One of the most popular and successful strategies over the last decade has been low-risk (i.e., low-beta or low-volatility) investing. New research shows that those strategies have persisted even after the publication of the research documenting their existence, and that they can be pursued in low-cost, low-turnover portfolios.
The most important factor determining the length of the U.S. recession brought on by the pandemic is the state of public health, he says.
From a performance perspective, I give robos an “A” for being average, and hope that future research can make more meaningful statements as to how robos truly impact investor outcomes.
Severe economic recessions often feature what might be called an “incubation phase,” where an exuberant rebound from initial stock market losses becomes detached from the quiet underlying deterioration of economic fundamentals and corporate balance sheets.
Economic factors are motivating recent protests and changes to supply chains.
Warren Buffett “should have kept airline stocks because the airline stocks went through the roof today,” President Trump said this week. It’s a good thing that investors chose not to follow Buffett’s lead, as airline stocks are up 50% since his exit.
In a new quarterly letter to GMO clients, Ben Inker, head of asset allocation discusses the current uncertainty over the market and economic outlook and the decision to significantly reduce net equity exposure in the GMO Benchmark-Free Asset Allocation Strategy. Alongside Inker’s letter, Jeremy Grantham writes in “The Virus, The Economy and The Market” ...
Three factors that may explain today’s disconnect between Wall Street and Main Street.
Wounds heal but scars last. That’s an old lesson from history and will also be the case as far as COVID-19 is concerned. We already know from empirical evidence in China that consumers are in no rush to come back on the streets of the big cities, and why would it be any different elsewhere?
Here are five conversation starters to engage your clients during these challenging times.
I had a recent experience when I became a client and experienced what it was like to be on the other side of the table. It taught me a lesson about fees.
The advisory industry is unaware that the traditional asset-location rules (i.e, put bonds in tax-deferred accounts and stocks in taxable accounts) don’t work in our low interest rate environment. The exact opposite is appropriate for most retirees.
In this part 2, I want to share an additional perspective that my research on the growing levels of corporate debt uncovered.
With state economies opening up, activity is expected to pick up the final two months of 2Q20. Real-time indicators show improvement. However, the figures for April are consistent with a sharp contraction in 2Q20, which won’t come close to being offset by May and June.
Given the dramatic underperformance of value stocks since 2017, it’s understandable that many are abandoning the strategy, believing that the premium has vanished. But, studious observers of market history know that value faced similar death sentences previously, only to undergo a rapid reincarnation and deliver spectacular returns.
How has the coronavirus shock changed medium-term fundamentals? And how does that change our long-term asset views?
The megacap safety trade that has ruled stocks for months is slowly giving way to a broader embrace of risk among investors captivated by tentative signs of a turn in the economy.
As fixed-income markets have started to recover following the massive selloff and liquidity crunch in March, credit risk-transfer securities (CRTs)―agency mortgage securities not guaranteed by Fannie Mae and Freddie Mac―have been slower to do so. Investors are wondering: Where do CRTs go from here?
The airline sector may be experiencing some turbulence now with COVID-19, but the industry has flown through storms before. After all, airlines stocks managed recoveries after the 9/11 attacks, the SARS outbreak in 2003 and the global financial crisis in 2008.
Potential for a large payoff on value strategies may exist soon, if history is any guide.
Rick Rieder, Russ Brownback and Trevor Slaven contend that even as markets were rocked by uncertainty as the coronavirus lockdowns began, the seeds of stability were sown in the massive fiscal and monetary policy response. The key is to know how to manage through this period for the long haul.
Weighty issues need to be considered before making expensive college commitments that could easily be disrupted in the coming months.
The COVID-19 crisis is likely to accelerate many underlying, secular disruptive forces already affecting economies and financial markets. This may only increase the difference between those companies, sectors, and countries that are being disrupted, and those that are acting more like disruptors. Distinguishing between the two is becoming crucial.
Although the major indices are well off of the lows they reached in March, there remains a high level of uncertainty about what the future holds for the market and the economy.
Jeremy Siegel, in time, will likely be proved wrong about the end of the “40-year bond bull” market. History suggests that not only is the “bond bull” alive and well, it likely has quite a long way as the U.S. will become more like Japan over time.
