The Tweedy, Browne Global Value Fund (TBGVX) has an exceptional track record, outperforming its benchmark and peer-group average by over 300 basis points annually since its inception 25 years ago. I interviewed the members of Tweedy, Browne’s investment committee.
I want to tackle a more evergreen topic, which is the implications on the economy of a high and ever-rising burden of debt. But I want to first differentiate between the deficit and debt.
This paper discusses Smith Capital Investor’s 2019 outlook on interest rates, with a focus on likely volatility in 2019 and the implications of stocks and bonds moving in tandem.
What investors should expect from upcoming elections in Thailand, Indonesia, India and the Philippines.
I was traveling last week seeing portfolio managers and doing gigs for our financial advisors and their clients. I have been doing such events for much of the past six months. The recurring question from clients is, “What about the national debt?”
Quick review of what drove equity markets in Q4 2018, why it was all noise and then a discussion on where equity investors should focus their thinking as it relates to future equity market performance.
A couple of weeks ago, I introduced you to an exciting new company called GoldSpot Discoveries,conceived and headed by mining visionary Denis Laviolette. GoldSpot is the world’s first exploration company to use artificial intelligence (AI) and machine learning in the discovery process for precious metals and other natural resources.
We have a light economic calendar and a short week. We’ll get earnings reports from another 10% of S&P 500 companies. With plenty of time and little fresh information, I expect plenty of pure speculation about the state of the market.
Is there a path upward for markets this year? Much has been made in the news recently about the possible onset of the next recession—and rightfully so, in our opinion, as we believe the next economic downturn is a matter of when, not if.
While EM has lagged overall in 2018, some EM factors did outperform.
This week Morgan Stanley projected a 14 percent upside for copper in 2019, based on a widening supply deficit and the surge in global demand for renewable energy and electric vehicles, both of which require tons of the red metal.
We have a normal economic calendar, and 1/3 of S&P 500 companies have not yet reported Q418 earnings. Corporate earnings are not confirming those who thought the market was signaling a recession. Both the economy and earnings remain in the background. Daily market moves, even small ones, and the often-erroneous explanations dominate the financial news.
In the next few weeks, economic reports that were delayed due to the partial government shutdown will continue to trickle in, helping to piece together the fourth quarter picture. That’s fine but investors are more interested in the future.
“Some people call it ‘peak gold,’ but I tend to think of it more as ‘peak discovery.’” Meet the brains behind Goldspot Discoveries, a first-of-its-kind quant shop that aims to use AI to revolutionize the mineral exploration business.
The Economics team explores a smooth economic slowdown, elevated consumer confidence, and troubles in Italy.
Robert Nelson, a portfolio manager with Franklin Templeton Fixed Income Group, believes emerging market corporate debt presents a compelling but under-appreciated investment story. Here he sets out three reasons why investors might consider an allocation to the asset class.
If you haven’t heard about Modern Monetary Theory, or “MMT” for short, by now, you will soon. It is highly likely that MMT will be increasingly touted by economists and politicians from both sides of the aisle, as the economic prescription, even panacea, to cure our economic ills.
The U.S. economy is finding its rhythm after an uncertain start to the year.
Following a painful and broad fourth quarter selloff, risk assets rebounded in the first weeks of 2019 as optimism has grown about Fed accommodation, earnings, China stimulus and an eventual trade dispute resolution. However, investors should be prepared for choppy markets, especially through the first half of the year.
This paper discusses Smith Capital Investor’s 2019 outlook, with an examination of the key themes they expect to drive markets. Among these are continued volatility, interest rates, the Fed, credit, credit and rate curves, CEO/CFO and board behaviors, political developments, and active vs. passive management in fixed income specifically.
Last week, the Federal Reserve issued policy statements intended to telegraph a shift toward easier, or at least more patient monetary policy. Though Wall Street interpreted this shift as a major about-face in the Fed’s policy stance, the most significant shift in Fed Chair Jerome Powell’s statements actually occurred on November 28.
We are skeptical Canada can shift its growth model, and our investment outlook for Canada is cautious as a result.
Since the financial crisis, there has been much commentary written about the low forward returns on stocks over the subsequent 10-year period from high valuation levels. The chart below shows the forward 10-year returns from previously valuation levels.
It’s difficult to get good footing in a market that has so many mixed messages bombarding it. We recommend patience, discipline and diversification as expect continued bouts of volatility. The U.S. government shutdown is over, for now…and the Fed is in pause mode, for now…but confidence in government is low and monetary policy is likely to persist. In the near term we believe the most important needle-mover will be the result of trade negotiations between the United States and China. The problem is the inability to gauge the likely outcome.
The purpose of this memo is to describe what happens when political behavior collides with economic reality, as illustrated in one area where the government is taking steps – tariffs – and another in which debate among politicians is heating up – restrictions on the capitalist system.
