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How to Profit from the Oil Price Fall
by Lee Robinson of Altana Wealth,
In February of last year, I wrote my quarterly piece on profiting from oil. The article is shown on the following page. Oil at the time was hovering just above $50. The December 2020 future was trading around $70. The average price that could be locked in by oil traders over 5 years was therefore around $60. We predicted we would see oil in the 20’s and fast forward to 2016 and oil has fallen to below $30 having been as low as $27 with the forwards at $47 and the average 5 year price now at $38.
Bear Market Ahead?
As I’ve said many times lately, I do not believe we’re heading for a repeat of 2008–2009.
A number of factors—a stronger U.S. economy, a less leveraged financial system and consumer, and an absence of imbalances like we saw with housing—suggest that we’re not in for a 2008-style collapse. Although the economy may be entering a slowdown, growth is likely to continue.
If Retirement Time Is on Your Side, Use It Wisely!
by Richard Davies of AllianceBernstein,
Younger American workers are eager and engaged. According to our latest DC participant survey, they’re enthusiastic and confident about saving for retirement. But they have very low scores on just how to do it.
Stocks You Shouldn't Own
by Travis Fairchild, Chris Meredith, Patrick O'Shaughnessy, Ehren Stanhope of O'Shaughnessy Asset Management,
Active management has two potential advantages versus an index. The
first advantage is the one that most people think of: active stock selection.
But this paper instead focuses on the second potential advantage: active
stock elimination, or identifying stocks not to own in the portfolio. While
owning strong performers is the most obvious source of excess returns
versus a benchmark, the stocks that are in an index but not in an active
portfolio often explain as much of the active portfolio’s relative returns.
Sustainable and Responsible Investing: Is There a Price to Pay?
by Larry Swedroe,
Consumers can use their market power to demonstrate their aversion to certain business activities by choosing not to purchase goods or use services from companies that, in their minds, are selling immoral products. Similarly, investors can decide not to invest in such companies. But do those investors sacrifice returns relative to a broad-based index fund?
Suffering Stock Market Stress?
by Chuck Carnevale of F.A.S.T. Graphs,
It would be an understatement to call the recent stock market activity turbulent. High stock price volatility makes investors anxious and some people even become downright frightened. These emotional responses are often exaggerated for people in or near retirement. Therefore, I contend that all investors need to find ways to keep their emotions in check in order to avoid panicking, which typically leads to the making of a devastating financial mistake.
What Investing Factors Have Worked the Best for Equities Over the Last Year?
by Bryce Coward of GaveKal Capital,
Factor investing is a well known and utilized means that investors use to allocate capital in hopes of outperforming the market over long stretches. It’s also known that no factor works all the time, and factors go into and out of favor with what can be a menacing frequency. With that said, what factors have worked the best for equity investors over the last year as the market has meandered around all-time highs and settled to multi-years all in twelve short months?
“Moneyball” Investing: Factors without Fama or French
by Marc Gerstein,
Eugene Fama and Kenneth French deserve enormous respect for the work they did in legitimizing an equity investors’ consideration of risk factors beyond the stock market itself and in identifying those factors. But to use factors as effectively as we can, we’ll have to use a framework that meets our client-centered concerns, which are not necessarily the same as those of academicians.
When Stocks Crash and Easy Money Doesn't Help
by John Hussman of Hussman Funds,
Historically, increases in the Fed’s balance sheet have only been positively associated with increases in the S&P 500, on average, when the S&P 500 was already in an uptrend and investors were already inclined to speculate.
Recession Probability Models - February 2016
by Ted Kavadas of RevSD,
There are a variety of economic models that are supposed to predict the probabilities of recession.
While I don’t agree with the methodologies employed or probabilities of impending economic weakness as depicted by the following two models, I think the results of these models should be monitored.
GMO Quarterly Letter
by Ben Inker, Jeremy Grantham of GMO,
In a new quarterly letter to GMO's institutional clients, co-head of asset allocation Ben Inker examines U.S. high yield corporate bonds, an "asset class that had a notably bad year," concluding, "at current spreads, high yield seems to be no worse than fair value and probably better than that... In today's environment, that makes it one of the best available risk assets for investors" ("Giving a Little Credit to High Yield").
A Look Back at 2015: Lessons Learned
The first sentence of my market update for last January went like this: “U.S. stock markets dropped across the board in January, as investors reassessed their risk tolerances.” Sound familiar? I went on to note that the primary concerns were slow earnings growth, caused by weakness elsewhere in the world, and a strong dollar. Again, does that ring a bell?