This year marks the 100th anniversary of the renowned investment firm Tweedy Browne. The firm was originally a broker, and one of its clients was Benjamin Graham. I interviewed six members of Tweedy, Browne’s investment committee.
The bitcoin halving that occurred this past Monday is only the third such event in the cryptocurrency’s 11-year history. In the months following the first and second halvings, bitcoin prices surged as it became abundantly clear that at some point in the near future, new bitcoin issuances will come to a halt.
April saw markets rebound from the recent lows set in March, as progress combating the spread of the coronavirus gave hope to investors. The S&P 500 gained 12.82 percent during the month, marking the best single month for the index since 1987.
The Fama–French value factor, and value investing in general, has suffered an extraordinarily long 13.3 years of underperformance relative to the growth investing style. The current drawdown has been by far the longest as well as the largest since July 1963. Arnott, Harvey, Kalesnik, and Linnainmaa examine the potential causes of value’s underperformance and provide estimates of value’s performance relative to growth’s performance under different revaluation scenarios over the next decade.
The poor performance of the Fama-French factors over the last decade has led many to question the existence of the premiums. But new research shows that those 10 years were not unique, and that factor-based investing have prevailed following periods of underperformance.
In investing, uncertainty is a given – how we deal with it will be critical. Read Howard Marks’s latest memo, in which he discusses the value of understanding the limitations of our foresight and “investing scared.”
The economic calendar is a normal one and is beginning to include data from after the start of the crisis. This week includes small business and consumer sentiment surveys, as well as April data for retail sales and industrial production. I will also be watching jobless claims, both new and continuing.
The recent market volatility has caused stress, fear and even panic. But that emotional toil can be alleviated by constructing what we call “dedicated portfolios,” rather than blindly following the precepts of modern portfolio theory.
With lower expected returns on the horizon, endowment managers are questioning whether standard annual spending rates will be sustainable and whether certain spending formulas are better suited for the muted environment investors face.
Leverage is probably one of the most controversial subjects in investing. Used properly (and given a bit of good fortune), the benefits of leverage can be amazing. Leverage is the reason why home ownership is often viewed as one of the best ways of building wealth.
Research Affiliates discusses how the All Asset portfolios seek to capitalize on opportunities amid pandemic-related market volatility and a strengthening U.S. dollar.
The turmoil in the first quarter of 2020 reinforced the importance of rebalancing in target-date design. As we see it, a finely tuned, systematic approach can help keep emotions in check and risk under control—benefits that translate to many types of multi-asset solutions.
With the S&P 500 up more than 25% from its March low, pension funds and other investors are asking if they should buy portfolio insurance via protective puts and, if so, whether it’s cost effective.
While an oft-cited risk of expansionary monetary policy is runaway inflation, Global X’s CIO team reminds that policies only become inflationary if stimulus extends beyond the required period of need.
I examine new research that offers a way to algorithmically determine how to draw down one’s savings.
In response to the COVID-19 pandemic governments imposed shelter in place rules for their citizens and issued orders to close all but essential business in their country. The collective impact resulted in an unprecedented global plunge in economic activity that threatens the existence of many small and medium size businesses...
Some investors use a set-it-and-forget-it approach to their portfolios, but there are times when the asset mix may need to be recalibrated to achieve one’s goals.
When storage capacity is near its limits, how do oil producers offload their inventory? One way is to incentivize buyers with negative prices. This is precisely what happened on April 20, the day before the May WTI futures contract expired.
Low Price to Something investing, or “value” investing as it has come to be known since Fama/French introduced the “value” factor has been a disaster for investors over the past 10 plus years.
In this CE webinar, Jan Holman, Thornburg Investment Management’s Director of Advisor Education, will:
See how the coronavirus pandemic is impacting manager viewpoints across key geographic and equity regions.
COVID-19 has affected the data collection process for the major economic reports, including employment, consumer prices, retail sales, and industrial production. However, the incoming economic figures imply a stunningly swift, sharp decline in economic activity.
The spread of the COVID-19 virus has blindsided conventional risk models. By understanding what went wrong, investors can develop a more forward-looking approach to risk management that considers multiple scenarios for a highly uncertain market environment.
While there is never a good time for a pandemic, the COVID-19 crisis has arrived at a particularly bad moment for the global economy. The world has long been drifting into a perfect storm of financial, political, socioeconomic, and environmental risks, all of which are now growing even more acute.
