A variety of macro and fundamental factors are converging in emerging markets, signaling a period of resurgence. We believe structural changes, a supportive investment environment, and dynamic geopolitical influences make EM particularly attractive right now. For example, semiconductor production could soon become more critical to EM growth than commodities. Now may prove to be an inflection point, especially for portfolios focused on capturing this dynamic change. Please join us for an interactive webinar highlighting EM's changing nature and the added value of active management.
There is hope that economies will see a more sustainable and robust recovery this year, given unprecedented levels of monetary and fiscal stimulus and as more individuals are vaccinated against COVID-19. But one question for investors is what happens next—will inflation and higher interest rates be a consequence?
Valid until the market close on March 31, 2021.
The S&P 500 closed February with a monthly gain of 2.61% after a loss of 1.11% in January. At this point, after close on the last day of the month, four of five S&P 500 strategies are signaling "invested" — Vanguard Total Stock Market ETF (VTI), Vanguard FTSE All-World ex-US ETF (VEU), Vanguard REIT Index ETF (VNQ), and Invesco DB Commodity Index Tracking (DBC) — unchanged from last month's quadruple "invested" signal.
We hope you enjoy Harold Evensky's latest NewsLetter.
Italy’s new prime minister, Mario Draghi, has a well-earned reputation for turning around difficult situations. But can he reverse Italy’s relative economic decline? And what does his program mean for Italian bond yields?
From cloud computing and automation to self-driving cars, technology continues to be one of the world’s hottest sectors. Our Chief Market Strategist Stephen Dover and Portfolio Managers Donald Huber and John Remmert believe active investing in technology and innovation is a global story, and government support and spending in next-generation technologies is likely a long-term positive.
Today’s low bond yields and high equity valuations have led many to jettison the traditional 4% initial safe-withdrawal rate assumption. But I will show that the optimal “safe” withdrawal rate depends considerably on the retiree.
Today the National Association of Realtors released the January data for their Pending Home Sales Index. According to the National Association of Realtors®, "Pending home sales took a step backward in January as inventory constraints continue to hold back prospective buyers."
Target date funds should be designed to reduce the risk of rash selling.
Turmoil in mega-caps like Apple Inc. is stirring investor anxiety. But for professional stock pickers, it’s mostly good news when the market’s biggest companies loosen their grip.
The key to getting referrals from a board is treating those influential people as genuine centers of influence.
The biggest slide in months for Cathie Wood’s funds is testing the resolve of investors who plowed billions of dollars into one of the hottest firms on Wall Street.
The energy sector is beginning to adapt to the realities of climate change. Who is best positioned for the future?
The GMO Asset Allocation Team has released its latest 7-Year Asset Class Forecasts through January 2021.
A solution for the challenge of moving wirehouse clients with active securities-based loans.
Calls of a market bubble might indicate low returns over the next 5-10 years, but not all equities are overvalued. The S&P 500 has been led higher by just a handful of companies that make up a large percentage of the index, and companies that have lagged may now provide better risk-adjusted returns as the economy recovers. We highlight some of the valuation metrics that look stretched and some thoughts on tactical allocation ideas.
For bond investors, inflation is pretty much all bad news, eating into the value of future returns. For equity traders, the tidings can be less categorically awful, given the ability of certain companies to wring profits from higher prices.
U.S. stocks have the highest CAPE ratio of any global equity market, but they are still the place to invest. But the inventor of that metric, Robert Shiller, says that stocks are indeed risky.
All eight indexes on our world watch list posted gains through February 8, 2021. The top performer is Hong Kong's Hang Seng with a gain of 7.67%, India's BSE SENSEX is in second is with a gain of 7.53% and Tokyo's Nikkei 225 is in third with a gain of 7.08%. Coming in last is London's FTSE with a gain of 0.98%.
Weighing the costs of global vaccine access, minimum wage and the energy rally.
Many investors think there are only two options in a market where participants have become overly exuberant, either 'I want in' or 'Get me out.' Our strategies are more nuanced, and we believe fit better with what we expect to transpire.
