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International Equities: Another Turn of the Wheel
by David Ruff of Forward Investing,
It’s a truism that markets move in cycles and that the ideal time to invest is right at or near the start of an upswing. Diversification is another key tenet of Investing 101. Yet inertia and the pull of the crowd often lead investors to concentrate assets in markets that may be nearing their peak while ignoring potentially more promising opportunities.
Crystal Balls, Likely Outcomes and Portfolio Planning
by Robert Holton of Cleary Gull,
In presentations to fellow professionals, we often make self-deprecating comments similar to this – “And then later we’ll tell you exactly when the Fed will raise interest rates. We’ll just grab our crystal ball and take a look.” That simple joke, variations of which are repeated over and over among financial professionals, draws on fairly deep-seated anxiety about the predictability of financial markets.
Should Investors Unload Their Mortgage REITs?
by Keith Jurow,
Lured by irresistible double-digit yields in 2012 and early 2013, investors dived into mortgage REITs with abandon. Having discussed the serious risks of equity REITs in my previous article, now is a good time to examine whether mortgage REITs pose similar risks for the unwary.
A Sense of an Ending
Having turned the corner on my 70th year, like prize winning author Julian Barnes, I have a sense of an ending. Death frightens me and causes what Barnes calls great unrest, but for me it is not death but the dying that does so. After all, we each fade into unconsciousness every night, do we not?
Show Me the Stocks, Not the Cash, Say Optimistic CEOs
In early March, I made the case that there’s no greater vote of confidence in a company’s growth prospects than when its top officers put some skin in the game and buy their own company stock. Among the examples I used were Warren Buffett, who owns millions of shares in Berkshire Hathaway; Elon Musk, who purchased over $100 million worth of Tesla stock in 2013; and myself, the largest shareholder of U.S. Global Investors. Another example of how bullish an executive is on his own company is when he chooses to forego a base salary entirely and instead be compensated in company stock.
Greece: Stuck in the Middle
Opinion polls show that many Greek voters support Athens's tough negotiation tactics. But the polls also show that most Greeks want their country to remain in the eurozone—but to do so would require agreeing with the zone's austerity demands. I think this would be the definition of a pickle.
Analysts Love to Talk about China but Should Focus on South Korea
by Jeremy Schwartz of WisdomTree, Inc.,
This week Professor Siegel and Jeremy Schwartz chatted with Jeff Weniger, Investment Strategist at BMO Global Asset Management. We spoke at length about the impact of the U.S. dollar on global markets. I found our conversation about the impact of easy monetary policy on economies such as China and South Korea particularly noteworthy.
China Finally Stops Fighting the Stock Market
by Peter Schiff of Euro Pacific Capital,
Although China's economy has been leading the world in annualized growth since the days that mobile phones had retractable antennas, there have always been some aspects of the country's commercial and financial system that loudly broadcast the underlying illogic of a Communist Party's firm control of burgeoning capitalism. China's stock markets were one such venue where things just didn't add up...literally.
The Case for Not Currency Hedging Foreign Equity Investments: A U.S. Investor’s Perspective
by Catherine LeGraw of GMO,
In a new white paper, Catherine LeGraw of GMO's asset allocation team explains GMO's approach to currency hedging, a topic which has gained relevance as the U.S. dollar has strengthened.
Finding Value in Declining Commodity Prices
So what’s the deal with Chinese equities right now? After all, China’s economic growth for the first quarter of the year cooled to a six-year low of 7 percent. The market surge is mostly attributable to monetary easing and government policy changes such as housing stimulus and modernization of the country’s financial structure. But there’s more at work.
Supply-Side Yellenomics Is (Slowly) Losing Its Grip on Markets
by Tony Crescenzi of PIMCO,
Should investors worry about the possibility that the Federal Reserve might raise interest rates this year? How about the negative economic consequences of the rally in the U.S. dollar? “Hawkish” Fed mistakes?
U.S. and Canada: Continued Recovery With Some Potential for Headwinds
by Ed Devlin, Mike Cudzil of PIMCO,
?Each quarter, PIMCO investment professionals from around the world gather in Newport Beach to discuss the firm’s outlook for the global economy and financial markets. In the following interview, portfolio managers Ed Devlin and Mike Cudzil discuss PIMCO’s cyclical outlook for Canada and the U.S..
Central Bank Dominance
The policies of the central banks are theoretically aligned in that they all have the objective of managing private economies with modern monetary macroeconomic principles. But, all four major economies are in different stages of recovery and disruptions are nearly inevitable. However, a positive view is that central banks are all focused on managing growth and that significant investment opportunities may be available for thoughtful investors and managers.
