Results 51–100 of 113 found.
Location, Location, Location
When the global economy was binging on credit, it was fine to invest in marginal locations’ equity markets. However, as the global economy slowed, those fringe markets have disappointed, and “location, location, location” has proved as important to equity performance as it is in real estate.
Asset Allocation 2.0™
Global markets are experiencing a major paradigm shift, which has rendered traditional asset allocation models all but obsolete. In order to attain true diversification investors must abandon the past and embrace the new. Introducing Asset Allocation 2.0™.
2016 – Mute the TV
With 2016 right around the corner, investors should remember that it rarely helps portfolio performance to listen to the 24-hour news cycle and Presidential candidates’ rhetoric. We’d rather invest for our clients based on a rigorous analysis of data, which currently suggests the US economy is in considerably better shape than recent campaigning suggests. For 2016, it’s time to mute the TV and focus on fundamentals, not noise.
Taking Grounders In Spring Training
If there’s one thing that all of ‘the greats’ throughout history have in common, it’s a mastery of the fundamentals. Grammy award winning singers warm their voices up before every performance and Hall Of Fame baseball players take grounders every spring training. Unfortunately, investors continue to focus on noise instead of the basics of investing.
Is the Sky Really Falling?
While most investors remain hesitant to make a move, the recent market correction created a great entry for savvy investors. One must ask themselves if this is the beginning of the end or merely a bump in the road of a continued bull market.
Uncertainty = Opportunity®
While market volatility is currently making front-page headlines in the media, we argue that investors must look past the noise and objectively focus on the fundamentals. Before you decide on a drastic asset allocation shift, learn what opportunities we see in these uncertain markets.
Global Investing is Changing
International investing was easy for U.S.-based investors for many years because the U.S. dollar was either declining in value or was stable. U.S. dollar-based investors’ non-US equity and fixed-income returns were generally enhanced by the falling dollar so that U.S. investors actually tended to outperform the local currency benchmarks. Of course, investment managers took credit for the resulting “alpha” despite that out performance was more likely attributable to currency than to asset selection.
Global Investing is Changing
The global investing landscape is changing and your portfolio should as well. A strong US dollar can have significant consequences for US dollar-based investors' foreign exposure and now is the time to consider the impact currency can have in a global portfolio.
Time to look at South Korea
Our global investments continue to focus on the secondary effects of the deflating global credit bubble. The bubble’s deflation has left the world awash in capacity, and we expect countries to fight for market share as a result of that overcapacity.
Valuation Normal for Mid-Cycle Period
While not as headline-catching as some of the doom and gloom market predictions currently circulating, our indicators suggest that the equity markets are fairly valued and are in the midst of a mid-cycle environment.
The Dollar Isn't the Peso Anymore (Part II)
In May 2013, Richard wrote a report titled “The Dollar isn’t the Peso anymore.” He rebutted the argument that the U.S. dollar (USD) was weak. The data showed that the USD had actually troughed in the spring of 2008. For seven years now, the USD has been gaining strength and is today a standout among the world’s currencies.
The Dollar isn’t the Peso anymore (Part II)
The US dollar rally is in its seventh year and we expect this trend to continue. Many observers, including the Fed, continue to worry about inflation. However, we think a strong USD and disinflation/deflation seem more likely than inflation so long as global overcapacity forces nations to fight for market share and depreciate their currencies.
Bonds or Jeter?
In baseball, batters choose to either swing for the fences in hopes of a home run or go for more consistent base hits. These same principles are highly relevant to the current market environment and long-term investment success. So, see if you really want home run hitters in your portfolio?
2015 Year Ahead: Continuing to Deflate the Global Credit Bubble
Stock market leadership virtually always changes when volatility significantly spikes, and the 2008 bear market was no exception. Credit-related asset classes led the markets for the decade prior to 2008 as the global credit bubble inflated. Since 2008?s bear market, however, leadership has significantly changed and credit-related asset classes have generally underperformed plain, old-fashioned stocks.
Tired of Being Scared Yet?
Bull markets are based on climbing the proverbial wall of worry, and this cycle has been no different. We have consistently argued over the past five years that the current bull market could be one of the biggest of our careers. Both investors and corporations continue to act conservatively because of the uncertainty caused by a litany of issues. Uncertainty is typically the engine of bull markets.
Special Report: Volatility Update
Volatility can destroy the best of financial plans. Simply doing nothing can be a fine strategy in the face of short-term volatility, but the tension associated with market downdrafts makes both institutional and individual investors feel that doing nothing is not an alternative. However, decisions made under duress are typically decisions that should not be made.
Is Smart Beta Smart Enough?
