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A Year-End Letter to Clients: How the World's Wealthiest Families Invest
by Dan Richards,
Here are the components of the year-end letter for 2014: An overview of 2014 performance; Some context on market valuations and how wealthy families are investing today; and brief thoughts for the period ahead.
Weighing the Week Ahead: The Message from Fourth Quarter Earnings
I do not know how earnings season will play out this week. My list of things to watch is good, but the market seems to be demanding a parlay of positive indications: Beating the whisper number for earnings; Beating the revenue expectations; Business growth ?organic, not from mergers or purchases; Solid ?quality of earnings? with no gimmicks or accounting moves; A credible, positive outlook.
For US Economy, 2015 May Be a Very Good Year
The US economy shifted into a higher gear in 2014 as growth over the last three quarters averaged 4.5%. With consumer, business and even government spending set to rise, the outlook for 2015 is even brighter?and that should be enough to convince the Federal Reserve to start lifting interest rates.
The Year Ahead
by Jack Rivkin of Altegris,
It is once again time to put down in print in one place some pretty specific speculations on what could happen next year. We do this every year with the intent of trying to get investors to think about what could happen and factor that into their decisions on how to adjust their portfolios to take advantage of opportunities while at the same time being aware of the risks.
5 Charts For Fully Invested Bears
by Lance Roberts of Streettalk Live,
While the mainstream media continues to misalign individuals expectations by chastising them for "not beating the market," which is actually impossible to do, the job of a portfolio manager is to participate in the markets with a predilection toward capital preservation. It is the destruction of capital during market declines that have the greatest impact on long-term portfolio performance.
Is the Party Over?
Every year it seems to be the same. January arrives and with it the winter blahs set in. The excitement of Christmas Day has passed. The celebration of New Year?s is but a memory. We?re putting away all the holiday decorations. What a pain (literally)! And, forgive me for a parochial slip; the Lions, once again, are out of the football playoff picture and off TV.
A Better Lesson than "This Time is Different"
by John Hussman of Hussman Funds,
The near-term outcome of speculative, overvalued markets is conditional on investor preferences toward risk-seeking or risk-aversion, and those preferences can be largely inferred from observable market internals and credit spreads. The difference between an overvalued market that becomes more overvalued, and an overvalued market that crashes, has little to do with the level of valuation and everything to do with investor risk preferences. Yet long-term investment outcomes remain chiefly defined by those valuations.
Pie in the Sky?
by Team of Absolute Return Partners,
January each year brings with it a host of forecasts, many of which are 'pie in the sky' - silly predictions on equity markets, interest rates and currency movements. We are not in that game, but this is the first time we have written a letter in January. Why? Because we think investors should be focusing on longer term structural trends when analysing the future.
As We Enter 2015, "Bulls" Should Consider
by Lance Roberts of Streettalk Live,
As we enter into 2015, analyst calls for a continued "bull market" advance have never been louder. There have been a litany of articles written recently discussing how the stock market is set for a continued bull rally. The are some primary points that are common threads among each of these articles.
Weighing the Week Ahead: Time for the January Effect?
I am not a big fan of seasonal effects unless there is a logical underlying reason. The Presidential cycle logic rests upon taking unpopular actions early in the term while emphasizing economic stimulus later. That does not have much relevance in the current environment. The January tax loss effect is more persuasive, especially in years where there are some clear losers to sell. That was true in many sectors this year.
The Coming Crash in 2015: Why there will be no Happy New Year before we see QE Reloaded
by Franz Lischka,
In September 2013 in my post How QE Alters Bond Yields (Or Rather How It Does Not) I wrote that historically the end of QE was associated with the following 4 events, which I expected to show up again after the end of the latest QE-programs (which in some cases was completely against the market consensus of that time).
The Lessons of Oil
I want to provide a memo on this topic before I and hopefully many of my readers head out for year-end holidays. Ill be writing not with regard to the right price for oil about which I certainly have no unique insight but rather, as indicated by the title, about what we can learn from recent experience.
Global Economic Perspective: December
by Christopher Molumphy, Michael Materasso, Roger Bayston, Michael Hasenstab & John Beck of Franklin Templeton Investments,
With 321,000 jobs added, the initial US nonfarm payroll report for November was much stronger than markets expected and brought job growth this year close to levels last seen in the late 1990s. Added to upward revisions in September and October jobs data, the nonfarm payrolls data reinforces the view that whatever is occurring in the rest of the world, the US economy appears to remain firmly on track to record reasonably strong growth in the months ahead. And while fourth-quarter gross domestic product (GDP) growth this quarter for the United States is expected to be lower than the third-quart
ECRI Recession Watch: Weekly Update
Lakshman Achuthan made a recent appearance (December 24th) on Al Jazeera TV discussing the company's outlook for the US economy in 2015. Despite improvements in GDP and jobs data, Achuthan takes a cautious view. Among other things, he points out that latest year-over-year GDP growth rate of 2.7% (a more intuitive metric than the latest quarterly annualized rate of 5.0%), has happened before since the end of the last recession, only to slide back to lower levels. He identifies US manufacturing as a potentially weak area.
