold winter season has many yearning for more pleasant weather. Despite a strengthening economy, the economic data over the past few months appears to have been weighed down by the snow and ice. Come springtime, I believe the data will reflect an economy that is in bloom.
No Madness and No Crowds
by Pamela Rosenau of HighTower Advisors,
Charles Mackays book Extraordinary Popular Delusions and the Madness of Crowds, chronicles some of historys greatest financial manias, including the South Sea bubble and the Dutch tulip mania, among many others. As the stock market continues to make new highs, discussion of a market bubble has been capturing many of the recent headlines. For those that suggest this is the case, they may need to refresh themselves with Mackays book, which highlights the mania phase a phase that we have yet to encounter.
More Than a Sugar High
by Pamela Rosenau of HighTower Advisors,
The recent decision by the Fed to delay any tapering may be a preview of what to expect by a Yellen Fed. As the Fed appeared to remove virtually every yardstick or goal post that they have provided recently, one thing is certain, they seem determined to keep the accelerator nailed to the floor as they drive the economy at full speed. According to Cornerstone Macro, based on the Feds move, it appears increasingly likely that growth is more likely to reaccelerate.
The Context of Price
by Pamela Rosenau of HighTower Advisors,
While the stock market has enjoyed a recent rally, some investors are experiencing some weakness in the knees as they continue to ascend the climb. These new all-time highs in the market compound the problem for some investors as they suffer from the recency effect, or the not-too-distant memory of significant market losses.
The Great Capitulation
by Pamela Rosenau of HighTower Advisors,
If you were to browse the virtual bookshelves of Amazon, some of the latest titles do not seem overly optimistic about the future. In Niall Fergusons The Great Degeneration, he examines why civil society is in complete free fall. Another recent pick me up entitled The Great Deformation, by former Reagan budget director David Stockman, discusses the negative impacts of Washingtons political dysfunction to our democracy.
Pain Aversion
by Pamela Rosenau of HighTower Advisors,
As the equity market continues to rally, the consensus among investors has called for a 3-5% pullback. Unfortunately for the market bears, "the pain trade remains higher right now." There are many who claim that equities are "overbought" or that stocks are "too extended." As market strategist Barry Ritholtz stated, "We find it hard to believe that after hiding under a rock for nearly five years, that a few months of equity inflows means investors have gone from petrified to exuberant. That process in our opinion is a longer arc, not a singular event."
Don't Wait for the Robins: Investment Strategy for 2013
by Pamela Rosenau of HighTower Advisors,
Warren Buffet once remarked, "If you wait for the robins, spring will be over." "Uncertainty" has been an overarching issue since the financial crisis of 2008 and one of the principal reasons that investors have remained on the sidelines away from the equity markets. As it has been a part of the investment lexicon, "uncertainty" will always exist in some capacity. In 2012, investors began by focusing on European issues, then the U.S. election, and now the fiscal cliff. In fact, when there is little uncertainty and investors appear unafraid, one should be more concerned.
Don't Let Sleeping Utilities Lie
by Pamela Rosenau of HighTower Advisors,
As the market continues to digest the unrelenting daily news flow relating to the fiscal cliff, some investors are trying to anticipate who the big winners and losers will be as we head into 2013. Although some may worry about uncertain economic consequences, Ned Davis Research notes that history reveals that in periods of market decline between 1970 and 2000, dividend paying stocks have outperformed their stingy counterparts by 1.5% per month.
Investing is Like Duck Hunting
by Pamela Rosenau of HighTower Advisors,
The discussion of additional monetary easing by the Federal Reserve has been the topic du jour in recent weeks. As a result of potential additional monetary stimulus, the US dollar has experienced a decline. Also, after a weaker than expected jobs report last week, US treasuries initially rallied given an increased expectation of Fed action. However, as pointed out by the market commentators at Sober Look, the Treasury curve has begun to steepen with the "30-year bond and other longer dated treasuries steadily selling off."
