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Can Retirees Still Use a 4% Withdrawal Rate? Practical Applications of Monte Carlo Analysis
Some advisors remain critical of Monte Carlo simulations, instead preferring to use analysis based on rolling historical periods or specific pre-defined scenarios. We believe Monte Carlo is a superior tool for measuring the uncertainties in long-term financial planning. As an example, we use it to predict the likelihood of a successful 4% withdrawal rate under today's market conditions.
Late, Not Lost: The Economic Drag From the Millennial Generation
We believe concerns of a student debt "bubble" and perpetual financial weakness among Millennials are largely overstated. Understanding Millennials' financial trajectory is critical to our secular (3-5 year) outlook for home prices and the broader economy. We expect Millennials' financial position to improve, and pent-up demand could result in longer-term strength in housing and housing-related assets.
Growth
by John Mauldin of Mauldin Economics,
This week I will respond to the second part of David Brins letter. Please note that David and I characterize our conversations as joyous deliberations, excited parry and thrust in the realm of ideas. I especially appreciate David because he forces me to think about many of my casual assumptions, although in a battle of wits with David I often feel as if Im bringing a knife to a gunfight. (Every writer needs a few David Brins in his life. Sometimes I think I have more than my share.)
Abenomics, European Style
by Nouriel Roubini of Project Syndicate,
Two years ago, Shinzo Abes election as Japans prime minister led to the advent of Abenomics, a three-part plan to rescue the economy from a treadmill of stagnation and deflation. It now appears that the European Central Bank has a similar plan in store for the eurozone.
Lucara Diamond Stock Sparkles, Reports Another Strong Quarter
Often it seems that gold gets all the fun when I write and speak about precious metals and minerals. But Vancouver-based Lucara Diamond has been turning heads here at U.S. Global Investors lately for a number of reasons, the most notable being that it continues to report stellar returns.
Market Internals—Breadth Weakness Troubling But Not Dire
by Doug Ramsey of The Leuthold Group,
Last month we argued "stock market participation is too broad for an imminent cyclical top to form," and we're not retreating from that statement. But interim market tops of varying degrees of importance can form with little or no warning. We've characterized stock market action alternately as uniform or in gear throughout most of 2014, but it's clear that market participation has not been nearly as "egalitarian" as it was throughout 2013. We've marveled at how well measures of market breadth were able to shrug off Small Caps' dramatic relative strength breakdown.
Gold: Keeping Calm And Carrying On
by Ade Odunsi of AdvisorShares,
We continue from last weeks discussion on the role of interest rates in the gold market by looking at trends in the cost of carry of gold as priced in dollars, euro, yen and pounds. By way of a brief primer we define the cost of carry of gold in dollars as the London Bullion Markets Association 3 month Gold Forward Offered Rate (GOFO). GOFO is published every day by the LBMA and is calculated as US dollar Libor minus the gold lease rate.
The Demise of Active Management is Greatly Exaggerated
Financial advisors and registered investment advisors feel severe pressure to throw in the towel on manager selection methodologies and accept index returns. Yet, many of these stories forget one central concept: indexes are actually inexpensive actively-managed portfolios. Every actively managed fund is an index itself.
The Power and Limitations of Monte Carlo Simulations
Explaining the past is much easier than predicting the future. This uncertainty raises a significant number of issues when creating a financial plan for a client. Monte Carlo simulations will illuminate the nature of that uncertainty, but only if advisors understand how it should be applied - and its limitations.
Event Driven Managers Encounter a Short-Term Hiccup
After a period of very strong deal activity during the first half of 2014, traders and investors were hit with arbageddon in early August. Arbageddon struck after a series of large deals fell apart, sparking concern that the pickup in activity from earlier in the year was coming to an abrupt halt. Activity since that time would suggest otherwise, and it appears that the M&A train is back on course.
Global Economic Overview: July 2014
by Team of Thomas White International,
Recent economic data from the developed world have shown divergent trends while growth in the emerging economies appears to be stabilizing. The U.S. economy expanded at a faster than expected pace during the second quarter, more than offsetting the first quarter decline, which revised estimates show was not as severe as thought earlier.
How Do You Anticipate the Unexpected?
It always seems to begin the same. A News Flash scrolls across the lower portion of our TV screens. Or the music trumpets a change is coming on the radio. (For those always plugged in on their phones or iPods, though, I have no idea how they learn about anything!)
Touring the Investment Landscape in the Czech Republic
My team and I have been touring Central and Eastern Europe this summer, and our travels recently took us to the Czech Republic. Its a country with an interesting history, and from our perspective, it also holds a variety of interesting potential investment opportunities, too.
