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You Cannot Manage New Economies with Obsolete Measuring Tools
In his latest piece, Francois Sicart, Founder and Chairman of Tocqueville Asset Management, discusses how misleading macroeconomic averages and aggregates can be as they often consist of components that could both signal either economic weakness or an acceleration with the potential to rekindle inflation.
A Happy New Year After All
As we return to work after the holidays, a sharp sell off in global equities and escalating geopolitical tensions in the Middle East beg the question whether this New Year will be a happy one for investors. I believe the recent market swings are no more than passing disruptions. For U.S. equities and credit, in particular, evidence is mounting that 2016 will prove happier than 2015 for investors. In fact, the global factors currently roiling the markets are easy to discount, and could lead to investment opportunities.
New Year’s Goals to Effectively Increase New Revenue
What is the right way to set achievable goals? I don’t want to set the bar so low that my team doesn’t need to work hard, nor can I afford to do that. At the same time, if I set it too high, all I will hear is grumbling for the first few months of the year.
The New Tools to Measure Risk in Your Portfolios
by Michael Edesess,
Understanding the risks embedded in a portfolio is central to providing value to clients. Traditionally, risks have been measured statistically – with standard deviation or value-at-risk. The shortcomings of those metrics, however, have been well documented. In response, a new generation of analytical tools has emerged that allow advisors to assess risk through scenario analysis – looking at portfolio outcomes through the lens of a storyteller.
The Biggest Stories of 2016?
Which stories are most likely to clear the front pages of the financial newspapers in 2016? In this month's Absolute Return Letter we take a closer look at that and arrive at the conclusion that three favourites stand out. We discuss all three, and we look at the implications for financial markets, should any of them unfold. Enjoy the read and happy New Year.
The Key to Becoming a Trusted Advisor
by Dan Richards,
Every advisor wants to be viewed by clients as the trusted advisor, the resource to whom they turn for counsel – not just for financial matters, but on their overall wellbeing. To do that, you have to be a resource for all the things that concern clients, not just what makes you money.
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%.
On My Radar: 2016 Outlook
If you haven’t seen the movie The Big Short, go see it. Christian Bale plays Michael Burry in Adam McKay’s adaptation of Michael Lewis’s book about the 2008 financial crisis. Burry was one of the hedge fund managers me and my team knew well. He and others helped us to better understand the approaching sub-prime crisis. I wrote about the issue frequently back then.
Byron Wien Announces Predictions for Ten Surprises for 2016
by Byron Wien of Blackstone,
Byron R. Wien, Vice Chairman of Multi-Asset Investing at Blackstone, today issued his list of Ten Surprises for 2016. This is the 31st year Byron has given his views on a number of economic, financial market and political surprises for the coming year. Byron defines a “surprise” as an event that the average investor would only assign a one out of three chance of taking place but which Byron believes is “probable,” having a better than 50% likelihood of happening.
Developed Europe: Economy Trends Update October 2015
by Team of Thomas White International,
The 19-country Euro-zone, which forms a substantial part of the Developed Europe region under our coverage, lost a bit of its growth momentum during the third quarter, signaling that the slowdown in the developing world is likely taking a toll on the export-focused single-currency bloc.
Which China are You Looking At?
by Andy Rothman of Matthews Asia,
Few investors recognize that this is almost certain to be the third consecutive year in which the manufacturing and construction part of China’s economy will be smaller than the consumption and services part. What else have we learned about China in 2015? Sinology examines.
Innovation in Emerging and Frontier Markets
While many investors consider innovation to be the province of Silicon Valley and other high-tech centers in developed markets around the world, the reality is very different. A look at where intellectual property is being created gives us some indication that we have to broaden our horizons as investors if we want to take full advantage of the potential opportunities.
International Retrospective and Outlook
The ratio of the MSCI Emerging Markets Index divided by the MSCI World Index (an index of developed markets) is at its lowest level in 10 years, and developed markets have dramatically outperformed since 2010. If we believe most trends eventually reverse course, we may be close to a period of outperformance for emerging markets.