Municipal bond investors like their muni portfolios to play the role of Old Faithful in their overall asset allocation, providing safety and income. But that doesn’t mean that the investment environment is reliably the same. How can muni investors stay on track in 2019? They can adhere to these three strategies.
During an economic slowdown, the government often employs fiscal stimulus to “prime the pump.” In such cases a burst in aggregate demand boosts income, which adds to consumer spending, which adds to income, and so on. This process can work in reverse.
The longest-ever US government shutdown has finally ended—at least temporarily—while negotiations continue over funding of a US-Mexico border wall. While the government will be reopened at least until February 15, the economic implications of the shutdown and the potential for more disruption ahead has become a source of concern to many global investors.
Global airlines are expected to log their 10th straight year of profitability—an industry first. And with incomes expanding worldwide, air travel demand is projected to outpace economic growth for the next couple of decades.
Central banks face a difficult year. Eurozone economies are slowing. And the U.S. government shutdown can’t be ignored.
The process of creating The Ten Surprises begins in the summer when I organize four lunches in the Hamptons for serious investors. About 100 people attend including hedge fund managers, private equity titans and even some academics. One of the benefits of this is that it gives me some clarity on where the consensus is, and that is essential before the Surprises can be determined.
For investors, the year began in fear. The global economic slowdown, the yield curve, Fed policy, trade policy, and the partial government shutdown generated risk. Last week, the news was mixed. There is no sign that the budget stalemate in Washington will end soon. There were renewed reports that President Trump is considering imposing tariffs on all imported motor vehicles.
In recent days, we’ve heard a number of analysts gushing that the S&P 500 is vastly cheaper than it was only a few months ago. It’s worth noting that they’re actually referring to an index that is now less than 10% below the steepest speculative extreme in history.
Diesel engines have found themselves in the crosshairs lately, with a number of European cities banning them outright. One of the beneficiaries of this policy has been palladium, used mostly in the production of pollution-scrubbing catalytic converters.
Stocks have rebounded off the lows but we don’t think we’re off to the races; issues remain and investors should remain vigilant.
It appears the “Powell Put” has been exercised as the Fed chief declares no “pre-set” course on rates and no “hesitation” to change its balance sheet runoff. But does the economy still need Fed accommodation, or do markets just want it?
In the last couple of years, Nobel Laureate Robert Shiller has championed the idea of economic narratives. Economic data describe “the fundamentals,” but stories are often the key drivers of activity. Investors are currently faced with two competing narratives.
As expected, Theresa May and her government survived the no-confidence vote called by the opposition Labour Party after the UK Parliament overwhelmingly rejected her withdrawal deal. Now UK political attention must turn back to the real job at hand—navigating the United Kingdom’s exit from the European Union.
In Part I, we discussed the issues surrounding predicting inflection points, defined as reversals of long-term trends. This week, we examine two long-term trends that we believe are approaching inflection points and offer guideposts that we think will signal further progress toward inflection.
2018 will be broadly remembered as a year when nothing worked and daily stock market volatility spiked. This contrasted with 2017 where seemingly everything pushed higher, and volatility was low. But in 2018, nearly every single asset class and all but one major stock market index (Brazil) around the globe posted negative returns.
The quip, “if you aren’t confused, you aren’t paying attention” needs to be replaced: “with the Fed confused, you better pay attention.” You may want to buckle up. Let me explain.
It is a light economic calendar without any of the most important reports. The government shutdown will command increasing attention as long as it continues. Finally, there is some real competition in financial news – the start of earnings season.
Despite representing about one-eighth of global equity market capitalization, and despite the attractive valuations and growth prospects, the vast majority of U.S. investors have portfolios that dramatically underweight emerging market stocks. Here’s why that is a costly mistake.
Goldman Sachs is bullish on commodities and gold, recommending an overweight position for both. The investment bank also raised its 12-month price forecast for gold up to $1,425 an ounce, a level last seen in August 2013.
Markets struggle to price new risks, and the U.S. government shutdown grows in severity.
Americans like to think we are insulated from the world. We have big oceans on either side of us. Geopolitically, they serve as buffers. But economically they connect us to other important markets that are critical to many US businesses. Problems in those markets are ultimately problems for the US, too.
The past year was a rough ride for bond investors. Will 2019 deliver more of the same?
Jeffrey Gundlach said that 2019 will mark the start of a period when bond markets must reckon with the rising federal deficit. In his most passionate comments ever on this topic, he said the exploding national debt and liabilities involving pension funds, state and local government governments and Social Security have reached a stage that is “totally unthinkable.”
History seems to move in broad cycles. Beliefs come into and fall out of favor. Despite evidence of these cycles, people tend to assume trends that are in place will remain in place forever, and it can come as a shock to society when trends shift.
The “bucket approach” to retirement planning has been routinely adopted by financial planners, ever since it was popularized by Harold Evensky. Clients keep several years of assets in safe, liquid investments, while investing the rest of their portfolio more aggressively. But new research shows that this approach actually destroys a portion of clients’ wealth.
