In a “secular bull’ market, the prevailing trend is “bullish” or upward-moving. In a “secular bear” the market tends to trend sideways with severe drawdowns and sharp rallies. However, what truly defines long-term secular markets are valuations, and whether those valuations are contracting or expanding.
Consumer attitude measures are divided by political affiliations. That’s nothing new. Sentiment readings have long depended partly on which party occupies the White House. Republicans currently rate economic conditions better, just as Democrats did during the Obama years (Independents fall somewhere in the middle).
In the bond market, staying positive is easier said than done.
Shifting trade policy perceptions remained the dominant factor for the stock market.
Private markets remain a key source of income for institutional portfolios, but late-cycle concerns demand a thoughtful approach to opportunities and risks.
Key Points
Rick Rieder and Russ Brownback argue that – in contrast to the past decade of monetary policy lifting all economic boats at once – the years ahead are likely to be characterized by great dispersion between economies, industries and markets. Understanding that dynamic will be the name of the game for investment success.
Changing dynamics may present a new set of opportunities for investors.
Despite decades of academics and practitioners promoting the “value factor,” it generates marginal to no long-term alpha. Four reasons have slowed the transition from the accepted “value” regime (low price to something) towards a more robust and realistic true value regime (worth measured independent of market price and focused on the value of future cash flows).
Endeavors in the financial markets do not fall firmly on, but move fluidly between, extremes on the chance and design spectrum. At times, investment outcomes are a product of chance and design engaging in a competition. And at other times, they are a product of the two working together.
The economic calendar is normal with a focus on housing. Some will be parsing the Fed minutes while others watch the impeachment hearings. This week’s topic may not be a media focus for the week ahead, but it gets constant attention. With a government shutdown and the debt ceiling on the agenda, let’s seize the moment and ask: Is it time to worry about debt? I suspect that many readers believe it is way past time!
S&P’s SPIVA scorecard provides persuasive evidence of the futility of active management. But its most recent scorecard illustrates something else – why active managers underperform even in the best performing asset class.
The menu of types and styles of exchange-traded funds available to investors keeps growing. The Securities and Exchange Commission just approved four proposals for a new type of exchange traded fund: non-transparent, active ETFs
Emerging markets provide many potential investment opportunities, but corporate governance shortfalls can present challenges. Over the years, some countries have moved faster than others to plug their governance gaps. Franklin Templeton Emerging Markets Equity’s Chetan Sehgal and Andrew Ness outline what corporate governance is and how emerging markets are making improvements in this area.
During Q3 2019, “haven” assets were strongest among the primary asset classes. This followed a similar pattern from the second quarter.
One of the pitfalls of identifying market conditions using labels like “bull market” and “bear market” is that the accuracy of those labels can only be verified in hindsight.
ESG integration is best used as a tool to improve portfolio returns and/or reduce risk. While usually thought of as a company-level concern, material ESG data can be very useful at the country level as well, especially in emerging markets. ESG signals are only as good as the quality of their inputs.
October has historically been a volatile month for stocks. But this year, it marked the second consecutive month of positive returns for global equities. Find out why.
Research Affiliates discusses how its research partnerships with academic thought leaders inform its process and examines the All Asset strategies’ returns per unit of equity beta.
This is an absolute monarchy we’re talking about, after all, and so global investors should not expect to have any shareholder rights. Aramco’s board of directors will have a fiduciary duty to MBS and any future monarch, not to investors. This has some serious implications.
REIT investors can diversify through a fund or ETF tied to an index, such as the FTSE NAREIT Index. But new research shows that a factor-based approach will have superior risk-adjusted returns.
The news media, bank executives, the U.S. Federal Reserve (the Fed) chairman and even presidential candidates have made remarks about the recent spike in short-term funding rates. What caused the spike and why is it important?
In October the International Monetary Fund (IMF) lowered its 2019 GDP forecast to 3.0% from 3.2% in July. This represents a marked slowing from global growth of 3.8% in 2017. The primary driver of the slowdown has been a retrenchment in global trade and business investment in response to the ratcheting up of trade tariffs since early 2018.
The pitfalls and opportunities we see in high yield markets highlight the importance of active portfolio management, rigorous credit analysis, and taking a cautious and selective approach.
Last week’s key releases of job growth and ISM manufacturing data highlight the ongoing bifurcation in the economy; with the consumer bucking manufacturing’s malaise.