Convertible Bonds: The Rodney Dangerfield of Liquid Alts
by Robert Martorana,
Historical returns have been outstanding for convertible-bond strategies. Moreover, low drawdowns during bear markets give these products an attractive risk-return profile, especially when compared to other liquid alternatives.
Setting the Scene for 2015
by Milton Ezrati of Lord Abbett,
Market prospects in the coming year would seem to hinge on four major considerations. One is geopolitics, inherently unpredictable but potentially disruptive, especially these days. Another is the Federal Reserves plan to raise interest rates along a gentle path beginning sometime in the middle of the year. Third is the perennial question of where value lies within and between markets. Fourth is the state of the U.S. economy.
U.S. Equities: Overvalued or Undervalued?
Market participants have devised tools to value overall equity markets: the cyclically adjusted price to earnings (CAPE) ratio, Tobin's Q-ratio, the regression trendline, market capitalization-to-GNP (Buffett's valuation indicator) and the trailing price-to-earnings ratio. We summarize each one of these valuation tools and its implications for investors.
Weighing the Week Ahead: Time for the 2015 Pundit Forecasts!
With little fresh news during the holidays and many pros on vacation, I expect a time of reflection and prediction. Publications hungry for content and TV producers needing to fill slots will highlight forecasts of any and all flavors. This happens every year, but the mid-week holidays are pushing it a little earlier than usual,
Completing the Alternative Investments Puzzle: Putting the Pieces Together
by Walter Davis of Invesco Blog,
In my previous blog, I discussed why I believe advisors and investors should approach alternative investments much like a jigsaw puzzle and offered an organizing framework that can help. When putting together a puzzle, the first step is to sort and organize all the pieces. For alternatives, the first step is to organize and align the various alternative strategies with specific investment objectives. This step is critical because it helps investors decide whether alternatives can help them meet their needs, and, therefore, whether they should invest in them.
The $330 Billion Global Tax Break
According to an article by Jon Markman titled The Saudi Stimulus, the global economy is looking to save hundreds of billions of dollars on an annual basis: "According to EIA data, consumption of crude oil during the latest 12 months was 6.9 billion barrels. So the price drop from $107/barrel at the June 2014 high to $59 today represents a total presumptive savings of $332 billion per year." In a time when China, the European Union and other major markets are trying to jumpstart their economies, a $330 billion tax break can only come as good news. It should help in stimu
The Lessons of Oil
I want to provide a memo on this topic before I and hopefully many of my readers head out for year-end holidays. Ill be writing not with regard to the right price for oil about which I certainly have no unique insight but rather, as indicated by the title, about what we can learn from recent experience.
A Rising Tide Lifts Most Boats
PIMCO expects global growth to accelerate in 2015, reaching about +2.75% year-over-year, with the majority of this improvement due to the (predominantly supply-driven) decline in oil prices. However, there will be large differences in growth dynamics among countries. While fiscal and monetary policies in most developed countries will stimulate growth in 2015, the U.S. Federal Reserve will attempt to break from the pack.
When is a Turnaround Not Really a Turnaround?
Like all good students, we try to learn from the experience of experts, and amongst value investors there is no more esteemed expert than Warren Buffett. We have followed Buffett closely, sending dozens of employees to Berkshire Hathaway annual meetings and scouring past letters to shareholders in search of value investing knowledge. Thus, we pay heed when Buffett warns that the temptation to predict a turnaround is often misguided.
Touching Base on the Commercial Real Estate Recovery
by Ian Goltra of Forward Investing,
Considering the recent upswing in commercial real estate prices and traded real estate stocks, in what inning is the commercial real estate recovery? Could there be extra innings? Prior to the most recent decline in real estate, downturns in commercial real estate cycles have historically been caused by supply shocksdevelopers putting up new buildings until they (or their banks) ran out of money.
Allocating to Alternative Investment Strategies
by Nathan Rowader of Forward Investing,
Following the market declines in 2008 and 2009, many investors have shown interest in alternative investment strategies such as hedge funds and mutual funds that employ hedge fund-like strategies. These types of strategies have been around a long time, but until recently their use among individual investors has been somewhat limited.
How to Approach the Alternative Investments Puzzle: Putting the Pieces Together
by Walter Davis of Invesco Blog,
Every summer my family and I go on a vacation to the beach. While there, my wife buys a big jigsaw puzzle for us to work on. Every year, we feel overwhelmed immediately after she dumps out all 1,000 pieces.
Weighing the Week Ahead: Will Crashing Oil Prices Change the Feds Course?
The investment conclusion is opportunity in non-energy cyclical stocks, including basic materials, technology, and consumer discretionary. There are also energy names that are part of the knee-jerk reaction, but which do not necessarily suffer from lower oil prices. These include refiners and some of the large integrated oil companies that need to replace reserves. (Barrons also suggests oil tanker stocks storage needed!)
Hungary's PM: Madman or Geopolitical Genius?