Weighing the Week Ahead: Is the Correction Over?
Stocks once again made a sharp turnaround late in Wednesday’s session. The “mystery” rebound took the S&P 500 up 3.5% in about two days of trading. Despite the important economic releases and heavy earnings calendar next week, expect the punditry to be asking:
Is the correction over?
A Frail New World
In this month's Absolute Return letter we argue why the long-term outlook for GDP growth and for returns on risk assets is uninspiring. We are often 'accused' of allowing the negative long-term demographic outlook to colour our view on risk assets in general, but in the February letter we argue why the demographic outlook is only one of (at least) four factors, which will hold back GDP growth as well as returns on risk assets in the years to come.
Now is the Time for Value to Outperform Growth
Now is a very attractive time to invest in value strategies. In similar times in the past, value investors achieved both strong absolute returns and robust relative performance versus the broad market indexes. Let’s explore what history can teach us about what is to come.
Thoughts on the Alternative Investing Landscape in 2016
As 2016 gets under way, investors need to guard against short-term volatility spikes and contagion risks from factors including geopolitical turmoil and pressure on oil prices. How is the environment impacting the risk/return characteristics of various hedge fund strategies?
A Market Correction Isn't Unusual…Look for Growth Later This Year
by Vern Sumnicht of iSectors,
As we saw at the close of last week’s market and really the entire first half of January, 2016 has had a difficult beginning. There are a number of market concerns that have resulted in a correction in the first half of January and they revolve around.
Does Market Volatility Bring Opportunities for High-Yield Bonds?
We believe the recent volatility and selloff in U.S. high yield offers an attractive relative investment opportunity as yield premiums have widened to provide appropriate compensation for today’s market risks.
The overall market still warrants a cautious approach for 2016, but we are constructive on much of the non-commodity-related high-yield opportunity set.
A disciplined credit selection process should serve investors well in taking advantage of high-yield opportunities.
Buckle Up
by Byron Wien of Blackstone,
My list of Ten Surprises for 2016 has a gloomy tone. I generally think of myself as an optimist, but some concepts that I have been brooding about for a while seem to be converging. I have been worrying about the impact of China’s slowdown on the rest of the world, the ramifications of the refugee crisis on the stability of Europe, the peaking of profit margins in the United States, the surfeit of goods around the world coupled with insufficient demand, the dependence of developed economies on central bank monetary easing for growth, the accumulation of public and private debt...
Why You Should Question “Buy And Hold” Advice
I recently received an email from an individual that contained the following bit of portfolio advice from a major financial institution:
“Despite the tumble to begin this year, investors should not panic. Over the long-term course of the markets, investors who have remained patient have been rewarded. Since 1900, the average return to investors has been almost 10% annually…our advice is to remain invested, avoid making drastic movements in your portfolio, and ignore the volatility.”
Annus Horribilis for MLPs
Despite the returns seen recently for MLPs generally, we are very optimistic about the outlook for MLPs in the long-run. Bottom line, we see the demand for midstream services to continue to expand. While we expect the volumes of oil will decline in the coming quarters, we expect the volumes of gas to be produced will still increase. And while oil is in oversupply for the current time, strong demand growth is being spurred by lower prices.
Peak Gold and Silver - It’s Here!
Have we reached peak precious metals? Many analysts think so.
Just to be clear, however, the idea of peak gold and peak silver doesn't refer to a peak prices. The precious metals put in a cyclical price high in 2011. But annual mining production levels may have peaked in 2014-2015. This is what is meant by “peak precious metals."
China’s Year of the Monkees
by John Mauldin of Mauldin Economics,
China isn’t the only reason markets got off to a terrible start this month, but it is definitely a big factor (at least psychologically). Between impractical circuit breakers, weaker economic data, stronger capital controls, and renewed currency confusion, China has investors everywhere scratching their heads.
Surviving Chinese Volatility
by Andy Rothman of Matthews Asia,
2016 is likely to be a year of volatility in China. This month’s Asia Insight explains how this volatility can create opportunities for investors, especially when dire headlines incorrectly assume that weak performance by outdated market indexes signal an economic hard landing.
Comparisons to 2008 Spark Gold’s Fear Trade
The comparisons to 2008 have triggered gold’s Fear Trade, with many investors scrambling into safe haven assets. Jeffrey Gundlach, the legendary “bond king,” recently made a call that amid further market turmoil, the metal could spike as much as 30 percent, to $1,400 an ounce.
What Does the Market Know?
