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Choosing Common Stocks That Make Sense for Your Retirement Portfolio: Part 2
by Chuck Carnevale of F.A.S.T. Graphs,
Choosing the most appropriate stocks for the common stock portion of your retirement portfolio is vitally important. In part 1 of this series found here I presented the 6 broad categories of stocks (businesses) that renowned mutual fund manager Peter Lynch presented in his best-selling book "One Up On Wall Street." I contend that the 6 categories that Peter Lynch wrote about establish a solid foundation of understanding of what’s generally available in the common stock universe.
It’s Someone Else’s Money
by Jeffrey Saut of Raymond James,
Indeed, due to expensive valuations, lack of revenue/earnings growth, slow GDP, China, politics, etc., the stock market had been in a virtual stalemate paralysis until the middle of July, having crossed above/below “go” so many times the only way to make money was to erect a toll gate at “go” (think the game Monopoly). And no wonder, frustration has reigned through the first six months of the year.
Designing the Appropriate Common Stock Retirement Portfolio: Stock Selection Options Part 1
by Chuck Carnevale of F.A.S.T. Graphs,
What is the best way to design or construct a common stock portfolio? This is a question I am often asked and my short answer is always the same - it depends. The truth is, there is no perfect method or strategy for designing a stock portfolio that is right for every individual investor. However, there are principles of sound investing that every investor can follow and apply when designing a common stock portfolio that’s just right for them.
Active Versus Passive – Understanding the Debate
by Charles Batchelor of Cleary Gull,
The purpose of this series of blog posts is not to add to the already massive number of studies, whitepapers, presentations, academic papers, blogs, etc. that attempt to prove which overriding type of investment product, “active” or “passive,” is “better.” Furthermore, I am not going to give you my opinion on which product type is superior. Rather, my primary goals are to better define what is being debated, spend time on what I do not believe has been discussed nearly enough during the “active vs. passive” debate.
Closed End Funds versus Exchange Traded Funds
by Heather Rupp of AdvisorShares,
There are currently a number of fund-based options available to investors looking for yield. In addition to traditional open-ended mutual funds, investors are also turning toward closed end funds (CEFs) and exchange traded funds (ETFs) to generate yield, including in the high yield bond market. Both CEFs and ETFs have continuous trading and pricing throughout the day, making them very liquid options for investors. While CEFs tend to be actively managed, there are both index-based options and actively managed options in the ETF space.
Describing Liquid Alts: Alternative-Asset Beta (FX, Commodities, MLPs and beyond)
The alternative-asset beta family of related liquid alternative strategies invests in alternative assets such as foreign exchange, commodities, and energy infrastructure. Ideally, these investments will provide attractive risk-adjusted returns that are uncorrelated with traditional equity and fixed-income markets.
ETFs: “Like Handing an Arsonist a Match”
by Mark Oelschlager of Oak Associates,
The popularity of ETFs has grown among market participants who, in the aftermath of the financial crisis, want to be able to reduce market exposure or shift between sectors when they sense danger/opportunity. The recent correction has brought to light the role of ETFs in the market, and the volume statistics are mind-boggling. Innovation is generally good, but like many things in life, there is a downside, and we would argue the downside to using ETFs to engage in frequent portfolio repositioning is particularly steep.
Does Morgan Stanley Add Value For Investors?
by Larry Swedroe,
In the latest 10-year period, only 38% of Morgan Stanley’s mutual funds outperformed their analyst-assigned benchmarks. Thus, while the fees these funds have generated are among the few consistent bright spots of growth on Wall Street, there is still a question for investors: Have these actively managed mutual funds been good investment choices?
Curb Your Mind
With the recent events in China and Greece causing volatility in the global markets, we think it is more important than ever to take a moment to reflect on how capital markets function. People trade stocks; and an understanding of the human thought processes is at the foundation of markets. The recent gyration of the world’s markets reminds us how quickly greed can turn to fear and how investors can begin to make mistakes. We find that heightened emotions often lead to mistakes that can be easily avoided.
Defensive Expectations
by Roger Nusbaum of AdvisorShares,
Last week there was an article in the WSJ noting the performance struggles of one of the larger liquid alternative mutual funds. I am not going to link to the article or name the fund because any fund can do very well, attract a lot of assets, then do poorly and lose the assets which is the arc of this fund’s story but instead want to focus on avoid that sort of loop or at least recognizing the potential for that sort of loop so that no one is surprised if/when it happens.
August 2015 Commentary
by Joe Becker of Milliman FRM,
As August wound down and families enjoyed the last few lazy days of summer, financial markets clearly had another idea in mind. After trading in a relatively tight range for most of the summer, the last two weeks of August were marked by volatility, the likes of which haven’t been seen since 2011. We attribute this heightened volatility to the confluence of global macro conditions with technical factors.
