In today’s world, where politics take up the majority of news cycles and there is an ongoing war of words between the two major political parties, I decided for this letter to replace our often used phrase “conservative investor” with “cautious investor.
It's time to think differently about building sustainable retirement income streams. Since many retirees fund their retirement using a traditional IRA, it makes sense to use a portion of that asset to fund a variable annuity with a GLWB.
It is hard to say with certainty what drives trading on any particular day, but it doesn’t seem a stretch to say that over the past few months a combination of tariffs and Federal Reserve rate hike fears have broadly impacted both equity and fixed income markets.
Asset price inflation (check). Financed by debt growth (check). We’ve spent the last three weeks reviewing Ray Dalio’s A Template for Understanding Big Debt Crises. I hope you found the insights as helpful as I did.
According to the 2018 edition of the Stock Trader’s Almanac, October has been a “great” time to buy. Once ranked last in terms of stock performance, the 10th month has delivered relatively average returns since 1950. What makes it so attractive is that it’s followed by November and December, historically among the very best months for stocks. We’re also entering the three most bullish quarters of the four-year presidential cycle, based on 120 years of stock market data.
This yield metric has risen to its highest level in nearly 30 years
Yesterday was a bad day in the market. The Dow was down more than 800 points (800 points!), and the S&P was down almost 100 points (100 points!). Surely, this is the beginning of the end.
Robert Gordon dismissed concerns that the stock market is in a bubble and further predicted that the unemployment rate will drop to below 3%.
Overnight, new data released in China suggests businesses are having a tough time lately. Cheung Kong University produces an alternate PMI Business Conditions Index in association with the China Federation of Logistics and Purchasing. The latest data point plunged more than 10 points from its end of July reading and is currently sitting at 41.88, deep into contraction territory.
As we enter another period of accelerated Brexit negotiations, how can investors best navigate the next few weeks and months? Our assessment is that a number of U.K. assets have already priced in a significant chance of a disruptive Brexit, but there is scope for further moves in either direction, depending on the path the negotiations take.
Growth and value stocks are often seen as opposing one another—but we believe they can be complementary within an equity portfolio.
Between 25% and 50% of financial advisors outsource some or all of their investment management functions. But is outsourcing right for your firm? A look at the key benefits and tradeoffs will help you make the decision that’s in the best interests of your firm – and your clients.
Last week Donald Trump, in his own estimation, succeeded in replacing what he claimed to be the "worst trade deal in history" with what he claims was "the best trade deal in history." If true, this would not only make good on one of his central campaign promises, but it would be a genuinely significant development.
Federal Reserve Board Chairman, Jerome Powell, who has been remarkably quiet as he adjusts to his new role at the Fed, finally roiled markets last week. He made comments on Wednesday, during the Atlantic Festival at a session moderated by Judy Woodruff of the PBS News Hour.
Without the passage of the C.R. the government was facing a “shut-down” just prior to the mid-term elections. So, rather than doing what is fiscally responsible for the long-term solvency and financial health of the country, not to mention the generations to come, they decided it was far more important to get re-elected into office.
Quick – what was the second-worst U.S. stock market drop since the 1930s? What caused it? It wasn’t the pricking of the tech bubble in the early 2000s. It was the bursting of the oil bubble in 1973. Fossil fuels have been the life blood of economic growth for the entire time that economies have been growing – almost 200 years – and they have been responsible for many of their ups and downs.
According to a recent Cornerstone Macro report, the three most influential macro trends this year have been 1) the strengthening U.S. dollar, 2) the flattening yield curve and 3) slowing global manufacturing expansion.
In May, the Trump administration exited the Iran nuclear deal and implemented new sanctions. Because the US has a tendency to implement financial sanctions against its perceived adversaries, there have been growing calls for an alternative to dollar-based trade.
As the quarter ends, the Dow Jones and S&P 500 indices, fueled by growth stocks’ appreciation, are at all-time historical highs, dominating the return from global investing. While the MSCI ACWI rose more than 3.5% for the quarter and 2% for the year, the MSCI ACWI-ex US was flat for the quarter and declined more than 5% year-to-date.
What impact are the looming U.S. midterm elections likely to have on financial markets?
We have heard the statement, “Nobody can consistently time the stock market’s ups and downs;” and, for the most part we agree with that. However, if one listens to the message of the market, one can certainly decide if one should be “playing hard,” or not playing so hard.
One of the great conundrums in today’s world is why computers in general and the digital revolution in particular have had exactly the opposite effect on productivity than everybody expected. Why on earth is productivity growth slowing when we all expected it to rise and what can we do about it? That’s what this month’s Absolute Return Letter is about. Enjoy the read.
One of the biggest threats clients face in retirement is chasing higher investment income. I’ve seen people go back to work because they concentrated on income and lost their principal. Income is the wrong goal, particularly since much of so-called income is just a ruse allowed by regulators.
