Select short-term government bond funds offer minimal risk and some income as higher-risk assets get frothy and tail risks loom.
As many of you know, we have been on holiday in South Africa for the past three weeks. The trip began with a long plane ride to Cape Town where we were gathered up and taken to the five star rated Ellerman House (Ellerman).
Prices of American depositary receipts reflect both a foreign firm’s locally traded share price and the exchange rate movements of its home country’s currency against the dollar.
I'm often asked how I invest my own money and often imbedded in the question is whether I prefer active or passive investing strategies. My answer is always both, and at Schwab we generally believe investors can benefit from traditional active management; e.g. mutual funds; alongside newer passive vehicles; e.g. exchange-traded funds (ETFs).
I have written before how fantasy football is one of my favorite hobbies. For an analytical, data-obsessed sports fan like myself, it doesn’t really get any better than diving into statistics to try to draft a team of players that will beat my friends and win the trophy at the end of the season (and yes, we do have a real trophy).
I hope investors have taken steps to prepare for some potentially disruptive economic storms, including this weekend’s central bank symposium in Jackson Hole, Wyoming, and the possibility of a contentious battle in Congress next month over the budget and debt ceiling.
The development of a personal trading or investing philosophy is usually an evolutionary and highly personal process. Through a combination of experience, trial-and-error, and the attainment of knowledge, successful market participants hone their skills until they find a strategy that works for them and that is consistent with their general mindset.
UFC and mixed martial arts (MMA) have seen their popularity grow in recent years from relative obscurity, banned in many states, to the mainstream. Does the current fight represent a view of the future (e.g. the NFL and the upstart AFL) or a novelty (e.g. the XFL)? The fight highlights the topic of convergence and its current poignancy, from boxing to politics to investments.
The difficulty advisors face when trying to persuade clients to abandon their long-trusted way of investing is rooted in a well-known psychological bias. Understanding this bias is the key to gaining more assets.
A new study reveals how large registered investment advisors (RIAs) select actively managed U.S. equity mutual funds. Among its key findings were that advisors are relatively insensitive to expense ratios on those funds – and that most fund companies should not be pressured to reduce fees. The study also found that wholesalers have little influence getting advisors to select their funds.
REITs are vulnerable to an increase in interest rates or an economic contraction. If you have been thinking of increasing your allocation to REITs to generate more cash flow, this new research – and current valuations – should serve as a cautionary warning.
Geopolitics is shaking global markets, with the epicenter of the latest tremors coming from the Korean Peninsula. Fiery rhetoric out of Pyongyang is nothing new. But it is certainly novel coming from the Oval Office.
Since the infamous “dot com” meltdown nearly two decades ago, people have tended to question any sort of extended run-up in technology-sector stocks.
I often hear criticisms about the use of bond ladders. Whenever the criticism comes from professional advisors, however, I’ve noticed it generally involves firms that use only bond mutual funds or ETFs instead of individual, tailored bond portfolios, whether in the form of a bond ladder or not. Unfortunately, much – if not all – of this criticism is based on falsehoods and the conflicts that can arise when advisors employ only mutual funds and ETFs.
I think most of you reading this right now are aware that gold is unlike any other metal, certainly any other element. It doesn’t play by the same rules as iron or tin or aluminum, and its value has nothing to do with its utility—or lack thereof.
We’ve heard Warren Buffett continue to repeat an important phrase, “what the wise man does in the beginning, the fool does in the end.” This begs the question, when does a foregone conclusion become what we call “a well-known fact”?
Right now, we don’t know if we can put this North Korea news in the same category of past market shocks, but looking back at history, major market collapses generally occur because of economic and financial deterioration, not geopolitics.
Stocks of some innovative companies with differentiated business models may be unfairly punished along with those genuinely vulnerable to Amazon’s disruption.
Dalio’s not the only one recommending gold right now. Speaking to CNBC this week, commodities expert Dennis Gartman, editor and publisher of the widely-read Gartman Letter, said that he believed “gold is about to break out on the upside strongly” in response to geopolitical risks and inflationary pressures. Gartman thinks investors should have between 10 and 15 percent of their portfolio in gold.
“Smart Beta” ETFs and their low-volatility ETF progeny may deliver a lower beta against their relevant benchmarks, but they’re not immune to bouts of volatility, and their returns frequently come up short.
This paper seeks to understand if a value investing approach could be viable in emerging markets and identifies the specific drivers of value in these markets.
Ladies and gentlemen, investing is a lot like whaling. Investors are constantly searching for that whale of a stock with the “right stuff” . . . aka the “ambergris factor.” Indeed, there have been many such “whales” on the Street of Dreams since the Royal Bank of Scotland’s “sell everything” advice at the January/February of 2016 stock market lows.
In our last quarterly letter, we discussed seven transactions from early 2017: two buys and five sells. We also provided an update on our then largest position, Express Scripts. There was zero analysis of the economy, asset classes, and central banks. We have been relatively quiet on the transaction front since then.