When the US and ultimately the rest of the Western world began to engage China, resulting in China finally being allowed into the World Trade Organization in the early 2000s, no one really expected the outcomes we see today. There is no simple disengagement path, given the scope of economic and legal entanglements. This isn’t a “trade” we can simply walk away from. But it is also one that, if allowed to continue in its current form, could lead to a loss of personal freedom for Western civilization. It really is that much of an existential question.
The evidence is overwhelming that automation has positively impacted total factor productivity (TFP) for years, i.e. GDP growth continues to benefit from the digital revolution despite the fact GDP growth is rather pedestrian these years.
Welcome to Emerging Markets! A huge array of economies all at various stages of development and maturity with different capital market structures. Add in as many different currencies, political frameworks and policy stances and the result is a complex, diverse, evolving and inefficient market universe.
As a senior woman in the investment industry, I am consistently appalled at how my male colleagues think nothing of talking about a woman’s physique, “beauty” or personality in my presence.
Most advisors tell you they are “tech savvy” and utilize the latest technology. That may be true, but I have a couple of suggestions you may not have considered.
Data science has brought investors powerful new tools to help generate returns, so is there still need for a human touch? Franklin Templeton Fixed Income CIO Sonal Desai weighs in on the role of quantitative science within the active-passive investment debate.
Listen... do you hear that? A bubble is popping. No, we aren’t talking about the stock market... well, at least not the stock market you’re probably thinking about. Generally, public companies have the economics to back up their lofty valuations, even if those valuations are, well, lofty. It is the market for private companies, specifically those backed by venture capital (VC), that looks truly bubblelicious.
Trade, geopolitics, and emerging markets were top of mind at the recent annual meetings
The National Bureau of Economic Research (NBER) defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.
This update contains a brief background on our ESG philosophy as well as an update on our methodology, notably including an improvement we made to adjust from overweighting S and G factors in previous iterations to an equal weighting of each of the E, S and G factors going forward.
Are equity managers reconsidering their exposure to more expensive growth stocks? Check out the latest insights from our manager research team.
When it comes to digital strategy in the wealth management industry, return on investment is totally dependent on how often clients keep coming back to a RIA’s client portal.
As we saw in the Summary of Economic Projections released in September, the Fed’s economic outlook is similar to most outside economists. The baseline scenario is for moderate growth in 2020, with growth in real GDP near 2%, and inflation moving gradually toward the Fed’s 2% goal.
In past reports we have discussed America’s evolving hegemony, noting that America’s hegemonic narrative centered on containing communism which united Americans to accept the burden of the superpower role.
Never in my investment career can I recall political “happenings” carrying so much weight in daily market movements. Today’s markets are whipsawed by political slings and arrows, often in the form of tweets or breaking news reports. And “investors” increasingly are reacting impulsively to a reality that’s shifting minute-by-minute.
The First Eagle Global Fund (SGENX) reflects the teachings of Benjamin Graham and Warren Buffett. In this interview, the three managers of the fund discuss a number of topics, including why they hold a large position in gold, why the market will favor value investors on a long-term basis and their views of ESG investing in the context of the companies they own.
Do factor premiums survive implementation costs? To answer this question, I’ll examine the returns of live mutual funds to see if they have been successful at capturing the returns of small-cap and value premiums.
Many conversations lately about negative CEO Confidence vs optimistic consumers Most of the bullish commentary centers around CEO's being wrong. But are they? We cover what historically happens next.
Headline inflation resulting from a food price shock can never be ignored fully.
In less than 12 months we have seen the Fed raise rates, cut rates, shrink its balance sheet, expand its balance sheet, inject liquidity, withdraw liquidity, and do who knows what else behind the scenes. Either Fed officials are confused or we are at some kind of economic turning point. Or possibly both—there is no playbook. At a minimum, I think we are at a turning point and the Fed is having to improvise policy as events dictate.
The primary purpose of this article on the importance of forecasting the future results of a business is offered to illustrate the conceptual validity of forecasting earnings (and every other metric) as the key to long-term investor success.
Both endeavors are driven by statistical analysis. Explore three different ways that managers can build their ‘teams.’
Is the lack of a size premium due to the performance of small-growth stocks in general? Or is it due to penny stocks, IPOs, stocks in financial distress and lottery-like small-growth stocks? Several recent studies answer those questions.
Brian Smedley is head of macroeconomic and investment research at Guggenheim Partners. In this interview, he explains why his team is forecasting a recession in mid-2020 and how advisors should position portfolios in response.
Alternative investments have the potential to enhance portfolio returns and reduce risk, but it isn’t easy to determine which alternative works best—and how much of it to own. To get accurate answers, it’s necessary to look beyond traditional asset-allocation approaches.