Christmas Edition: 2015 in Review
Before we reach 2016, I want to reflect back on 2015. Everyone is talking about interest rates and monetary policy right now, but the role fiscal policy plays is just as important—if not more so. As I always say, government policy is a precursor to change, and very recently we saw this firsthand.
10 Undervalued Dividend Champions For 2016: Be Greedy When Others Are Fearful
by Chuck Carnevale of F.A.S.T. Graphs,
Dividend Champions/Aristocrats are the go-to dividend paying stocks for prudent investors desirous of a safe, predictable and growing stream of income on the common stock portion of their retirement portfolios. As most investors are aware, in order to be classified as a Dividend Champion/Aristocrat a company must meet the stern test of consecutively increasing their dividend for 25 years or longer. Of all the dividend paying stocks in the universe, only a select few make these prestigious lists.
Developed Asia Pacific: Economy Trends Update - October 2015
by Team of Thomas White International,
Thomas White International seeks superior performance by identifying undervalued securities in the U.S. and nearly 45 markets worldwide. Its flagship product is the Thomas White International Fund (TWWDX).
Pew Study: American Middle Class is Steadily Shrinking
1. Pew Research: American Middle Class is Steadily Shrinking 2. Pew’s 5 Takeaways About the American Middle Class 3. American Middle Class Also Losing Ground Financially 4. Wealth Gap Between Upper, Middle & Lower Incomes 5. Political Implications of the Shrinking Middle Class
Robert Gordon, the Special Century, and the Prospects for Economic Growth
by Laurence Siegel,
Is the slowdown in economic progress in this new century an aberration or should we have expected it all along? Is it the result of unwise policies or unfavorable demographics, or is it the comedown that naturally occurs after a century-long global economic miracle? How one views the prospects for economic growth will have profound implications for the long-term performance of the capital markets.
The Case against Wall Street
by Bob Veres,
Ladies and gentlemen of the jury, we are here today to consider the case of a defendant who is familiar to everyone: the brokerage industry, or simply Wall Street. The defendant is charged with a number of crimes: employing deceptive business practices; operating a cartel; undermining consumer protections; engaging in anti-competitive behavior against the emergent financial advisory profession; exerting undue and improper influence on Congress and the regulators; raking in excess profits and thereby harming the American economy that it originally was created to benefit.
2015 Recap and a Look to the Year Ahead
Sir John Templeton coined the phrase, “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” In 2015, we expected investors to transition from “skepticism” to “optimism” as we experienced (1) solid momentum in U.S. economic growth with low inflation, (2) a pickup in consumer spending based on job growth, confidence and a positive wealth effect, (3) solid earnings growth, (4) stimulus from low commodity prices and financing costs and (5) a still-good liquidity environment aided by stimulus from non-U.S. central banks.
Middle East/Africa: Economy Trends Update -- October 2015
by Team of Thomas White International,
The three months from July to October turned out to be a reasonably good period for the five economies we cover in the Middle East and Africa region. Although the largest among these economies, South Africa, remained beleaguered by a range of external and domestic problems, there were signs that the country coped well with its difficulties. Israel recorded robust growth after staying depressed for much of the first half of this year while Egypt took further steps to reform its economy.
International Economic Week in Review: EU Growing, China Slowing, Edition
by Hale Stewart,
As we go into year end, the world economic situation is tenuous. The US, UK and EU are doing fairly well, but Japan and China are weakening. And while Australia is growing, it's clear the Chinese slowdown is hurting. Overall, as noted by the Dallas Fed, the global economic environment is fragile.
The Fed Awakens: A New Hike
On Wednesday, Chair Yellen announced that, for the first time in seven years, easy money will become slightly less easy. The target rate will be set at between 0.25 and 0.50 percent, which doesn’t sound like much, but it’s important that the Fed ease into this cycle cautiously and gradually. Plus, this comes at a time when fellow industrialized nations and economic areas around the globe are considering further monetary easing measures.