Robust portfolios that have the greatest probability of performing across various macro outcomes can effectively mitigate and navigate the unpredictable twists and turns of dynamic markets and economies.
One hour after beginning a new job which involved moving a pile of bricks from the top of a two story house to the ground, a construction worker in Peterborough, Ontario suffered an accident which hospitalized him. He was instructed by his employer to fill out an accident report.
I’m in the process of writing another book, going into great depth regarding one of the most important things discussed in my book The Most Important Thing: cycles, their causes, and what to do about them. It will be out next year, but this memo will give you a preview regarding one of the most important cyclical phenomena.
Psychologists have uncovered a surprising number of idiosyncrasies from making the soundest choice in many situations. These lapses explain some of the mysterious up and downdrafts that can lift and lower stock prices. Understanding them can make successful investing easier. The most important findings arise from answers to a pair of questions.
The divergence this year in the performance of the emerging markets stock index and commodities prices reflects improved earnings quality and valuations of developing country stocks, not to mention big changes at the top of the index.
Today I want to discuss reports that global debt levels are at all-time highs, and what this means for your investment decisions going forward.
Low Treasury yields and high equity prices aren’t necessarily contradictory. Both suggest expectations of continued unexciting growth, low inflation and a steady Fed. What could go wrong?
In Tuesday’s post, “A Shot Across The Bow,” I discussed the recent “Tech Wreck” and the warning sign that was delivered when trading algorithms begin to run in the same direction.
I asked the readers of my Inside Information service, members of the Advisor Perspectives community, and others, to tell me how they were charging their clients, and how much. The most interesting conclusions related to a key question that has arisen from the DOL Rule: what is a “reasonable” AUM fee to charge clients?
It’s been awhile since we’ve weighed in on the active/passive debate so we thought we’d toss our hat in the ring yet again and try to explain the asset migration that is taking the fund management industry by storm.
K2 Advisors seeks to add value through active portfolio management, tactical allocation and diversification across four main hedge strategies: long short equity, relative value, global macro and event driven.
We first published this in 2014, but decided to republish it today given the cover story of Barron’s that reads “The Machine Driven Market,” which intuitively means the era of those machine driven models is nigh. I like this story.
Bank loan products are often seen as a nice alternative to high yield in a rising interest rate environment, but the conventional wisdom about their interest rate protection and security needs a credit check.
Keeping portfolio construction simple improves performance no matter what type of investment process you use. Our industry is in love with complexity, but complexity is costly to clients.
Leveraged funds may seem like a good idea – if we expect the S&P 500 to be positive, for instance, then getting four times its return seems even better – but long-term investors (and there shouldn’t be any other kind) should be skeptical.
With $504 billion flowing into passively managed products and $316 billion fleeing actively managed mutual funds in 2016 in the U.S., the active-versus-passive debate appears to be tipping in favor of passive management.
In my many conversations with investors and industry peers about factor investing, one topic seems to always come up: factor investing timing. I’ve had recent discussions on this topic with a central bank whose managers need to think about preserving capital and with a more nimble RIA team which explicitly wants to use timing to pursue incremental returns.
As outflows hit U.S.-focused equity mutual funds, international and emerging market stock funds are seeing massive inflows, bolstering strong share price performance of overseas markets this year. Despite the investor rush abroad, plenty of upside could remain.
With the euro up another 50bps today against the USD, we thought it timely to review some fundamental factors that should act to support the longer-term trend higher in the euro.
The purpose of this focus group is to gather advisors’ observations on actively managed US equity funds. This focus group will take place as a private APViewpoint conversation.
Advisors who are not part of the focus group will not be able to view this conversation, and advisors who are part of the focus group will not see the responses of the other participants.
If you are selected to participate in this focus group, you will be required to thoughtfully answer a series of questions, at your convenience, over a seven-day period. It will take approximately an hour to answer the questions. At the completion of the seven-day period, Advisor Perspectives will pay you $100, either to your PayPal account or as an Amazon gift card (your choice). Alternatively, you may designate that the $100 be donated to one of four charities: the American Red Cross, the USO, the Foundation for Financial Planning or the Jimmy Fund (a cancer-research organization).
To participate in this focus group, you must meet the following criteria:
MSCI has taken a cautious approach to A share inclusion that encourages China to increase foreign investor access and ultimately ability to redeem and repatriate funds in exchange for greater future index weightings. It’s a sensible plan.
Underfunded pension plans grab the headlines. But that’s not what drives prices in the municipal bond market, according to Tom Doe. It’s the interplay between supply and demand – and right now yields are depressed due to a shortage of high-quality bonds.
In a nod to comedian Jeff Foxworthy’s signature “You might be a redneck” shtick, the following parody offers real-life examples of why, contrary to popular perception, talented, experienced financial advisors have absolutely nothing to fear from the invading robot army:
Portfolio Manager Chuck Royce discusses why financials continue to play an important role in his portfolios.
Fed hikes rates again, even as inflation falls further from target and financial conditions continue to ease. Smooth sailing ahead? Beware the leverage risks building below the surface.
