Investors appear to remain oblivious to how high inflation already is in the US relative to inflation rates around the world. With Washington DC policy overtly pro-inflation, investors need to be positioned for the overheating ahead.
Investing based on short term-market gyrations and noise from the 24/7 business news cycle rarely drives alpha. At RBA, we’d rather invest dispassionately based on market fundamentals and focus on longer time horizons. Remember to ignore the Tweet and invest for the meat.
When the Fed instituted ZIRP, investors were overenthusiastic to invest in the next great Unicorn. Now that rates are rising and money is no longer free, investors are beginning to realize that rational investing and positive cash flows trump hype and speculation.
Many income-oriented investors may not be appropriately positioned for the current market environment, with increasing inflation and looming tariffs poised to lead to significant underperformance.
Successful investing in this cycle has depended largely on following the business cycle and ignoring the myriad of fears. As the economy enters a late-cycle phase, investors need to recognize the characteristics of a late-cycle environment and how to accordingly position portfolios.
In the 9th year of this bull market, investors remain overweight bonds in an environment poised to drastically limit fixed income returns. It’s time to avoid bonds’ day of reckoning.
2017 turned out to be a better year for the stock market than most investors surmised. For 2018, we yet again see investors avoiding one of the longest post-war bull markets in history and continuing to ignore the fundamentals driving markets higher.
While Tech remains one of RBA’s largest overweight sectors in our portfolios, one thing to consider is the sector’s dirty little secret: it’s really a deep cyclical.
2008 may have generationally scarred investor psychology. As a result, many continue to disavow the current bull market and instead heed warnings of an impending bear market. We argue that fundamentals remain strong and the global equity markets are rife with opportunity.
Many investors no longer view the US as the global safe haven to turn to during bouts of volatility. We argue that US and global fundamentals remain strong, however, many global investors seem to be losing religion.