Hungarys Prime Minister Viktor Orban is one of the first European leaders to turn friendly toward Russia, noting that geopolitics are changing and Eastern European countries should redefine their international policies according to these changes. This report explores the differences between the rules of the geopolitical game being played by Hungary, the West and Russia. We will describe the history of Hungarys balancing act between the powers of the East and West and how this history affects its current politics. We will discuss the most likely outcomes and their international si
Designing Balanced DC Menus: Considering Equity Investments
by Stacy Schaus, Ying Gao of PIMCO,
Defined contribution investment lineups typically provide numerous equity choices but still may lack adequate diversification and return potential. Participants may benefit by accessing high-growth markets such as emerging markets and tapping in to dividend-paying stocks. Retirement outcomes could improve further by including portfolios structured using fundamental measures rather than market capitalization.
2015 Fixed Income Outlook: Handle with Care
by Anthony Valeri of LPL Financial,
With sustained improvement in economic growth, slowly rising inflation, and the approach of the Feds first interest rate hike, bond prices are likely to decline in 2015. High-yield bonds and bank loans can help investors manage this challenging bond market.
Peaking Process
by John Hussman of Hussman Funds,
In my view, we are likely witnessing the peak of the third equity valuation bubble in the past 14 years, the first two which saw major indices plunge by at least 50%. Its important to recognize that market peaks are a process, not an event. Internal deterioration has actually been developing since early July, and became measurable in early August. This process has been quite like what we observed in 2007, when deterioration became measurable in July of that year. Despite an initial selloff, the major indices recovered to a marginal new high in October 2007 before continuing lower.
Macroeconomics Finally Gets Interesting
by John Mauldin of Mauldin Economics,
2015 may be the year that macroeconomics really becomes interesting again, if it hasnt already. After a long period of relatively coordinated central bank policies and remarkably low volatility, the macro scene is becoming more dynamic. Thats great for those who live and die by dramatic long-term shifts in global markets, but it should be terrifying for emerging-market policymakers, currency carry traders, Texas oil men, and, frankly, the average investor. King Volatility is back on his throne.
Dont Let Market Motion Sickness Keep You From Missing the Boat
Despite all of the good news, the recent threat of market volatility, which weve seen plenty of in commodities and emerging markets, seems to have pushed close-to-retirement folks away from equity securities. The August and October downturns, not to mention the decline in gold and oil prices, have understandably heightened consumer fears.
Weekly Market Summary
by Urban Carmel of The Fat Pitch,
Coming into this week, SPY had been above its 5-dma for 30 days in a row. This was a new record, unlike any streak the index has ever seen. We reviewed prior examples of these streaks earlier; our conclusion was that the streak rarely marked the top in the market, meaning there were higher highs immediately ahead after the streak ended. But the index also struggled in the following weeks, often trading lower.
The Great Escape??
by Tony Crescenzi of PIMCO,
Since the financial crisis, the Fed has engaged both conventional and unconventional tools in a colossal effort to smooth the deleveraging process, help put Americans back to work and boost wage growth. The Fed has achieved two out of three "escapes": 1) Escape from a liquidity trap: Get banks to lend. 2) Escape from quantitative easing: Stop the bond buying program. 3) Escape from the zero bound: Hike the policy rate above zero. Over the longer term, portfolios should be positioned for low policy rates not only in the U.S., but also in Europe and Japan.
Exchange Rate 101: A Primer For International Investors
by Bryce Fegley of Saturna Capital,
A solid grasp of exchange rates and how they impact various asset classes can help international investors make better-informed decisions. The asset class most likely to be impacted negatively by a strengthening dollar is non-dollar fixed-rate bonds.
How Could They?
Punch and Judy fought for a pie. Punch gave Judy a sock in the eye. Said Punch to Judy, "Would you like any more?" Said Judy to Punch, "No my eye is too sore." Mother Goose nursery rhyme. Ah, nursery rhymes! Intended for kids no less! The above little ditty could serve as a modern day NFL domestic playbook, I suppose, while a century ago it was but one of many lesson plans on what not to do when you grow up.
Is Bitcoin the Future?
by John Mauldin of Mauldin Economics,
Worth Wray has written this weeks letter as a summary of what we know about Bitcoin. Delving into its history and bringing us up to date, he also offers a glimpse of the future. At the end of the letter I offer a few of my own thoughts on the relationships among gold, fiat money, Bitcoin, and financial transactions. If nothing else, Bitcoin offers a provocative way to think of the future of money.
Hard-Won Lessons and the Bird in the Hand
by John Hussman of Hussman Funds,
The S&P 500 is more than double its historical valuation norms on reliable measures (with about 90% correlation with actual subsequent 10-year market returns), sentiment is lopsided, and we observe dispersion across market internals, along with widening credit spreads. These and similar considerations present a coherent pattern that has been informative in market cycles across a century of history including the period since 2009. None of those considerations inform us that the U.S. stock market currently presents a desirable opportunity to accept risk.
Results 2,901–2,950
of 3,702 found.