Well, you know this is a bull market [in government bonds]!
by Team of GaveKal Capital,
Those familiar with "Reminiscences of a Stock Operator" will recall several scenes in which young traders are gathered at a brokerage house exchanging ideas and contemplating every tick on the tape as if marked some monumental episode for owners of the stock. Then one of the young traders would ask a quiet veteran trader, who was sitting in the corner paying little or no attention the topic de jure, what he thought of the recent price action of some issue, to which the veteran would reply, “Well, you know this is a bull market”.
The Not-So-Hidden Risks in REITs
by Keith Jurow,
With most investors confident that equity REITs are a sure bet to continue their upward momentum, now is an excellent time to carefully examine whether this ebullience is justified. Let's see what the conditions in the real-estate market mean for valuations in several of the largest REITs, as well as two of the ETFs that hold them - IYR and VNQ.
Are You Building a Harley Davidson Practice?
Harley Davidson is the only company I know of whose customers permanently tattoo its name on their body. What is it that makes Harley Davidson customers want to show their support in this way? Bad-boy image, reputation, quality products, exceptional service?
On My Radar: Going Forward with Great Purpose!
The Fed tried to talk down the dollar last Wednesday. Essentially firing a warning shot (downgrading estimates for growth, inflation and short-term interest rates). The ultra-low rates in Germany and Japan vs. the U.S. favor the dollar. Anything that points to the Fed raising rates enhances the attractiveness of U.S. bonds and attracts further capital flows.
Living in a Free-Lunch World
by John Mauldin of Mauldin Economics,
I believe the fundamental imbalances we are seeing in the world (highlighted in the two papers mentioned above) are the result of the massive increases in global debt and misunderstandings about the use and consequences of debt. Too much of the wrong kind of debt is going to be the central cause of the next investment crisis.
REITs in a Rising Interest-Rate Environment
Wilson Magee, director of global real estate and infrastructure securities, Franklin Real Asset Advisors®, believes this environment is causing many investors to search for alternative investments that can add an income-oriented asset to their portfolio as well as gain exposure to global economic growth potential. He outlines why he thinks it’s an opportune time for many investors to consider diversifying into global real estate through an actively managed investment vehicle.
Cutting Through the Currency Fog
With the euro sliding deeper against the dollar this week, equity investors have been getting nervous. But why is everyone so surprised when known currency fluctuations derail earnings? In our view, a sharper focus on company exposures can help create a “natural” currency hedge in global equity portfolios.
Strong Jobs Report Hits Fed's Rate-Hike Target Zone
Last Friday’s unemployment report for February was stronger than expected, both in terms of new jobs created and the headline unemployment rate which fell from 5.7% to 5.5%. This sparked growing fears among investors that the Fed will move to raise short-term interest rates sooner rather than later. Stocks fell sharply just after the report.
A Contrarian Case for Brazil
Many investors in Brazil, including us, have been a little frustrated over the past couple of years with its lack of growth and progress. Gross domestic product (GDP) in Brazil grew a mere 0.2% in 2014 (estimated), a far cry from the 7.5% it saw in 2010. However, we believe Brazil has all the elements in place to achieve much higher rates of growth if the political will is there.
President Obama's 2016 Federal Budget Proposal
by Tim Steffen,
Both parties are focused on passing some type of tax reform this year, and in order to do that Republicans will likely have to concede on at least some of the president's wishes. Which of those may survive remains to be seen, but it's now up to the Republicans in Congress to respond with a proposal of their own.
After a Dismal 2014 Business Development Companies Poised to Outperform in the New Year
After a dismal performance in 2014 business development companies are enjoying a reversal of fortune, floating to the top of the leaderboard in the New Year. They’re outpacing their interest-rate sensitive brethren, utilities and REITs, bonds and the S&P 500 alike amid widespread anticipation that the Federal Reserve will lift interest rates mid year. As the stock market grows ever more expensive and profit margins are reaching record highs, the catalysts that should drive outperformance in BDCs grow stronger and stronger considering that most BDCs are trading at single-digit multiples.
Tigers in Africa
This month's Absolute Return Letter is about unrealistic expectations which is something we are all guilty of from time to time. We look at why it is unrealistic to expect equity returns to be in the double digit range over the next several years, why central banks are not printing money like many believe, plus a few other topics.
Hasenstab on Global Growth: Headwinds or Tailwinds?
While some forecasters predict gloomy global growth this year, the contrarian-minded Dr. Michael Hasenstab, chief investment officer, Templeton Global Macro Group (formerly known as Templeton Global Bond Group), has a different view. He aims to counter what he sees as “excessive pessimism” surrounding the global economy and outlines why he believes the recent plunge in oil prices could prove a tailwind, not only for economic growth in the United States, but also in Europe. He also offers his scorecard regarding Japan’s monetary policy experiment dubbed “Abenomics.”