Lucid Dreaming!
by Jeffrey Saut of Raymond James,
Evidentially, the lucid dreamers on Wall Street practiced their skills two weeks ago as professional traders were sneaking large buy orders into the equity markets on the closing bell. Simultaneously, the Commitment of Traders Report showed those same traders were dramatically reducing their short sale bets.
Skittishness
Stocks suffered some of their bigger daily and weekly declines of the year recently with geopolitical and Fed concerns the likely culprits. We dont believe this was the start of a sustainable downtrend, although there could be further selling to come in the near-term. The U.S. economy appears to be strengthening, leaving us optimistic on the longer-term outlook for stocks. Likewise, worries over the Fed and the timing of the first rate hike have increased, but the initial stages of a tightening cycle tend to be positive for equities.
Americas: Regional Economic Review - Q2 2014
by Team of Thomas White International,
Economic trends from the region during the second quarter were in line with earlier periods, as the developed economies in North America are seeing healthier growth while most of the emerging economies in Latin America are facing a slowdown.
What's Your Exit?
by Axel Merk of Merk Investments,
Are you prepared for an Exit? If the Fed pursues an exit from ultra low interest rate policy, are you be prepared for an exit from the stock market should things turn South? We discuss how investors prepare, noting the most common mistakes investors make along the way.
A Peak at Yellen’s Labor Market Dashboard Highlights Fed Concerns
by Rick Harper of WisdomTree, Inc.,
In this piece, we attempt to re-create the labor market dashboard and assess the progress the economy has made post-financial crisis. While many indicators suggest a full recovery (or at least substantial progress), a few indicators hint at little progress from crisis lows.
Gold – Keeping it Real
by Ade Odunsi of AdvisorShares,
One of our favorite measures to monitor in relation to the gold market has been the relationship between the gold price expressed in US dollars and the US 10 year real yield with the real yield being the nominal yield on a government bond adjusted for inflation expectations. Over the long term studies have shown that gold has a much stronger relationship with real interest rates versus nominal interest rates.
European Bank Stocks: Time to Buy, or Bail?
In recent months, European banks have been under increased regulatory scrutiny, meeting the ire of regulators (in the United States in particular) for a range of alleged improprieties, resulting in sizable financial penalties. Throw in a bailout-inducing crisis at Portugals Esprito Santo bank, and its perhaps no surprise that share prices of many bank stocks in Europe have languished this year. These developments have provided investors with a stark reminder of the risks associated with investing in the banking sector.
Australia’s Terms of Trade: Implications For Credit Investors
by Tracy Chin, Aaditya Thakur of PIMCO,
Australia is contending with a multi-year decline in the terms of trade and a rebalancing toward the non-mining sectors of the economy. For companies, the macroeconomic consequences of a downswing in the terms of trade provide both challenges and benefits. For investors, it is important to find companies that have a clear, demonstrated understanding of the macro environment and can navigate the headwinds through operational efficiencies, cost control, market positioning and balance sheet management.
Tug of War Continues Between Fundamentals and Geopolitics
Important progress in the global recovery, U.S. labor market and corporate earnings has been masked by geopolitical tensions. The conflict involving Russia could have a significant impact on the eurozone and global growth. Market volatility is likely to increase in the short term, causing headwinds for risk assets.
7 Phrases Investment Professionals Should Never Say
Robert Isbitts posted: "As a big Robin Williams fan, this was a tough week. Ironically, before this comedic genius's shocking death on Monday, my team and I planned for this week's blog to be a parody of the work of another comedian taken from us too soon, George Carlin.
The Unfortunate Truth About the Bond Market?
During the past four years, we investors have been inundated by financial commentators, strategists, economists and equity gurus prognosticating the coming collapse of the bond market. I can say with confidence that they have been woefully wrong during this period I can also say with confidence that if they keep saying it, they will eventual get it right. These negative views on interest rates gained momentum in August of 2010 when Jeremy Siegel and Jeremy Schwartz authored, The Bond Bubble and the Case for Equities.
Managing Expectations - Part III
In the first of this three-part series on managing expectations, I discussed the role cycles play in the investment management process. At U.S. Global Investors, we actively monitor both short- and long-term cycles, from the annual seasonality of gold to four-year presidential elections, in order to manage expectations based on historical patterns.