Said the Fed to the Markets, “Take a Hike”
by Liz Ann Sonders of Charles Schwab,
The initiation of rate hikes removes the uncertainty around the start date obviously; but does not remove the uncertainty around the path of rate hikes from here. We believe this will remain a focus by investors in 2016; and is likely to contribute to some of the volatility we believe will persist across the equity and fixed income markets.
Mission Accomplished
by Peter Schiff of Euro Pacific Capital,
The new rounds of rate cutting and Quantitative Easing that the Fed will have to unleash will echo the military "surge" in Iraq in 2007. Those fresh troops were needed to roll back the chaos that the Administration had ignored for so long. But just as that surge only bought us a few years of relative calm, look for the gains brought about by our next monetary surge to be even more transitory. That is a development for which virtually no one on Wall Street is preparing.
Global Economic Overview: November 2015
by Team of Thomas White International,
The upward revision in third quarter U.S. economic growth and buoyant consumer sentiment supports a more stable global economic outlook for the next few quarters. Consumer optimism also remains healthy in Europe, though the Euro-zone economy expanded less than expected during the third quarter. The Japanese economy declined during the July-September period, according to initial estimates, but the data could be revised higher as capital investments for the period were greater than initially calculated.
Performance Measurement: Danger of Point-in-Time Analysis
by Charles Batchelor of Cleary Gull,
I hear it on TV, I see it in ads and I get the sales pitch. “Fund XYZ is a 5-star fund according to Morningstar,” or “Fund XYZ is in the top quartile of its peer group for the trailing one- and three years.” It sounds impressive. But, should we listen? No, not really. Should you invest in a fund based on this data? Definitely, not. Looking at these statements through a critical lens, they’re little more than a means to pique investor interest in a product…
Lift Off!
With all systems set on “GO,” the broadly-advertised and widely-anticipated lift off by the Federal Reserve from the zero-bound Fed funds rate is expected to take place this Wednesday, December 16. One would hope that the fate of the tragic Danish prince does not befall what comes afterwards. As a skeptic of unconventional monetary policies, we look at the impending action and potential consequences with trepidation.
The 2016 Geopolitical Outlook
As is our custom, we close out the current year with our outlook for the next one. This report is less a series of predictions as it is a list of potential geopolitical issues that we believe will dominate the international landscape in the upcoming year. It is not designed to be exhaustive; instead, it focuses on the “big picture” conditions that we believe will affect policy and markets going forward. They are listed in order of importance: the Election Transition, Western Populism, Small-Scale Islamic Terrorism, the Weakening of the European Union, and Trouble in the South China Sea.
What to Expect When You're Expecting Uncertainty
by Scott Brown of Raymond James,
Last week, we looked at the Fed’s various policy tools and how the central bank will use them. This week, let’s examine the implications of a Fed rate hike. While a rate increase should be largely factored into the markets by now, the global reaction may be the largest concern for Fed officials.
Dear Ms. Yellen, I Don’t Care What You Do
by Andy Martin,
Rising interest rates are nothing to fear. Total returns will be positive, not negative, if we have a similar rate trajectory that we had in the last bear market in bonds. Bonds should continue to be a staple in investors’ portfolios – and in greater, not lesser percentages as our population ages and interest rates increase.
How to Diversify into International Growth Cycles
When it comes to portfolio diversification, the dialogue tends to focus on the domestic side of investing, from market-cap size to stocks versus bonds. What’s often missed is the need to think regionally. In this blog post, we’ll discuss the importance of positioning your portfolio to capture overseas opportunities, through international diversification strategy. We’ll also highlight three types of companies that position themselves to capitalize on improving business climates.
The Slippery Welcome Mat for Rising Rates,
The commencement of a policy-rate-hike cycle by the US Federal Reserve has both symbolic and material significance for the US economy and financial system. Gradually unwinding unconventional, ultra-accommodative monetary policies sets in motion the repricing of assets and other long-delayed adjustments in economic, financial and currency markets. Comparing economic and financial outcomes with prior rate-hike cycles provides clues as to the possible outcomes this time around, but they have little predictive power.
Results 7,401–7,450
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