Today’s capitalism has a contradiction that is increasingly hard to ignore: lack of competition in key markets. That’s a problem because competition incentivizes producers to get more efficient and reduce prices for consumers. Without competition, you end up with bloated monopolies that may be highly profitable for the owners, but don’t serve the greater cause of economic growth.
Here are key takeaways from our 2019 Asset Allocation Outlook on how we are positioning asset allocation portfolios in light of our outlook for the global economy and markets.
Early on in my career, I learned there are four psychological reasons investors buy (listed from strongest to weakest).
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.
In Keeping At It: The Quest for Sound Money and Good Government, a beautifully crafted autobiography, Pau Volcker recounts the many struggles involved in achieving his aims.
How can an individual build a defined-benefit element into his or her retirement-income portfolio? Is there a way to structure a floor income during retirement that can’t be outlived?
Harold Evensky's quarterly letter to his readers.
To make a quantitative and systematic assessment of how different sectors performed through various business cycles, we used the Conference Board Leading Economic Indicator Index (LEI) to segregate business cycles and evaluated sector performance over multiple business cycles between 1960 and 2018. This provided a good sample size to evaluate sector performance persistency for different cycles.
So let’s summarize how we see the world in terms of noise – those things that may introduce short-term volatility and anxiety, but which are unlikely to dramatically affect longer-term performance – and signals – those things that may actually affect longer-term market performance.
This article examines the Federal Reserve’s monetary policy objectives and their stated inflation goals to better appreciate the role they play in rising wealth and income inequality gaps.
Financial euphoria episodes are a common occurrence in investment markets and the U.S. stock market. When a new one comes along, market participants accelerate their enthusiasm toward the end, which makes the shares of companies involved dead to us.
An array of causes, many long-familiar, lay behind the December rout. But for simplicity’s sake three overarching causes – three “big rocks” that were in the average investor’s way, if you will – can be singled out.
In a world where “nobody knows anything,” investors may be no better than film-studio moguls at predicting the future. If so, then markets, instead of being predictive, become increasingly reactive, simply extrapolating recent events.
The market over the last 10 years was built up largely on the back of growth-tech stocks. The FAANG stocks ended up an awful lot like a teenager hitting a massive, early, growth spurt. Participants in the market were ecstatic at the rate of growth and the benefits.
Fed Chair Jerome Powell used the “patient” word again last week. He also added new words that the Fed can “wait and watch” before raising rates again. And he added another new word, that whenever interest rate increases resume, they will be “gradual.” The stock markets loved it!
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.
Whether you follow a systematic approach to growth or are looking for an “easy button,” growth hacks are a path that any practice, team or individual advisor can leverage.
In the famous book, Strange Case of Dr. Jekyll and Mr. Hyde, Dr. Jekyll and Mr. Hyde were one human being with a split personality. Dr. Jekyll healed people and Mr. Hyde murdered them. This economic environment and the U.S. stock market have the same kind of split personality.
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.
The difference between base (mandatory or essential) and discretionary (voluntary or non- essential) expenses in retirement is fundamental and consequential. Properly making this distinction may be the most important decision in order to use assets efficiently and effectively in retirement income planning.
Low Volatility and Quality offer potential benefits in stressed markets.
I was digging through some old charts over the weekend and stumbled across this gem from AlphaTrends which explains the “best time to buy stocks.”
Some advisors fail to highlight the difference between expense categories and claim that clients do not see food, shelter, insurance differently than country club dues or vacation cruises, hence the expense categories are combined and called ‘lifestyle expenses’. In our view, this is a distortion of affluence.
Free from a house view on economies, markets or stocks, J O Hambro CapitalManagement’s (JOHCM) fund managers invariably see the world in different ways. We asked a number of our managers for their thoughts on the outlook for their asset class next year, what they would like to see and the possible surprises that 2019 could bring.
In September, this year looked like it was going to be one of the great years for the Ten Surprises. Oil was at $75 (West Texas Intermediate) and the S&P 500 was at 2,940. The Surprises had oil at $80 and the S&P at 3,000. The Ten Surprises are judged on whether they work out at some point during the year, not where they are at year-end.
Amazon recently announced that they are combing through the list of things they warehouse and sell to determine which items “can’t realize a profit” (C.R.a.P.).1 We found it very interesting how they are determining which items to pare from their website list.
Which blog posts generated the most interest from readers in 2018? We wrap up the year with a look back at our favorites.
The truth about water shortage isn't that we either have it or we don't. It's not an either/or proposition. In fact, it is much more complex than that. One of the greatest challenges the globe faces today is both the scarcity of and access to one of its most valuable commodities.