What Middle East Tensions Mean for Oil Prices & Equity Portfolios
by Russ Koesterich of BlackRock,
With turmoil in the Middle East dominating headlines, many investors are wondering what the recent and growing unrest in the region means for oil prices and for equity portfolios. Russ explains why oil prices are likely to remain elevated for the foreseeable future and why theres a strong case for sticking with energy stocks even if oil prices dont spike.
Neighborhood Bully - America Recklessly Throws its Weight Around
by Peter Schiff of Euro Pacific Capital,
On June 30, U.S. authorities announced a stunning $9 billion fine on French bank BNP Paribas for violations of financial sanctions laws that the United States had imposed on Iran, Sudan and Cuba. In essence, BNP had surreptitiously conducted business with countries that the United States had sought to isolate diplomatically (sometimes unilaterally in the case of Cuba).
A New York State of Mind
by Jeffrey Saut of Raymond James,
I met Arthur, as well as a host of other friends, last Thursday afternoon during my NYC sojourn to see institutional accounts and do media events. Over a scotch, he related the aforementioned story to me. The timing was propitious because another one of our friends had just telephoned to tell us the President was authorizing air strikes against ISIS. After a dinner at Mr. Chows, I went back to my hotel to find the preopening S&P 500 futures printing down roughly 11 points.
Banking on Banks
by Bradford Evans of Heartland Advisors,
Banks have not fully participated in market advances, but we believe they stand to benefit from growth in loan demand, rising short rates, or both. Opportunity for earnings growth and multiple expansion offer something you can take to the bank. It's a compelling space with attractive valuations, especially at the regional level, and merits a closer look.
Flexible Income Strategies - Avoiding Side Effects from the Fed’s Medicine
by Dave King of Columbia Management,
The U.S. economy went into recession in 2008, and it looked serious. As our fiscal deficit piled up, the political appetite for high government spending waned, leaving monetary policy as the primary available weapon to prevent recession from becoming depression. By mid-2011, Treasury bond yields had reached all-time lows. This strong monetary medicine now seems to be working. Many economic statistics have rebounded to peak levels, while some forward-looking ones, like major stock market indices, have hit new highs.
Middle East/Africa: Regional Economic Review - Q3 2014
by Team of Thomas White International,
With a geopolitical setback and a positive market development, the Middle East had a mixed second quarter. Amid the civil war in Syria, another conflict erupted in the region during the quarter as a militant group started systematically seizing territory from Iraqi security forces.
Developed Asia Pacific: Regional Economic Review - Q2 2014
by Team of Thomas White International,
During the first half of 2014, developed Asia Pacific economies faced challenges arising from lukewarm consumption and meek trade growth. Most countries in the region tried boosting their economies with a mix of infrastructure spending and loose monetary policies. Countries that had their trade skewed to China, Asias largest economy, faced prospects of slowing trade.
Lessons from Steve Jobs on Delivering a Brand Experience
by Kevin Marsh,
Apple has little in common with the advisory business. But financial advisors, whose clients depend on them for sound investment management and financial-planning advice, can learn lessons from the tech giant when it comes to delivering a unique brand experience.
Dynamic and Durable Growth Part 3: The Mobile Data Tsunami
by Ido Cohen of Invesco Blog,
This is the third in a four-part series examining dynamic and durable growth themes that affect the US economy and present opportunities for investors. The first post explored the biotech revolution, and the second looked at the enormous implications of shale energy. The final post will examine the coming mobile advertising boom.
Transformation or Bust, Part 2
by John Mauldin of Mauldin Economics,
Envisioning a clear path through the issues from where we are today is not easy, though China certainly has more options than the world had with subprime by the middle of 2008, when there was so much toxic waste on the balance sheets of banks all over the world and there was no turning back. As we have emphasized in the past and will do today, China does have options. But each of the options has costs associated with it, and those costs are going up every day. Who pays and when is the simple question that most readers want to have answered, but therein lies the conundrum.
Managing Expectations
Financial markets are influenced by relatively predictable cycles, a lesson we at U.S. Global Investors rely on to help us manage expectations and be effective stewards of your money. This is a theme I've frequently written about and discussed in investor presentations, one of which, Anticipate Before You Participate, is a classic that I often use to remind investors of these timeless principles.
Summer Void
Although Wall Street and other corners of the business and political world may empty over the next few weeks, risks of a pullback in U.S. equities have gone up. Although we believe it would represent a buying opportunity and are optimistic longer term due to improving economic growth, nervous investors may want to consider a hedging strategy. China's stock market performance has improved and we remain positive, while European economic data has been more concerning, although the stocks still look attractively valued in our view.
Results 8,551–8,600
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