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Are You Financially Literate? Take the Test!
For over a decade, numerous studies have found that most Americans are lacking in their basic knowledge regarding finance and investments. I first reported on this back in 2003 and have done so every few years since then. Unfortunately, things have not gotten better over the years, despite the fact that we went through a major financial crisis in 2008-2009.
Beware Of The Valuations On The Best Consumer Discretionary Dividend Growth Stocks
by Chuck Carnevale of F.A.S.T. Graphs,
The Consumer Discretionary sector consists of businesses that sell nonessential, and therefore, discretionary goods and services. Companies in this sector include retailers, media companies, consumer services companies, consumer durables and apparel companies, automobiles and components companies. Since so much of what this sector offers is discretionary items, companies in the sector tend to do best when the economy is strongest. Unfortunately, as we will soon see, so do the prices of their stocks tend to perform best when the market is performing best.
What is Happening to Gold?
John Hathaway, manager of the Tocqueville Gold Fund (TGLDX), examines in his latest Tocqueville Gold Strategy Investor Letter the dramatic developments in the gold market over the last six months. The letter goes on to discuss the impact the Fed continues to have, and suggests that todays valuations represent a compelling entry point.
ENERGY MLPs: A Suitable and Sustainable Asset Class
Greater capitalization. More liquidity. The energy MLP market has grown steadily, with good reason: our constant demand for energy. While oil prices go up and down, volume has stayed consistent. Production is increasing. And the infrastructure is needed to support it. Add some risk, and you’ve got an investment which could fit in a diversified portfolio.
Widening the Search for Income: Beyond Traditional Bonds
by Team of Forward Management,
Multisector bond market strategies may provide an opportunity to capitalize on differences in relative value. A more refined and global approach may generate yield with dividend-paying stocks. Emerging market (EM) corporate bonds feature attractive fundamentals and have increased in popularity as an asset class.
Investment Bulletin: Emerging Markets Equity
by Team of Bedlam Asset Management,
The portfolio performed very well in May, taking the year to date net gain to 15.0%, vs. 3.5% for the index. There were two causes for the good numbers: stock selection i.e. ignoring index weightings - and the avoidance of countries with deteriorating balance of payments and budget deficits, and with high government debt to GDP ratios, such as Hungary, Poland, India, Turkey and South Africa.
T-i-m-b-e-r-r-r!
by Jeffrey Saut of Raymond James,
Many investors have stepped into the bucket, or left the game altogether. Recall that stepping into the bucket is when a batter steps away from home plate on his forward swing, usually in response to the fear of getting hit in the head by the ball. The Wall Street parallel is that it seems one of the hardest things to do is something you may not have been trained in at an early age.
Stay the Course As Mixed Signals Move Markets
We maintain that gold is in extremely oversold territory and mathematically due for a reversal toward the mean. Yet when gold prices plummet, fear takes over and some investors forget the fundamental reasons to own gold: Gold is a portfolio diversifier and a store of value. It is a finite resource with increasing global demand.
And That's the Week That Was
by Ron Brounes of Brounes & Associates,
What is the Fed actually saying? The economy is recovering; the labor market is improving; short-term interest rates should remain low until at least 2015; the bond buying program will continue in its current form; any winding down (tapering) of purchases will be contingent on steady growth; the policymakers would be prepared to ramp up buying if conditions warrant. What have many investors been hearing/thinking?
Weekly Economic Commentary
by Team of Northern Trust,
Today, the relative health of banks around the world goes a long way toward explaining differences in economic fortunes. As policy-makers seek ways to improve growth, addressing structural issues in their financial systems may be more effective than monetary or fiscal stimulus.
Dialing Down
by Scott Brown of Raymond James,
The financial markets have gyrated in recent weeks on fears that Federal Reserve policymakers will taper the rate of asset purchases. The rise in long-term interest rates and increased market volatility are hard to justify based on the discussion of possible changes in the Fed asset purchase program alone. No change in monetary policy is expected at this weeks Federal Open Market Committee meeting.
Newsletter June 2013
Do you remember hiding under the sheets listening to radio when your parents thought you were asleep? If so, I have an unbelievable collection of all the old-time radio shows we listened to when we were kids, if you have about six months? spare time. Find your favorite, click on it, and it lists literally hundreds of episodes you can re-live.
And That's the Week That Was
by Ron Brounes of Brounes & Associates,
When Ben Bernanke talksactually he doesnt even have to talk to move the markets. For the past few weeks, investors have speculated about the next Fed moves and the possibility of a tapering of the $85 billion a month bond purchase program, perhaps as early as next week. Markets have been jittery (to put it mildly) as global stocks have fallen (thanks Japan) and international bond rates have been on the rise. Investors began over-analyzing each economic release, each comment by a Fed official, each forecast by a regulatory body or related agency.
