The economic calendar is light, and the market week will be shortened. There is no holiday this week, but expect many participants to take off early for a long weekend. If interest remain above 3% on the ten-year note, that will be the focus.
To serve the needs of our evolving consumers, a more comprehensive fiduciary mindset needs to be adopted in order to survive.
Christopher Mack is a co-manager of the Harding Loevner Global Equity Fund (HLMGX). Over the 15-year period ending 4/20/18, its annual return has been 10.46%, outperforming its benchmark by 160 basis points. Over that 15-year period, it ranks in the 15th percentile of its Morningstar peer group. I interviewed Chris last week.
Viewing investors and markets as emotional decision makers rather than as rational computational entities forces us to reconsider every aspect of how we operate in financial markets. The behavioral financial markets concepts I discuss below provide a framework for rethinking client financial planning, asset allocation, investment manager selection and the creation and execution of investment strategies.
A number of our clients are watching the markets and becoming increasingly uncomfortable with the ups and downs. We have many retirees and soon-to-retire clients and 2008 is still fresh in their minds. They fear another disastrous downswing in their portfolios.
There are logical explanations for why the size premium may have shrunk. But there also remain simple, intuitive, risk-based explanations for why the premium should persist.
The ability to withstand the next market correction may require making investment decisions that go against the grain. Can a multi-asset approach help?
While we don’t know when the equity market’s recent volatility will settle down, it’s important to consider the big-picture, fundamental backdrop for the market, and not get caught up in short-term sentiment swings, according to Franklin Templeton’s head of equities, Stephen Dover. And, he believes the fundamental backdrop still looks solid.
“Further research into active management has helped this organization hone it’s criteria for finding superior active managers.”
The field of Behavioral Finance took a great leap forward in 2017, as the Nobel prize was awarded to Richard Thaler for his work. Philosophically, we know Behavioral Finance is important, but there is a method for advisors to integrate it into their practice and prove value to their clients.