Can Trees Really Grow to the Sky?
by Jeffrey Saut of Raymond James,
I stopped my rental car in the middle of a cluster of giant sequoia trees while driving to one of my speaking engagements in northern California last week. I have always been overwhelmed with these beautiful “beasts” and last week was no exception. As I lay supine at the base of the behemoth the visual fallacy actually made it look like this monster was indeed growing to the sky. The surreal sensation brought to mind the old stock market axiom, “Trees don’t grow to the sky!”
The Devastation Awaiting Residential Mortgage-Backed Securities
by Keith Jurow,
Real estate investment euphoria is widespread. An asset class for which Wall Street has provided little useful information - residential mortgage-backed securities (RMBS) - is especially vulnerable if this euphoria is misplaced.
Mamas, Don’t Let Your Babies Grow Up to Be Pension Fund Managers
by John Mauldin of Mauldin Economics,
We do not have to look to Greece to find massively underfunded obligations. Here in the US we can find hundreds of examples, willingly created by politicians and businessmen who proclaim they are working for the public good. We call them pension funds, but they’re just another form of unfunded debt. A sovereign bond is a promise to pay a certain amount of money over time.
From Russia with Love?
by Jeffrey Saut of Raymond James,
The big news late last week was German Chancellor Angela Merkel’s and French President Francois Hollande’s emergency trip to Russia for peace talks with President Putin. Obviously, the situation in the Ukraine is heating up again or such Herculean efforts would not be undertaken.
Scott Mather Discusses PIMCO’s Total Return Strategy
by Scott Mather of PIMCO,
Bonds have continued to rally so far this year, even as the Federal Reserve contemplates raising interest rates. In the following interview, Scott Mather, CIO U.S. Core Strategies, discusses recent developments in the bond markets, the outlook for the year ahead and the investment implications for PIMCO’s Total Return Strategy. Mather co-manages the strategy with Mark Kiesel, CIO Global Credit, and Mihir Worah, CIO Real Return and Asset Allocation.
Outlook and Positioning
Alex Crooke, Head of Global Equity Income, provides a review of the Henderson Global Equity Income Fund's (HFQAX) recent performance and current positioning as well as providing an update on recent events in Europe. Alex notes that the action of the ECB (European Central Bank) starting a quantitative easing (QE) program as the most significant factor driving markets over the next 6 months. While he believes the program will be a slow modest start with monthly purchases around 60trillion Euros, it should gain traction over the next year or two.
Quarterly Letter
by Team of Grey Owl Capital Management,
Over the past seven months the price of oil has plunged from a peak above $100/barrel to the mid-$40s today. This is just the most extreme version of the market volatility and divergence we began highlighting in our second quarter letter. A cautious investment stance remains the prudent choice.
Germany's "Time Pressure" Thesis; Noose Tightens on Europe
Today German Chancellor Angela Merkel proclaimed Greek Diplomatic Offensive Is Failing. Merkel’s Christian Democratic-led bloc in parliament has agreed not to give in to any “bad compromise that “defacto adds up to a debt writedown,” Hans-Peter Friedrich, a deputy leader of the caucus, said in an interview today.
Ditch the Good, Buy the Bad and the Ugly
In a new quarterly letter to GMO's institutional clients, co-head of asset allocation Ben Inker provides background on why, "as the New Year begins, we in Asset Allocation find ourselves slowly selling down even our beloved U.S. quality stocks in favor of the various problem children of the investing world" ("Ditch the Good, Buy the Bad and the Ugly").
The Absolute Return Letter - January 2015
by Team of Absolute Return Partners,
In large parts of the financial community there is a strongly held belief that the problems which caused the credit crisis back in 2008-09 have never been properly addressed, causing many to suspect that it is only a matter of time before the ‘end game’ is upon us – the credit crisis Mk. II so to speak. I will in the following pages look at various ways the end game might unfold but, before I do so, I shall return to one of the subjects I discussed in the January letter – the end of cheap oil – which caused a flurry of comments and questions.
PIMCO Extends Its Dividend Suite With Two New Regional Strategies
by Brad Kinkelaar, Adam Muller of PIMCO,
As is the case with our other dividend strategies, we are unconstrained by benchmarks and focused on generating yield and capital appreciation by finding attractively valued companies that pay appealing dividends today and have an ability and willingness to grow dividends over time.
Is There A Case For German Equities?
by Team of GaveKal Capital,
With the highest productivity in Europe, a sizeable current account surplus and rock bottom interest rates, is there a case to made for German equities? Germany's competitiveness, export performance and trade surplus should increase as the Euro weakens helping German exporters in markets outside of the Euro bloc.
Key Issues for 2015: The View from Western Asset
The U.S. represents a bright spot in a global recovery best characterized as "two steps forward, one step back." Sector and issue selection remain crucial in this environment, but so do macroeconomic strategies, which may help provide ballast when the pace of recovery slows.
Results 2,051–2,100
of 2,772 found.