Which Way for Bonds? Mapping a Path Forward
by Bill Gross of PIMCO,
In 1980, the Federal Reserve, led by Paul Volcker, tightened the quantitative noose to tame double-digit inflation, fueling an unprecedented tailwind for bond prices. Thirty years later we find ourselves at the other extreme, as central banks print money in the trillions of dollars to stimulate economic growth, and inflation is abnormally low. While we are not likely to see a repeat of that type of bull market any time soon, we also do not believe we are at the beginning of a bear market for bonds.
But We Want Goldilocks-Like Growth
by Blaine Rollins of 361 Capital,
While the equity markets would enjoy a bit of the great rotation out of the 20+ year outperformance in bonds and into equities, the move in May has been too much, too quick for even equity investors to stomach. So while the Long Treasury ETF (TLT) fell -6.8% in May, the size of the move even scared investors in REITs (IYR), Junk Bonds (JNK/HYG), and Utilities (XLU).
Certainty, Rates and the Year Ahead
The government tells us not to worry, as the Federal Reserve comes to rescue with QE-Forever. Certainty with fiscal policy doesnt seem to change the demand equation and cheapened money doesnt do anything if demand isnt present. Treasury rates remain at 0% for the foreseeable future making yield hard to find. Read this position paper by Peritus Asset Management scrutinizing how all this has come to pass and what indicators are foretelling the near future effects on the high yield asset class.
Broader Use of Bail-Ins Could Spur a Revival of Asset-Backed Securities in Europe
by Felix Blomenkamp of PIMCO,
We believe ABS issuance will likely increase in Europe as eurozone developments and possible future bail-ins potentially result in higher risk premiums and funding costs for European banks. Although regulators are playing catch-up, capital markets are making room for a more credit-intensive product, helping to lead the way for a resurgence in ABS. Due to concerns over the security of bank deposits, investors may look to the ABS sector, which offers collateralized bonds that are free of bail-in risk.
Will Green Shoots Flourish in U.S. and Latin America?
by Josh Thimons, Lupin Rahman of PIMCO,
The US economy is much further along the road to repair relative to its developed market peers, but it is still dealing with an unsustainable fiscal situation. Latin America is closely coupled to the rest of the world. What happens in the U.S., China and Europe over the secular horizon is especially critical. Our secular investment outlook calls for a more defensive posture toward risk. In U.S. fixed income, this suggests positioning for alpha rather than capital appreciation.
Exposing False Claims about Socially Responsible Investing A Response to Adler and Kritzman
by Adam M. Kanzer,
When the Domini 400 Social Index was launched in 1990, the common wisdom said that if you limited your investable universe by anything other than financial factors, you would limit your returns. The performance of the index has proven that assumption to be false. Nevertheless, the assumption lives on.
The Role of Cash in Multi-Asset Portfolios
Determining the optimal allocation to cash is as challenging as ever in todays unusually uncertain markets. When allocating to cash, investors should consider a multi-dimensional framework to assess the liquidity of the underlying cash instruments. In our view, the most attractive risk-adjusted opportunities for cash investors lie just outside the traditional money market space.
Wounded Heart
by Bill Gross of PIMCO,
Joseph Schumpeter, the originator of the phrase creative destruction, authored a less well-known corollary at some point in the 1930s. Profit, he wrote, is temporary by nature: It will vanish in the subsequent process of competition and adaptation. And so it has, certainly at the micro level for which his remark was obviously intended. Once proud, seemingly indestructible capitalistic giants have seen their profits fall short of everlasting and exhibited a far more ephemeral character.
Equities Hit Pause
by Bob Doll of Nuveen Asset Management,
Stocks and other risk assets struggled last week, with the S&P 500 declining 1.11%.1 Equities finished lower on Friday, the final trading session of May. The decline trimmed Mays gains and sealed the second consecutive weekly decline for U.S. equities. The S&P increased 2.34% for the month and has gained 4.31% this quarter and 15.37% for the year.1
The Week in Fiscal and Monetary Policy
by Scott Brown of Raymond James,
The financial markets were more than a bit confused by the minutes of the April 30 May 1 Federal Open Market Committee meeting. Some Fed officials wanted to begin tapering the rate of asset purchases as early as June. However, that wasnt a majority opinion. Fed Chairman Bernankes testimony to the Joint Economic Committee of Congress was balanced, but strongly suggested that monetary policy is unlikely to be tightened anytime soon. In his testimony, Bernanke also lectured congress on fiscal policy, which has been completely wrong-footed this year.