DeVoe’s Unprovable but Highly Probable Theories
by Jeffrey Saut of Raymond James,
I don’t claim to be an economist, although I do have a degree in economics. Fortunately, I have forgotten most of the economics I learned at university. Also fortunate is that I work with one of the best economists on Wall Street in the form of Scott Brown, Ph.D., but I digress. For the past few months I have been suggesting the economy was doing better, which has brought about cat calls from many of the negative nabobs. My sense has been that GDP was growing by at least 3%.
Investors Should Not "Buy the Dip" Because Macro and Market Risks Remain Elevated
The global market meltdown is turning into a rout as investors who ignored the warning signs of overvaluation, weakening earnings/revenue trends, and deteriorating internal market dynamics may now be heading for the exits. As advisors and investors try to rationalize asset allocation and equity market exposure, they may deem it appropriate to stick with investments in countries with the strongest economies. Reasoning, stronger eco-markets should behave better than markets in countries with economies under pressure.
Risk Is Like the Air We Breathe
A couple of months ago I wrote an article about how risk, like death and taxes, is always with us. That was written as the market made new all-time highs, and I wanted to make it clear that such highs did not mean that risk was absent. Risk is always with us—like the air we breathe.
The Active-Passive Debate Revisited
by Bob Veres,
Asset flows to passively managed funds are surging. But, as often happens,
advisors are embracing a trend just as debunking information is arriving in
the marketplace. New research is showing that selecting above-average
active funds may not be the impossible task that the academic research has
suggested.
Doodles from an Eventful Summer
This month's Absolute Return Letter is a little different. It was a very eventful summer with many incidents impacting financial markets and we have compiled all these topics into one letter. China is, not surprisingly, a core subject. If the Chinese economy is slowing (and it is), we don't think China is in for a hard landing. If anyone is in the near term - and this may surprise you - we think the U.S. and the euro zone are far more likely candidates.
Forget the Sept. '15 Fed Tightening -- There Has Been a Stealth Tightening Since Sept. '14
by Paul Kasriel of The Econtrarian,
The late, great Milton Friedman used to preach that you don’t assess the degree of monetary policy restriction or accommodation by the level and movement of interest rates but rather by the behavior of monetary quantities. For Friedman, the monetary quantity by which he judged the stance of monetary policy was some definition of the money supply – currency and some of the deposit liabilities of the banking system.
Panic Is Not a Strategy—Nor Is Greed
by Liz Ann Sonders of Charles Schwab,
Admittedly, the development of a long-term strategic asset allocation plan isn't the hard part—it's sticking to it that often becomes the real challenge. Adding to underperforming asset classes and trimming outperforming asset classes goes against the emotions of fear and greed that often drive investment decision making. But if we learn from our mistakes, use our brains over our hearts and look to our portfolios as rebalancing guides, we can expect a more successful investing future and maybe even get a free lunch along the way.
Feeling Old Yet? Incoming College Freshmen Have Always Known Google
I use Google every day, and yet I still marvel at how amazing a tool it is. Part of this amazement stems from the fact that most of my life was spent in the dark ages before the search giant changed human knowledge forever. I appreciate it in a way 19th-century, transcontinental travelers must have appreciated steam locomotives’ ability to shave days and weeks from their covered-wagon travel time. Except Google is more like a rocket ship than a locomotive.
12 Attractive Fast-Growing Dividend Growth Stocks for High Total Return
by Chuck Carnevale of F.A.S.T. Graphs,
The current market environment is presenting many challenges to the conservative retired investor in need of current income. Interest rates are near all-time lows and the valuations of many blue-chip dividend growth stocks have become extended. Consequently, it is becoming very difficult to find quality investment opportunities that can provide safety through sound valuation, attractive yield and the potential to fight inflation.
Why a 500-Point Sell-off Isn’t “Massive”
While I was training early this morning, I was forced to endure two hours of CNBC’s seemingly permanent headline across the bottom of the screen that screamed that the markets were heading for a “massive sell off.” At the time, the Dow Jones Industrial Average futures were down about 500 points. When the markets opened at 9:30, the Dow did open down about 500 points (thereafter it actually was down about 1,000 points) before bouncing back to its opening levels.
What Investors Must Know About China
The latest story scaring investors witless (TM OldProf Euphemism) is the collapse of the Chinese economy. It has become an element of Wall Street Truthiness. The Chinese are lying about their data, masking the true story. “All of the data” support this according to the commentators, led by pundit-in-chief Jim Cramer and the rest of the gang at CNBC. How about some much-needed objectivity?
Options and Volatility Strategies -- Describing Liquid Alts
Some equity funds may add option hedges in an effort to dampen portfolio volatility, generate alpha, and reduce tail risk. Option hedges provide a vehicle for potential alpha, allowing tactical managers to express multi-dimensional views on security price, volatility, and time. Systematic option strategies—which include covered-call, collar, put-writing, and more-complicated strategies—allow managers to potentially exploit the nonlinear characteristics of option payoffs to shape the return distribution.