It doesn’t take Black History Month to remind our listeners of the lack of diversity in the advisory profession. Of the countless conferences I’ve attended – when it was possible to attend such conferences – the overwhelming majority of attendees were like me: white, male and middle aged. We’ve seen a number of efforts to address this lack of diversity, particularly in the last year in light of the tragic events that have particularly affected people of color. Here to talk with me today is someone at the forefront of those efforts within the advisory profession.
Millions of Texans were without power this week when the state was hit with a record setting winter storm. An overhaul of its aging infrastructure would require massive amounts of metals and other materials, which would be positive for miners and producers.
BlackRock Global Allocation Fund portfolio manager Russ Koesterich explains why he expects volatility to drop -- and cyclicals outperform.
It’s tempting these days for some investors to question the role of fixed income in portfolios. After all, real yields have plunged, potentially leading to less income today and smaller capital gains tomorrow.
New virus variants are stoking COVID-19 angst, but we see vaccination programs opening the door to economic and market recoveries.
It’s another milestone for Cathie Wood’s Ark Investment Management. Less than two weeks after hitting $50 billion in assets, the red-hot firm now manages more than $60 billion, as funds flow into Wood’s exchange-traded funds at the fastest pace ever.
I offer 15 explanations for the bubble in stock prices and a single explanation for the one in bond prices. Those bubbles could deflate for any of 10 reasons I also identify, severely diminishing the retirement savings of baby boomers.
Over the last two weeks, we have seen how a cadre of retail traders on Reddit can lay siege on a group of hedge funds that had shorted the stock of the retail company GameStop. We saw the price of GameStop rise from about $20 at the beginning of the year to a peak of $347.5 on January 27. Yesterday, on February 4, it closed at $53.50. This is a brick-and-mortar company that sells video games and lost about $20 million last year. Today we will explore deeper issues surrounding the GameStop saga.
A brief monthly update on what's happening in the municipal bond market.
Emerging market equities have historically provided investors with outsized returns but have also been the biggest decliners during global equity market pullbacks. For the last 10 years they have lagged the performance of US Equity markets by a considerable margin. But with attractive relative valuations, higher earnings growth forecasts, and underrepresentation in global portfolios, we believe they are set to reverse that trend and outperform US markets over the next 5-10 years.
How can you help a family foundation plan for rapid growth in a way that is consistent with their wealth management objectives?
With U.S. equity valuations very rich by historical standards, many – including Jeremy Grantham, Rob Arnott and Vanguard – are predicting emerging markets to excel. I’ll examine the case and give my thoughts on how to invest in emerging markets.
Factor-based models are often criticized for data mining. One way to address that charge is with “out-of-sample” testing over longer time frames. But that takes time. New research provides an alternative out-of-sample test – using emerging-market bonds.
Happy Year of the Ox! Today China and a number of other Asian countries celebrate the Lunar New Year, also known as the Spring Festival.
Rob Arnott: “There hasn’t been a better time to be a value investor at any other time in my career. I look back at the tech bubble and I never thought I would see valuations stretched the way they were then. We're back to that, and then some." We invite you to revisit “Reports of Value’s Death Have Been Greatly Exaggerated” now published in the Financial Analysts Journal.
Quantitative investment firm Dimensional Fund Advisors is already making waves in the $5.9 trillion exchange-traded fund market.
Investors have parked record piles of cash on the sidelines amid concerns about valuations and volatility. But short-term safety comes at a price. By defining long-term goals, investors can put idle cash to work despite uncertainty about the path to recovery.
By buying or overweighting characteristics-based factor exposure and selling or underweighting beta-based factor exposure, investors can position their portfolios to reap the rewards of factor investing while bearing less risk.
Sustainable investing in the United States continues to accelerate at a rapid pace. Here, we dive into the sustainable investing landscape and how the Shelton Green Alpha Fund (NEXTX) fits in a client portfolio with Portfolio Manager, Garvin Jabusch. NEXTX was the top U.S. Equity ESG Fund for 2020 according to Morningstar.
It’s more than enough money, at going prices, to buy one GameStop, two AMC Entertainments and four Bed Bath & Beyond's.
This is a new type of exchange-traded ETF that is built differently from a traditional ETF.