As smart as smart beta might be, it is not smart enough to answer the most important question in beta management. The key to successful beta management, regardless of whether the beta is smart or dumb, depends primarily on the choice and timing of beta. A strategy that focuses on smart beta without consideration for full beta management seems very likely to underperform.
Stocks vs. High Yield Munis
The track record of the so-called "Fed Model" is dubious at best. The relationship compares the S&P 500's earnings yield to the yield of the 10-year Treasury note, and there are many other indicators that have a better track record than does the Fed Model when attempting to predict twelve-month forward returns. Despite that caveat, we nonetheless thought it interesting to examine the yield relationships between stocks and a broader array of fixed-income categories. Among those categories, high yield municipal bonds can be the only fixed-income that is attractive relative to stock
Toward the Sounds of Chaos
Stock market volatility is always a scary thing. Investors nearing retirement fear their nest eggs will evaporate. Younger investors saving for a home or a childs college education fear their families futures might be in doubt. However, history suggests that allowing volatility to overrule a good investment plan tends to lead to poor performance. Its not volatility itself that generally leads to poor longer-term performance, but rather it appears to be investors emotional reactions to volatility that ultimately lead to poor performance.
Lack of Corporate Hubris Means Elongated Cycle
When we started Richard Bernstein Advisors roughly five years ago, we thought the US was entering one of the biggest bull markets of our careers. Today, we are likely in the midst of this long bull market. Despite the general consensus that a bear market is on the horizon and investors ongoing interest in protecting potential downside risk, we do not think the Fed, investors, or corporations are yet sowing the seeds for the next recession.
EM Debt Seems Risky
At RBA, we search for gaps between perception and reality, and this seems to be the case for emerging market debt. Investors have been lured to these securities by their higher yields, yet the underlying economic and currency fundamentals are deteriorating without commensurate widening of spreads.
Worried about the Downside?
There have been numerous academic studies that suggest investors reactions to market risk are not symmetric. Investors consistently react more negatively to losses than positively to gains. At RBA, we incorporate this asymmetry in our sentiment work. Data clearly show that no group of investors is currently willing to take excessive US equity risk. Pension funds, endowments, foundations, hedge funds, individuals, Wall Street strategists, and even corporations themselves remain more fearful of downside risk than they are willing to accentuate upside potential.
A Classic Barometer
Investors seem a bit too eager to tout emerging market equities. Much as they did with technology stocks during the early-2000s, investors today are looking for the best re-entry point. Data clearly do not support anymore the notion that emerging markets are a superior growth story, yet investors seem to be ignoring the classic warnings signs for fear of missing out. One such classic warning sign is the slope of the yield curve. Historically, steeper yield curves have been reliable forecasters of stronger overall nominal economic growth and stronger profits growth.
The Importance of Beta Management
Morningstar recently released ?Mind the Gap-2014? which demonstrated that investors are generally very poor beta managers. The Morningstar data showed that investors? performance lagged that of their funds by about 250 basis points per year for the past ten years because of poor beta management, i.e., investors tend to be very poor allocators of capital.
American Industrial Renaissance Revisited
We first wrote about The "American Industrial Renaissance" in 2012, and it remains one of our favorite investment themes. We continue to implement this theme through small US-centric industrial companies and small financial institutions that lend to public and private industrial firms. It remains unlikely that the United States will be the manufacturing powerhouse that it was during the 1950s and 1960s, but many factors are suggesting that the US industrial sector will continue to gain market share.
Market Share: The Next Secular Investment Theme
It is well known that corporate profit margins are at record highs. US margings, developed market margings, and even emerging market margins are generally either at or close to record highs. A myopic focus on profit margins may miss an important investment consideration. Whereas most investors remain fearful of margin compression, we prefer to search for an investment theme that could emerge if margins do indeed compress. Accordingly, our investment focus has shifted toward themes based on companies who might gain market share.
Equity Bubble? No.
The US stock market performed very well during 2013. The S&P 500s total return of nearly 33% far outpaced the returns of most asset classes. A growing contingent of market observers is fearful that the US equity market is in some sort of a bubble. We disagree completely with this notion. A strong market rally that many investors have missed is hardly sufficient grounds for a financial bubble.
Like a Shakespearean Script
Shakespearean plays follow a pattern. The underlying plots and storylines change from play to play, but the five-act construction is a common overlap. Market cycles tend to follow a similar pattern cycle after cycle. Like the different plots in various Shakespearean plays, the catalysts that begin and end each cycle, and the events during the cycle are always different. However, market cycles seem to follow a script and, so far, this cycle seems to be following the script almost perfectly.