In Thursday’s memo, “On the Couch,” I mentioned the two questions I’d been getting most often: “What are the implications for the U.S. and the rest of the world of China’s weakness, and are we moving toward a new crisis of the magnitude of what we saw in 2008?” Bloomberg invited me on the air Friday morning to discuss the memo, and the anchors mostly asked one version or another of a third question: “does the market’s decline worry you?” That prompted this memo in response.
A Year of Transition for Financial Assets
The rocky start to the year corroborates our belief that 2015 marked a transition in the investment environment. We expect low returns and high volatility to continue in 2016.
Two factors that help explain market outcomes in 2015 remain relevant in 2016: 1) financial assets aren’t cheap and 2) Fed tightening eliminates one of the greatest tailwinds for financial markets.
Even in this new and challenging environment, we strongly believe that positive returns are achievable with the appropriate investment strategy. Active strategies deserve higher prominence.
What, Me Worry?
by Scott Brown of Raymond James,
Recent economic data releases have been mixed. However, despite strong job figures, most have been on the soft side of expectations. Lower commodity prices are tough for producers of raw materials, but beneficial to the buyers of those materials. However, the bigger concern is why commodity prices are falling. Many view the drop in oil prices as signaling a more pronounced global slowdown and fear that the U.S. domestic economy may not be robust enough to escape that. The anecdotal data from the manufacturing sector is much worse than is suggested by the hard economic data reports.
Tactical Alpha: Theory & Practice (Pt. I) – Fundamental Law of Active Management
For the overwhelming majority of investors, portfolios are broadly organized into strategic silos of stocks and bonds, such as the ubiquitous 60/40 balanced portfolio. By design, the strategic proportions of stocks and bonds in the portfolio change very little over time. However, within each silo investors take active risk by choosing to hold individual stocks and bonds in weights that deviate substantially from passive market-cap weights.
Market Plunges Deeper, but No Recession in Sight
I’ve written over the past couple of days that it's not time to panic, and I still believe that's true. But it appears there may be more short-term damage than I initially thought. Now, the question is, how much worse might it get, and what does that mean for us as investors?
A Tale of Two Economies
U.S. economic growth appears to have shifted to a lower gear in the final months of 2015. It has left many concerned about the well-being of the economy and raised questions about the Federal Reserve’s recent hike of the policy rate. In this context, it is important to note that the recent slowing reflects a lopsided development not a widespread deceleration of economic activity.
China: A Rocky Start to a New (Old) Year
by Matthew Peterson of LPL Financial,
Once again, the precipitous decline in the value of the Chinese stock market has spilled over to the broader global financial markets. The value of the Shanghai Index declined almost 15% since the beginning of the year, or at least the beginning of our year. China’s social and economic life is geared around the lunar New Year, which will be celebrated on February 8, 2016. The New Year makes a big difference in China, both psychologically and in real economic activity.
Fed Rate Hike Playbook: Part 2
by Anthony Valeri of LPL Financial,
In Part 2 of our Federal Reserve (Fed) rate hike playbook, we assess how municipal bonds have fared during periods of Fed rate increases. In the first full week of trading for 2016, Fed rate hike expectations declined in response to another bout of Chinese economic concerns and a benign message from the Fed meeting minutes, which appeared to cast doubt on whether the Fed would ultimately follow through on its forecast of roughly four rate increases in 2016.
How Gold Got Its Groove Back
After five straight positive trading sessions, the yellow metal climbed above $1,100 on a weaker U.S. dollar, its highest level in nine weeks. The rally proves that gold still retains its status as a safe haven among investors, who were motivated this week by a rocky Chinese stock market, North Korea’s announcement that it detonated a hydrogen bomb on Wednesday and rising tensions between Saudi Arabia and Iran.
You Cannot Manage New Economies with Obsolete Measuring Tools
In his latest piece, Francois Sicart, Founder and Chairman of Tocqueville Asset Management, discusses how misleading macroeconomic averages and aggregates can be as they often consist of components that could both signal either economic weakness or an acceleration with the potential to rekindle inflation.
Federal Reserve Outlook for 2016
by Tony Crescenzi of PIMCO,
Up until the Federal Reserve’s historic December meeting, when the central bank increased its policy rate for the first time since 2006, investors were fixated upon when the Fed might finally move its policy rate up from the range of 0%–0.25%. The Fed set the rate at the zero bound in 2008 to combat a plunge in economic growth and to fight disinflationary pressures tied to the debt deleveraging process.
Results 4,751–4,800
of 6,447 found.