Maybe you’ve heard: The pandemic is killing cities, fueling a rush to spacious houses in the suburbs. But beyond pricey New York and San Francisco, real estate demand is booming in downtowns across America.
Joe Biden’s administration has dedicated its first few weeks in office to spending more money on pandemic relief -- and shrugged off warnings that the economy may overheat as a result.
Rick Rieder and team think that today’s potent policy cocktail holds important implications for the path of economic growth, markets and the value of a dollar.
It goes without saying that COVID-19 and the pandemic has been and is a terrible thing. People have gotten terribly sick and many have even succumbed to this horrible virus. Clearly, there is nothing good or positive that can be said about this scourge from a purely human or humanity perspective.
Fortunately, human behavior has a history of repeating itself at extremes. The worst buying decisions are made at the top. Just like bonds, the convexity is true when yields rise going forward. It’s a slippery slope and could be vexing.
The fundamental concept that you must understand about LinkedIn is this: It is not a meritocracy, it’s an attention-getting contest.
It was a dinner conversation with former Federal Reserve Chairman Ben Bernanke in early 2020 that convinced Cesar Perez Ruiz that the golden age of bond investing was over.
At some point, interest rates will move higher. Advisors must understand the inherent risks, and proactively evaluate alternatives for their fixed income portfolios to manage through successfully.
When companies take positive ESG steps, they attract asset flows from fund managers, according to new research. But the price spikes from those flows may not result in outperformance for long-term investors.
It’s hoped that an extra $1,400 in the pockets of everyday Americans may help support lagging U.S. consumption. We believe the stimulus, along with improved vaccine roll out, may also help support commercial air travel.
The 4th quarter of 2020 began with tremendous anxiety and divisiveness around the Presidential election. Investment markets reflected that anxiety.
The GameStop drama that has rattled US stocks reflects the growing power of individual investors to shape market events. But there are lessons for traditional, long-term investors, too. When markets ignore fundamentals, redoubling a focus on quality is the best way to produce consistent returns while reducing volatility.
While your chances of winning an argument on any given topic are slim, there’s one situation where it’s non-existent. That’s when you’re confronted with a high-conflict personality.
Cyclically oriented value stocks could make a comeback in 2021, yet there’s still a place for durable growers in a balanced equity portfolio.
Massive growth in central bank balance sheets via quantitative easing, debt monetization, and firing of “big bazooka” stimulus packages brings renewed focus to potential shocks in the business cycle. An awareness of the macroeconomic “shocks” and their impact on asset prices should be incorporated in investors’ tactical asset-allocation decisions.
The UK-EU trade agreement entered into just before Christmas is a 1,200-page monster which contains far more cons than pros for the British economy despite Boris Johnson doing his very best to convince the British public of the opposite. In this month’s Absolute Return Letter, you can see why.
Nothing so animates a speculative herd as a parabolic price advance in an asset detached from any standard of value. I am convinced that future generations will use the present moment to define the concept of a reckless speculative extreme, in the same way our generation uses “1929” and “2000.”
Malkiel and other detractors who claim ESG is a fad are missing a key element in their arguments, namely that companies are incorporating sustainability into their operations both in response to – and increasingly quite apart from – the ESG investing trend.
As inflows to sustainable equities break new records, here’s what investors should look for to identify portfolios that align with their responsible investing goals.
Does time diversification work in the real world? Do portfolios get less risky – i.e., converge to a more reliable expected return – the longer we wait?
The explosive rally in GameStop, pitting retail investors against hedge funds, has renewed calls to ban short selling. But new research shows how valuable short sellers are to the efficient functioning of markets.
I’m often asked if I foresee inflation or deflation. Both are possible in their own ways, and frankly I feel a little funny telling people I think we will see both. I would just like to have a growing economy and dependable money that holds its value.
The COVID-19 pandemic has expanded the universe of companies in financial distress, creating a buyer’s market for distressed debt funds.
Precious metals in general did very well in 2020, and I expect them to keep pace in 2021, supported by heightened efforts in the U.S. and elsewhere to transition from fossil fuels to renewable energy.
The Mortgage and Structured Finance Sector Team discusses key themes in the securitized market in 2021.