Today, we’ll address several things, so think of this as my year-end “Quick Shots from the Frontline.” It will be more like a personal, from the heart, fireside chat. (Trigger warning: I will be taking off my politically correct gloves. Naming names and pointing fingers. Just Uncle John telling it like it is.)
The Fed opted to buck a broadening outcry for a pause and raised rates 25 basis points; while offering a slightly more dovish statement and lowered economic projections.
Last Monday, Jeff Gundlach, famed bond fund manager and CIO of Doubleline, made an interesting comment during an interview with CNBC when he stated that the 10-year Treasury yield would top 6% by 2020 or 2021. 6% would be the highest yield since 2000.
Investors’ obsession with the flattening U.S. Treasury yield curve dominated headlines for much of 2018. A flattening yield curve occurs when short-term rates are rising faster than long-term rates, which may eventually lead to an inverted yield curve, where short-term rates are higher than long-term rates. Historically, this has been a negative signal for the U.S. economy, often providing an early warning of an eventual recession, which is why the yield curve has been garnering so much attention recently.
Gold is back! So far this quarter, the yellow metal has crushed the market, returning around 6 percent versus negative 15 percent for the S&P 500 Index. Gold miners, though, have been the top performer, climbing a phenomenal 12.3 percent.
I am going to offer some different thoughts than the mainstream media spin on Jerome Powell, his press conference, and the Federal Reserve.
The business case for diversity is compelling, but the investment case for diversity is less clear-cut. We suggest, therefore, that investors who seek to promote diversity and its business benefits combine diversity with known drivers of excess returns.
Read Harold Evensky's most recent NewsLetter.
See what themes may impact global markets in the new year from Invesco Global Market Strategist Kristina Hooper and her team.
The chief goal of society should be to maximize wealth, according to Tyler Cowen. Pursuing that goal has delivered everything from nutritious and abundant food, to air conditioning and smartphones in the developed world, and those benefits are spreading rapidly to the developing world. The challenge is how societies can embrace and implement that goal. If those challenges are overcome, the benefits to globally diversified equity investors will be substantial.
Josh Shores serves as a principal and director of Southeastern Asset Management, Inc. He is a manager of the Longleaf Partners International Fund (LLINX). In this interview, he discusses why the biggest, broadest and deepest opportunity set for investing is outside the U.S.
We see a synchronized global slowdown in 2019. We position cautiously but anticipate opportunities ahead.
An inverted U.S. Treasury yield curve has historically been a telltale sign of a looming recession for the U.S. Does the recent curve flattening spell trouble for the U.S. economy?
After talking with hundreds of advisors and interacting online with thousands more, I’ve identified five ominous challenges the profession will face and trends it will need to adapt to in the coming year.
Our senior investment leaders see plenty of reasons to be optimistic about the year ahead, but recognize investment opportunities may be more divergent.
The key phrase in Fed Chairman Powell’s speech to the Economic Club of New York was widely misinterpreted by thefinancial press and, in turn, the markets. That’s not unusual. The markets don’t do nuance. Stock market participants were likelylooking for an excuse to rally.
Senior Economist Ryan Boyle looks at how America accumulated so many student loans, and how best to deal with them going forward.
Old Big Red sprung a leak a while back. Many of you are familiar with Big Red, but there are a few of you who might need an introduction. Big Red is my 18-year-old Chevy Silverado 2500 HD. I realize this may not be the type of vehicle driven by the majority of bankers, money managers, financial advisors, or brokers...
We've managed client assets in floating-rate corporate loan strategies since 1989. Our longest-running fund will surpass its 30-year mark in 2019. Along the way, we've developed deep expertise in this asset class. Today we manage more than $45 billion in floating-rate corporate loan assets, for clients all around the globe and in every discernible delivery format.
Here are some ideas for meeting prospects in a transient setting such as an airport, bus terminal, train station, doctor’s office, Starbucks coffee lounge, etc.
Like cranberry growers, many bitcoin miners are choosing to limit supply as current prices are lower than operating costs. Bitcoin fell below $5,000 on Monday and was trading around $4,250 on Friday. The average of mining a single bitcoin, meanwhile, is estimated to be between $6,000 and $7,000, meaning miners are operating at a loss.
Our long-time readers are aware that we analyze the U.S. stock market through the prism of what we call “well-known facts.” A well-known fact is a body of economic information which is pretty much known to all market participants and has been acted on by almost everyone with available capital.