The Use and Abuse of Dividend Strategies
I will look at the underlying justification for a dividend-based strategy and at how the most popular funds have performed recently. I will then discuss the criteria that investors should use to construct the best dividend-oriented portfolio, and which mutual fund best meets those criteria.
Long/Short Equity and Equity Market Neutral – Describing Liquid Alts
Equity long/short strategies construct portfolios consisting of both long and short positions in equity securities and equity-linked derivatives but maintain an overall long bias with significant positive correlation to the overall equity market.
On My Radar: China’s Surprise – Power To The Dollar
“Something is deeply wrong if an economy is not growing, because it means these natural processes are impeded. That is why around the world, since the Dark Ages, lack of growth has been a signal of political oppression or instability. Absent such sickness, growth occurs.”– Adam Posen, “Debate: The Case for Slower Growth”
The High Yield ETFs: Market Size, Money Flows, and Liquidity
by Heather Rupp of AdvisorShares,
The entire U.S. fixed income market (municipals, Treasuries, mortgages, corporates, federal agency bonds, money market, and asset back securities) totals $39.2 trillion. Of this, corporate credit is about $8 trillion. The high yield bond market is a growing piece of that corporate debt piece, now at $1.8 trillion, and accounts for over 20% of total corporate bonds outstanding. If you add in high yield floating rate loans, that total high yield debt number moves to over 30% of corporate debt.
The Tortoise Wins Again?
The narrow trading range for US stocks continues, but there are some concerning signs such as seasonality and technical issues that make us a bit more cautious in the near term. We don’t think the bull market is in danger of ending, but there could certainly be a pullback and we don’t believe investors need to be in a great hurry to put money to work. In the immediate aftermath, China’s move on its currency rattled markets, but we don’t think it’s the start of a currency war, and hope that this is part of a herky-jerky path to freer markets.
Caveat Emptor (“Let the buyer beware”) of Index Funds
by Gary Stroik of WBI Investments,
Imagine a very nice family living in a very nice neighborhood in an especially beautiful and very nice home. They have lived there for a little over seven years now, and have been very happy. A few years ago they invested in finishing the basement, turning it into a beautiful family space with an entertainment center, exercise equipment, and separate room for the furnace and hot water heater. They even added a pair of sump pumps to protect their investment. Because their home made up a big part of their family wealth, they paid for homeowners’ insurance every month.
Clear Evidence that Demand for ETFs is High and that Appetite is Being Met
by Bryce Coward of GaveKal Capital,
We all read about it in the news, but ETFs really are becoming the preferred investment vehicle for the investing public. The evidence is clear; both in terms of number of funds and net assets ETF growth is outpacing mutual fund growth by a wide margin.
The Case for Hedge Fund Strategies in a Rising-Rate Environment
by Dr. Sudhir Krishnamurthi, Ronald van der Wouden, Kenneth LaPlace of Wells Fargo Asset Management,
Dr. Sudhir Krishnamurthi, Ronald van der Wouden, and Kenneth LaPlace from The Rock Creek Group, LP explain why hedge funds may outperform traditional fixed-income investments in a rising-rate environment.
Price-Insensitive Sellers
In a new quarterly letter to GMO's institutional clients, co-head of asset allocation Ben Inker examines the impact on a range of global asset classes of "price-insensitive market participants" who may "buy assets for reasons other than the expected returns those assets may deliver."
Are Managed-Payout Funds Better than Annuities?
by Joe Tomlinson,
Managed-payout funds promise to meet retirees’ need for sustainable lifetime income without relying on annuities. To see whether this promise can be fulfilled, I’ll answer three questions: What’s the best design for such funds? How do they compare to annuities? Can retirees do even better by combining managed-payout funds and annuities?
Screens vs. Windows: Why Choosing a Fund Manager Requires Both
by Tracy Fielder of Invesco Blog,
Choosing the right fund manager is an important decision for investors, and many rely on data screens to help them sift through mountains of performance numbers. But screens alone don’t tell you the whole story. To get a clear view of how a fund might fit into your portfolio, you also need a window into the mind of the manager.
Does Your Muni Bond Fund Own Puerto Rico’s Bad Debt?
While the media and investors are focused on Greece, Puerto Rico is having a debt meltdown of its own. The U.S. territory owes lenders over $70 billion, $5.4 billion of which is due in the next 12 months. But without some form of debt restructuring, says Governor Alejandro García Padilla, it will be unable to meet its obligations. Countless municipal bond fund investors—many of them unaware they have exposure to the Caribbean island—could be affected.
Don’t Let the Noise Keep You Up at Night
Three subjects have concerned the markets recently: a Greek debt default and possible exit from the European Union (Grexit), the Federal Reserve’s (the Fed’s) normalization of interest rate policy and potential bond market illiquidity following a rise in interest rates. The first two are binary outcomes, which have been debated in the marketplace for years. While discussing these possible outcomes ad nauseam may be a palliative to some, in our view it doesn’t really provide much meaningful, incremental information until more definitive actions are taken.
Results 2,451–2,500
of 3,303 found.