For all Millennial readers, if you visited a casino in your lifetime only to see your money quickly disappear, you have not seen anything compared to trading versus professionals. So to all you Robinhood traders I say, “Welcome to the Jungle.”
Federal Reserve Chair Jerome Powell heads into what could be his last year atop the central bank determined not to repeat the mistake he made when he was a neophyte monetary policy maker seven years ago.
It has been my tradition to informally rate the investment-related books I read in the past year. I have also included some novels and books of general interest. Here is my list of winners and losers.
When someone identifies as a bear, normally it means they’re selling. In this market, where anyone who dares do that gets crushed, it just means you’re a little less bullish than everyone else.
Heading into 2021, advisors face numerous headwinds: a potential return of inflation, sky high equity prices, possible negative returns on bonds. Yet advisors with retail clients have few good options to protect against these risks, and many that embraced alternative mutual funds and ETFs have been disappointed with low returns, high fees and large drawdowns.
The questions advisors are asking today is:
How can retail investors gain exposure to leading hedge funds yet with the client-friendly features of an ETF? Given the difficulties for many hedge funds in the 2010s, will hedge funds will return to the Golden Age of the 2000s, when they generated alpha through two bear markets?
There have been a small number of consistent alpha-creating axioms in the U.S. stock market over time. Value beat growth over long time frames, tech stocks hit bottom in the summer and crowded trades separate you from your money, to name a few.
The decade-long onslaught inflicted by growth stocks on value investors is due to end, according to Gerard O’Reilly. But the data is too “noisy” for him to say when that will happen.
By the end of the first decade of the 19th century, everyone in the U.S. was accepting denominations printed on paper by banks as payments in dollars. Americans had invented retail credit banking and discovered how much they liked it.
As expected, the new administration has hit the ground running. In his first two days in office, President Biden issued executive orders which rescinded a number of previous directives or were aimed at ending the pandemic and easing the pandemic’s economic impact.
In the years since the end of the gold standard, there’s been a significant lack of discipline in government spending. Today, the federal debt is closing in on an astronomical $28 trillion, which is more than 130% of the size of the U.S. economy.
The 2020s are going to be about rifle shots, not the shotgun approach of index funds.
Wall Street and Main Street are two different zip codes. In 2020, one neighborhood struggled with rising economic uncertainty, while the other posted strong gains underscored by a loose fiscal and monetary environment. In 2021, we expect the neighborhood's economic fortunes to converge.
The newly inaugurated President and Vice President of the United States are proposing much that will have significance for advisors interested in ESG and impact investing.
A holistic LDI portfolio may provide a superior liability hedge.
You can take active steps to protect your practice, clients, and employees by following this checklist.
Our outlook for 2021 is formed by the need to get away from the crowd and to expect some very stormy weather in the U.S. stock market. We are not afraid of drowning. Therefore, we will review the circumstances at the bottom of the market in 2009 with today’s market to see where the crowd is and where we need to go to avoid the coming storm.
The speculative “V” is one of the most interesting and challenging features of the market cycle. For passive investors, it can be a period of exhilaration followed by panic.
2021 market outlook from BlackRock's municipal bond team.
A confluence of dynamics are set to accelerate global capital flows to emerging markets amid attractive valuations.
Emerging-market stocks rebounded in 2020 even as the COVID-19 pandemic spread globally. As vaccines and other favorable conditions unfold, investors have good reasons to consider EM equities in 2021 while strategically considering their potential risks.
This video explores the mindsets of those who support and oppose President Trump. It was recorded on November 24, six weeks before the rioting at the Capitol building.
Every January, I start keeping track of the predictions for the upcoming year I hear in the financial media and from advisors and investors. With the arrival of 2021, it’s time for my final review of how the 2020 forecasts played out.
Today we’ll begin by looking at new virus developments, some of which are good, some very good, and some frightening. We (the entire world) are in a very tight race with dire consequences if we lose.