Cash Flow is King
by Pamela Rosenau of HighTower Advisors,
In today's yield starved environment, investors continue to seek secure sources of income with the potential for growth. Energy infrastructure master limited partnerships (MLPs) have become increasingly attractive not only for their above average current yield, but for their low risk profile and ability to generate predictable cash flows backed by, in many instances, long-term tariff based contracts.
Navigating the Equity Market
by Pamela Rosenau of HighTower Advisors,
Between now and the Greek election on June 17th, I expect we will see a consistent negative bias in the equity market. According to Citigroup global equity strategist Tobias Levkovich, sentiment has shifted rapidly from complacency in March to panic in the latest readings of their Panic/Euphoria Model. He adds that these readings are a contrary indicator, in addition to valuation metrics, arguing statistically that we may see market gains over the next two or three quarters.
Looking Forward to New Leadership in the Market
by Pamela Rosenau of HighTower Advisors,
Winston Churchill once stated, The farther back you can look, the farther forward you are likely to see. When I look at the broader equity market, there are two areas that I find particularly attractive large integrated energy companies and large pharmaceuticals. Just twelve years ago, some of the large integrated energy companies had price-to-earnings ratios near 25x. Since that time, their earnings multiples have contracted to roughly 10x, yet some have grown their earnings per share by an impressive 250 percent over the same time period.
Reviving a Chinese Bull
by Pamela Rosenau of HighTower Advisors,
Changes in the direction of the reserve requirement ratio (RRR) for Chinese banks, or the minimum reserves a commercial bank must hold according to central bank regulations, have a major impact on the Chinese stock market. The RRR in China had steadily climbed from eight percent in mid-2006 to its peak of 21.5% in mid-2011. The decision in November 2011 by the Peoples Bank of China to cut the ratio by 50 basis points, which was subsequently followed by another cut just last month, appears to be the beginning of a long directional move downward in the RRR as the bank continues to ease.
The Bigger the Base, the Higher the Space
by Pamela Rosenau of HighTower Advisors,
Overall, people around the globe are underinvested or invested in the wrong asset classes. As data point continue to strengthen, coupled with the fact that income (and sustainability of income) are becoming a scarce commodity, a significant rally in the equity markets could ensue. As some technical analysts may suggest, the bigger the base, the higher the space. As U.S. blue chip stocks have lagged for more than ten years, they have built a base that has prepared these stocks for liftoff.
Common Sense is Uncommon: Our Hidden Economic Resilience
by Pamela Rosenau of HighTower Advisors,
If one thing has become clear these days, macro factors increasingly determine the valuations at the micro level. Although the valuation of individual stocks used to determine the value of the market as a whole, stock selection is now subordinate to asset allocation. Even Bill Miller, the ultimate bottom-up investor, is going to lose his job after thirty years at the helm of Legg Mason Value Trust. Investors need to begin to focus on the positive signals that the market is sending us - better economic data will be a boon for the U.S. stock market.
Time to Put Your Shades On
by Pamela Rosenau of HighTower Advisors,
The paradox of the stock market is that higher prices attract buyers, while lower prices attract sellers. This herd-like behavior is confirmed by peers and exaggerated even more now by social media outlets. The most important thing to acknowledge in these markets is to be tactical and buy on weakness. In our current yield starved environment, I have focused on growth and income (two such scarce resources these days) in both dividend paying large cap stocks and energy infrastructure MLPs.
Connecting the Dots
by Pamela Rosenau of HighTower Advisors,
The efficient frontier provides the optimal expected return for a portfolio for a given level of risk, or the lowest level of risk needed to achieve the optimal expected return. Over the years, investors have come to perceive that certain asset classes with higher risk premiums are more risky than others. We believe what many view as traditional asset allocation may be vulnerable going forward. In short, it is dynamic, not static. In todays negative real interest rate environment, investors will be well served by investing in certain asset classes perceived to be more risky.
26 results found.