And That's the Week That Was
by Ron Brounes of Brounes & Associates,
All good things must come to an end (hopefully just temporarily). After a nice month-long weekly winning streak, stocks gave back some ground as investors over-analyzed Fed comments and worried about future monetary policy. (The stimulus will end at some pointthats not necessarily a bad thing.) Japan took the over-analysis the hardest as its market suffered a serious setback, though the rally for the year had been significant and some watchers expected a pullback at some point (just not all in one day).
Global DC Plans: Similar Destinations, Distinctly Different Paths
DC plans in in the U.S., Australia and the U.K. may benefit from better aligning asset allocation defaults to workers needed outcome: purchasing power in retirement. Focusing on needed outcomes would suggest a higher allocation to real assets, earlier de-risking and consideration of tail risk hedging.
Filling the Hole We Have Dug
by Adam Bowe, Robert Mead of PIMCO,
Mining investment contributed more than 60% of the growth in Australias GDP in 2012. The expected decline in mining investment will likely leave a significant economic hole in the short term that needs to be filled. PIMCO expects easier monetary policy will be needed to support other sources of domestic growth, such as non-mining business investment, household consumption and housing construction.
Forward-Looking Broad-Market Investing
by Team of AdvisorShares,
The following is a research study that provides compelling data on a more efficient way to invest in broad markets. Many people have called the equity market of the last 10 years the lost decade due to its lack of net change. Madrona Funds research shows that it would have been possible to have profited by over 200% over the last decade by using their forward looking methodology, which is based on future expected earnings, not past performance.
And That's the Week That Was
by Ron Brounes of Brounes & Associates,
Four times a charm. Despite lackluster earnings and economic data that raises some concerns, investors continue to play the game of how high can we go and stocks climbed for the fourth straight week With 15k (Dow) and 1600 (S&P) well in the rearview mirror, investors seem to have their targets set on bigger and better things. Some bullish comments by a hedge manager; a solid consumer sentiment reading; a reason for the Fed to hold off on tapering its bond buying stimulusand its off to the races for equities (again).
If You Didn't Buy That Powerball Ticket...
by Blaine Rollins of 361 Capital,
So onward and upward. What signals should Bulls be on the lookout for? Change in breadth (Up v. Down Volumes, Advancers v. Decliners), Signs of distribution (Sharp down days accompanied by large % increases in trading volumes), Change in leadership away from RISKON sectors (dont want SmallCaps, Financials, Industrials, Transports or Housing to lag)...
Don't Set Much Store in the Equity Risk Premium
An old measure but a useful one. It should give us some indication of the market after the 23% gain in the S&P since November. The measure is simple enough: the forward price earnings yield less the yield on the GT30. This makes sense because the duration of equities is around 16.5, which is close to the GT30 of 19. By the way, other sources, notably the New York Fed use different approaches, for example Cyclically Adjusted Price Earnings and a shorter duration risk-free rate. But its the vectors that matter not the scale.
As Energy Demand Outpaces Supply, Asia Looks Overseas to Refuel
by Raja Mukherji, Taosha Wang of PIMCO,
Many Asian countries are encountering growing energy shortages due to declining indigenous resources and domestic consumption growth. Oil companies in Asia frequently engage in overseas acquisitions. In many cases, these transactions help enlarge reserve base, access technological know-hows and enhance corporate profitability. Strong sovereign support is a key investment thesis in the Asian oil and gas sector. Through our bottom-up analysis, we are finding numerous investment opportunities.
Developed Europe: Regional Economic Review 1Q 2013
by Team of Thomas White International,
After withdrawing into the background in late 2012, the Euro-zone sovereign debt crisis resurfaced in the first quarter with the Italian elections and Cyprus banking crisis. In late February, Italys national elections resulted in a fractured mandate, and Italians voted out the incumbent, the main architect of the countrys austerity and reforms agenda.
ProVise Bullets
When the President put forth his proposed budget for the 2014-15 fiscal year which begins October 1st, he went out of his way to offer an olive branch to the Republicans on entitlement programs - especially Social Security and Medicare. The President proposed changing the cost of living adjustments in such a way that, over time, there would be significant savings to the government, but of course, take the money away from the recipients.
And That's the Week That Was
by Ron Brounes of Brounes & Associates,
Fiscal Cliff. Sequester. Different names for similar budgetary issues that both basically resulted in games of Congressional kick the can. Now in a stroke of luck for non-compromising politicos, the budget deficit is shrinking as higher payroll taxes and paybacks from previously bailed out entities (thanks Fan) have enhanced government revenues since the beginning of the year.