Active Management
Technology is the New Oil: The Changing Nature of Emerging Markets
A variety of macro and fundamental factors are converging in emerging markets, signaling a period of resurgence. We believe structural changes, a supportive investment environment, and dynamic geopolitical influences make EM particularly attractive right now. For example, semiconductor production could soon become more critical to EM growth than commodities. Now may prove to be an inflection point, especially for portfolios focused on capturing this dynamic change. Please join us for an interactive webinar highlighting EM's changing nature and the added value of active management.
Coming Out of COVID-19: A Look at Interest Rates and Inflation in Europe
There is hope that economies will see a more sustainable and robust recovery this year, given unprecedented levels of monetary and fiscal stimulus and as more individuals are vaccinated against COVID-19. But one question for investors is what happens next—will inflation and higher interest rates be a consequence?
February Moving Averages: Up 2.6% from January
Valid until the market close on March 31, 2021.
The S&P 500 closed February with a monthly gain of 2.61% after a loss of 1.11% in January. At this point, after close on the last day of the month, four of five S&P 500 strategies are signaling "invested" — Vanguard Total Stock Market ETF (VTI), Vanguard FTSE All-World ex-US ETF (VEU), Vanguard REIT Index ETF (VNQ), and Invesco DB Commodity Index Tracking (DBC) — unchanged from last month's quadruple "invested" signal.
NewsLetter - February 2021
We hope you enjoy Harold Evensky's latest NewsLetter.
Can Mario Draghi Recharge Italy’s Economy?
Italy’s new prime minister, Mario Draghi, has a well-earned reputation for turning around difficult situations. But can he reverse Italy’s relative economic decline? And what does his program mean for Italian bond yields?
The Birth of Global Tech Continues
From cloud computing and automation to self-driving cars, technology continues to be one of the world’s hottest sectors. Our Chief Market Strategist Stephen Dover and Portfolio Managers Donald Huber and John Remmert believe active investing in technology and innovation is a global story, and government support and spending in next-generation technologies is likely a long-term positive.
Retirement Planning in the Post-4% World
Today’s low bond yields and high equity valuations have led many to jettison the traditional 4% initial safe-withdrawal rate assumption. But I will show that the optimal “safe” withdrawal rate depends considerably on the retiree.
Pending Home Sales Retreat in January
Today the National Association of Realtors released the January data for their Pending Home Sales Index. According to the National Association of Realtors®, "Pending home sales took a step backward in January as inventory constraints continue to hold back prospective buyers."
What the Pandemic Taught Us About Target Date Funds
Target date funds should be designed to reduce the risk of rash selling.
With Tech Oligarchy Shaken, Active Funds Are Having a Great Time
Turmoil in mega-caps like Apple Inc. is stirring investor anxiety. But for professional stock pickers, it’s mostly good news when the market’s biggest companies loosen their grip.
Five Words That Trigger Referrals from Board Members
The key to getting referrals from a board is treating those influential people as genuine centers of influence.
Cathie Wood Fan Club Faces Big Test as Ark Funds Extend Rout
The biggest slide in months for Cathie Wood’s funds is testing the resolve of investors who plowed billions of dollars into one of the hottest firms on Wall Street.
Will the Energy Sector Evolve or Devolve?
The energy sector is beginning to adapt to the realities of climate change. Who is best positioned for the future?
GMO 7-Year Asset Class Forecast: January 2021
The GMO Asset Allocation Team has released its latest 7-Year Asset Class Forecasts through January 2021.
Easing Advisors' Transition to Independence
A solution for the challenge of moving wirehouse clients with active securities-based loans.
Risks of High Equity Valuations Present Tactical Opportunities
Calls of a market bubble might indicate low returns over the next 5-10 years, but not all equities are overvalued. The S&P 500 has been led higher by just a handful of companies that make up a large percentage of the index, and companies that have lagged may now provide better risk-adjusted returns as the economy recovers. We highlight some of the valuation metrics that look stretched and some thoughts on tactical allocation ideas.
Inflation Angst Is About to Rewrite the Stock Market Playbook
For bond investors, inflation is pretty much all bad news, eating into the value of future returns. For equity traders, the tidings can be less categorically awful, given the ability of certain companies to wring profits from higher prices.
Robert Shiller: U.S. Equities are Still the Place to Invest
U.S. stocks have the highest CAPE ratio of any global equity market, but they are still the place to invest. But the inventor of that metric, Robert Shiller, says that stocks are indeed risky.