I do not think the tariffs on China are going to cause a recession. But if we have a recession, that is precisely what the Democrats will say. Democrats will not run against the Fed, investor sentiment, markets, Italy, or anything else that actually causes the next recession. They will be running against Trump and everything will be his fault. It will be the Trump Trade War Recession. Whether or not it is true is immaterial.
This week, we look back at EU's recovery from the global financial crisis and the new normal of the US housing market. They have both recovered, but are we on the right path?
The consensus view is that the US will not head into recession until later in 2019, perhaps not even until 2020. But it is important to remember that fiscal stimulus simply pulls consumption forward. We currently are benefiting from that phenomenon, as the economy is strong and consumer and small business owner sentiment is as high as it has been in years. But while fiscal stimulus can elongate economic expansion, it does not negate the business cycle. The piper always gets paid.
The price of gold fell back below $1,200 an ounce again this week as the U.S. dollar advanced following another federal funds rate hike. It’s now set to log its sixth straight month of declines, its longest losing streak since 1989.
The third quarter looks like another good one, at least here in the U.S. Despite ongoing turmoil—both political (with the Kavanaugh confirmation battle) and economic (with the rising trade conflict and tariffs)—markets rose steadily, reaching new highs. Markets abroad were not as positive, with emerging markets down and developed markets generally flat.
One of my favorite Warren Buffett quotes is “investing is most intelligent when it is most businesslike.” The reason this quote resonates so much with me is because I believe it represents the essence of value investing.
As expected, the Fed raised interest rates today following its September policy meeting. Could the escalating trade war between the U.S. and China impact plans for future increases?
The idea for this memo came from the seven worst words in the investment world: “too much money chasing too few deals.”
1636 was a very good year, and 1637 was a very bad year.
We see growth slowing, but not an imminent recession. We invest accordingly.
I don’t trust the fundamentals of the global economy. The system is built on quicksand.
Not long after I started studying economics in graduate school in 1975, I concluded that government-imposed tariffs on imported goods are almost always a bad idea. Ditto for trade wars. In general, the government has no business influencing the prices US manufacturers and others pay for the goods they import from abroad.
What impacts could escalating trade tensions and rising U.S. interest rates have on global markets and economies in the months ahead? See what our strategists’ views are for the fourth quarter of 2018 and beyond.
The boring truth of financial analysis and portfolio management is that the majority of our days are spent visiting with clients, reading, reading, reading, and when required, making decisions. Years ago it would have included quite a bit of time on a calculator, but thanks to the low cost of computers and software, most of the number crunching can now be completed with the push of button.
Well, “you did it,” as the senior index followed most of the other indices to new all-time highs. We have repeatedly written that this was going to happen given the Advance-Decline Line’s continuing new highs, as well as the stock market’s strong breadth.
In order to gauge the trajectory of this economy, it’s important to examine the data behind our recent growth and the price we're paying for it. It’s also important to look at whether growth will last into the third quarter of 2018 and examine the one significant factor that underlies real growth: wage revitalization.
The US will have the upper hand initially, and could hold it for a year or two. This is because, for now, our economy is relatively strong and we can better withstand any Chinese retaliation. Beyond that point I think our current policies will begin to backfire, maybe spectacularly.
In case you couldn’t tell from the ubiquitous political ads and yard signs, midterm elections are right around the corner—46 days from now, to be exact. Historically, volatility has increased and markets have dipped leading up to midterms on uncertainty, but afterward they’ve outperformed.
Asia’s entrepreneurs have capital, customers and conviction. Learn about the opportunity for global investors.
In this issue, Research Affiliates discusses the funds’ long-term outcomes relative to peers, views on emerging market currencies and recent research centered on momentum.
A new study suggests that earning wealth through the stock market may be better accomplished by focusing on slow and steady long-term growth, rather than chasing top-tier performance.
Fans of the “Fast & Furious” movies know the game of chicken. Two cars race toward each other, each driver waiting for the other to swerve out of the way. If neither swerves, the cars collide head-on. This game has been playing out in Europe as the UK and Italian governments each face off with the EU.
A review of last month’s market-moving events across countries and asset classes.
September is life insurance awareness month so I thought I’d celebrate by cautioning against the worst clichés frequently used when selling insurance.
The longer term trend is positive but the near-term outlook is unfavorable. It seems unlikely that any equity weakness will be substantial or long lived, but investors should remain on alert to heightened risk over the next several weeks. We believe that will be a good set up for gains into year end.
I’ve compiled a list of three questions to help you decide if now is the time to refocus how you’re running your business and your life.
Behemoths like Amazon and Uber have transformed industries, putting smaller competitors out of business. Could the same fate await smaller financial planners? Many analysts have predicted massive consolidation in our industry, resulting in a landscape where a few “Goliaths” make it impossible for the small “Davids” to compete. Is this thesis accurate and, if so, what should advisors do to protect themselves?