10 for '14
Each December we publish a list of investment themes that we feel are critical for the coming year. We continue to believe the US stock market will continue its run through one of the largest bull markets of our careers. Our positive outlook extends to the following areas: US Equities, Japanese Equities, European small cap stocks, high yield municipals.
EM: The Growth Story That Isn't
We remain very concerned about emerging market stocks and bonds. The recent outperformance of EM stocks is again luring investors to once again touch the hot stove. Emerging markets seem to have some significant structural and cyclical issues about which investors seem unaware or seem to be ignoring.
A Special Note on Potential Government Debt Default
We find it incredible that the government is, once again, on the verge of a default on US debt. Although we doubt that the US will actually default, it is unfathomable that elected officials would even consider such an event. Worse yet, some officials apparently believe that a default might benefit the US.
The Global Sea Change Continues
Most investors will readily admit the global credit bubble is deflating, yet continue to favor credit-based asset classes within their portfolios. Whereas many investors still believe that the emerging markets are a growth story, the data tell us that U.S. investors can find growth in their own backyard.
Japan The Land of the Rising Stock Market
We have been ardent bulls on the Japanese stock market since last Fall. Our thesis has been a simple one: For the first time in the history of our data, Japan began running consecutive monthly current account deficits.
If SNLs Emily Litella worked on Wall Street, shed probably be asking Whats all this hubbub about the Feds tapir? After all, its a fine animal that never hurt anyone on Wall Street. It would then be pointed out to her that the word was taper and not tapir. She would politely end her commentary with her famous Never mind.
The REAL Great Rotation
The phrase "Great Rotation" has come to mean a sizeable shift in asset allocation from bonds to stocks. We, too, believe that stocks are likely to secularly outperform bonds, but we dont think that is the "great rotation" about which investors should be concerned.
Reversing Quantitative Easing
The Fed is likely to lag the markets, as they do in most cycles. The markets will probably anticipate the Fed reversing QE. The Fed will surprise few investors. The Fed should reverse QE in a yield curve-neutral way, in our view. Steepening the curve risks perversely stimulating the economy by making carry trades and loan spreads more profitable. This cycle will probably end as do most cycles. The Fed will be behind the curve, play catch-up, tighten too much, invert the curve, and cause a recession. That end result, however, is probably quite far in the future.
80's Bull Redux
We have thought for some time that the current bull market might be one of the strongest of our careers, and could potentially rival the 1980s bull market. Although this current cycles construction is quite different from the 1980s bull market, there are many aspects of this market that are curiously similar.
The Year in Review: 2012
Politicians crave the spotlight, but it is unfortunate that investors watch the show. 2012, like 2011, was another year in which Washington theatrics scared investors. As a result, investors largely missed out on above average equity returns. Corporate profits and valuations, and not Washington, continue to be the primary drivers of equity returns. We think there are several important points to consider when reviewing 2012 performance, and when structuring portfolios for 2013.
Beyond the Fiscal Cliff
Politicians love the spotlight, but it is very unfortunate that investors watch the show. The drama of the so-called "fiscal cliff" has scared investors, and led them to miss a very good year in the equity market (the S&P 500's total return was 16.0% during 2012 versus the long-term annual average of 11.8%). It appears as though Washington wants to continue to dominate the headlines, which means that it may be more important than ever for investors to downplay Washington's theatrics.
13 for '13
Each December we publish a list of investment themes that we feel are critical to the coming year. We continue to believe that US equities are in the midst of a major bull market that could ultimately rival 1982's bull market. It is hard to be bearish when one considers the following.
The American Industrial Renaissance
The "American Industrial Renaissance" remains one of our favorite investment themes. We prefer to implement this theme through small US-centric industrial companies and small financial institutions that lend to public and private industrial firms. It is unlikely that the United States will again be the manufacturing powerhouse that it was during the 1950s and 1960s, but many factors are suggesting that the US industrial sector will gain market share over the coming decade.
This Is What Bull Markets Are All About
Investors have the impression that bull markets are days of wines and roses. However, nothing could be farther from the truth. Bull markets are periods of fear. This becomes quite obvious when one examines the valuation and sentiment data associated with the 1982, 1990, 1995, and 2003 bull markets.
Is Buy-and-Hold Dead?
If one searches in Google for Does buy-and-hold work?, more than 191 million results will appear.If one searches for Is buy-and-hold dead?, more than 81 million results will appear.However, if one searches for Successful buy-and-hold strategies, only about 9 million results will appear.Its pretty clear that the investing world believes that buy-and-hold strategies are basically dead and gone.
Results 51–100 of 113 found.