Yen Weakness: Buffett's "Shot Heard Round the World'"
We returned recently from the Berkshire Hathaway Annual Shareholder Conference. The most exciting and profound comment to us was what Warren Buffett said about the unprecedented actions the last three years by the Federal Reserve Board. Buffett was asked about the risks of the Federal Reserves current plan to buy Treasuries to keep interest rates very low.
Who is Henry Singleton?
by Jeffrey Saut of Raymond James,
The year was 1974 and Teledyne (TDY/$77.56/Outperform), on a split-adjusted basis, was trading at about $0.05 per share. By 1986 it was changing hands around $75 per share. Unfortunately, back in 1974 I didnt have enough money to buy more than 10 shares, having lived through the devastating bear market of 1973 1974 where the D-J Industrial Average (INDU/15118.49) lost 47% of its value.
Americas: Regional Economic Review 1Q 2013
by Team of Thomas White International,
Weaker global demand and prices for energy and commodities, as well as softer than expected domestic consumption have restricted the growth outlook for most economies in the Americas region during the first three months of the year. Fewer monthly job additions in the U.S. have dented consumer confidence, and growth for the current year is now forecast to be moderately lower than earlier expectations.
The Importance of Being Different
In his latest essay, Francois Sicart, Founder and Chairman of Tocqueville Asset Management, writes about how superior investment managers outperform their market benchmarks -- by taking advantage of volatility, among other things -- as well as how to properly evaluate investment performance.
2013 US Financial Markets: Part 2 - The TINA Hypothesis
Contrary to the Bernanke Illusion (money market funds are a zero return investment), history indicates that money market funds are likely to provide investors with returns approximating inflation over the next decade. As I pointed out in our last letter, the markets are pricing in inflation levels significantly higher than the prospective total returns of 10 year TBonds. The small additional return achieved by corporate bonds or US stocks (at current prices) is unlikely to compensate a buy and hold investor with sufficient gains to justify the interim risks.
A Tale of Two Markets: Equity Bulls and Bond Bears
Surging equity markets absent an accompanying rate rally is a red flag, as Treasury yields remain well below normal. While investors renewed enthusiasm for equities is warranted, they must be careful to avoid the folly of gaming diversification. Corporate earnings have impressed, though revenue has struggled due in part to a moribund Europe. Divergent markets mean investors should stay broadly diversified in equities and real bonds not near-cash and ever alert to the fundamentals.
Deflation Is OverPlease Come Out
A blooper reel of 20th century history would likely include a feature on Japanese soldier Hiro Onoda. Posted to a small island in the Philippines during the waning days of World War II, when Onodas mission proved unsuccessful he was ultimately forced to flee into the woods, where he survived on a steady diet of coconuts and bananasfor almost 30 years after the end of the war.
Quarterly Letter
by Team of Grey Owl Capital Management,
In his April 2013 commentary, PIMCOs Bill Gross wrote, PIMCOs epoch1, Berkshire Hathaways epoch, Peter Lynchs epoch, all occurred or have occurred within an epoch of credit expansion What if an epoch changes? What if perpetual credit expansion and its fertilization of asset prices and returns are substantially altered? What if a future epoch favors lower than index carry or continual bouts of 2008 Lehmanesque volatility ?
Global Bonds: A Flexible Solution for an Uncertain Market
The recent rallies in both safe-haven and risk assets have left many investors in a quandary. We believe alpha, or above-market return, will have to play a greater role for investors seeking to meet return targets. In our view, the current environment affords many opportunities for generating alpha.
Aligning Market Exposure With the Expected Return/Risk Profile
by John Hussman of Hussman Funds,
Some risks and market conditions are more rewarding than others. My objectives for this weeks comment are very specific. First, to demonstrate using a very simple model that investment returns do indeed vary systematically with market conditions. Second, to demonstrate that overvalued, overbought, overbullish conditions have historically dominated trend-following measures when they have emerged. Third, to demonstrate the impact of accepting investment exposure in proportion to the return/risk profile that is associated with a given set of market conditions.
Gold Recovers Amidst Uncertainty
by John Browne of Euro Pacific Capital,
The selloff in gold that captured the worlds attention in mid-April has revealed some truths about how the market trades and the sentiments of many of the investors who have piled into the trade over the past few years. While the correction does highlight a higher degree of uncertainty than many of the most ardent gold advocates had anticipated, it does not represent the historic "end of an era" reversal that the many in the media have so gleefully suggested. In many ways, the market has shown a resiliency that its detractors do not understand.
Results 3,401–3,450
of 3,702 found.