World Markets Update: February 22, 2021
All eight indexes on our world watch list posted gains through February 8, 2021. The top performer is Hong Kong's Hang Seng with a gain of 7.67%, India's BSE SENSEX is in second is with a gain of 7.53% and Tokyo's Nikkei 225 is in third with a gain of 7.08%. Coming in last is London's FTSE with a gain of 0.98%.
Vaccine Nationalism, Minimum Wage, Rising Energy Prices
Weighing the costs of global vaccine access, minimum wage and the energy rally.
Spectate or Speculate
Many investors think there are only two options in a market where participants have become overly exuberant, either 'I want in' or 'Get me out.' Our strategies are more nuanced, and we believe fit better with what we expect to transpire.
Minisode - Overcoming the Diversity Challenge in the Advisory Profession
It doesn’t take Black History Month to remind our listeners of the lack of diversity in the advisory profession. Of the countless conferences I’ve attended – when it was possible to attend such conferences – the overwhelming majority of attendees were like me: white, male and middle aged. We’ve seen a number of efforts to address this lack of diversity, particularly in the last year in light of the tragic events that have particularly affected people of color. Here to talk with me today is someone at the forefront of those efforts within the advisory profession.
Texas Freezes, but a New Commodities Supercycle Could Be Heating Up
Millions of Texans were without power this week when the state was hit with a record setting winter storm. An overhaul of its aging infrastructure would require massive amounts of metals and other materials, which would be positive for miners and producers.
As Volatility Fades, Can Cyclicals Shine?
BlackRock Global Allocation Fund portfolio manager Russ Koesterich explains why he expects volatility to drop -- and cyclicals outperform.
Fixed Income: Low Yields Don’t Tell the Whole Story
It’s tempting these days for some investors to question the role of fixed income in portfolios. After all, real yields have plunged, potentially leading to less income today and smaller capital gains tomorrow.
What Vaccine Progress Means for Stock Markets
New virus variants are stoking COVID-19 angst, but we see vaccination programs opening the door to economic and market recoveries.
Cathie Wood’s ‘Phenomenal Rise’ Brings ETF Assets to $60 Billion
It’s another milestone for Cathie Wood’s Ark Investment Management. Less than two weeks after hitting $50 billion in assets, the red-hot firm now manages more than $60 billion, as funds flow into Wood’s exchange-traded funds at the fastest pace ever.
15 Explanations for the Bubble in Stock Prices
I offer 15 explanations for the bubble in stock prices and a single explanation for the one in bond prices. Those bubbles could deflate for any of 10 reasons I also identify, severely diminishing the retirement savings of baby boomers.
Lessons for Advisors from the GameStop Saga
Over the last two weeks, we have seen how a cadre of retail traders on Reddit can lay siege on a group of hedge funds that had shorted the stock of the retail company GameStop. We saw the price of GameStop rise from about $20 at the beginning of the year to a peak of $347.5 on January 27. Yesterday, on February 4, it closed at $53.50. This is a brick-and-mortar company that sells video games and lost about $20 million last year. Today we will explore deeper issues surrounding the GameStop saga.
Monthly Municipal Market Update, January 2021
A brief monthly update on what's happening in the municipal bond market.
Emerging Market Equities Set for Outperformance
Emerging market equities have historically provided investors with outsized returns but have also been the biggest decliners during global equity market pullbacks. For the last 10 years they have lagged the performance of US Equity markets by a considerable margin. But with attractive relative valuations, higher earnings growth forecasts, and underrepresentation in global portfolios, we believe they are set to reverse that trend and outperform US markets over the next 5-10 years.
Helping Clients Plan for Growth in Their Private Foundations
How can you help a family foundation plan for rapid growth in a way that is consistent with their wealth management objectives?
The Case for Emerging Markets
With U.S. equity valuations very rich by historical standards, many – including Jeremy Grantham, Rob Arnott and Vanguard – are predicting emerging markets to excel. I’ll examine the case and give my thoughts on how to invest in emerging markets.
An Out-of-Sample Test for Factor-Based Strategies
Factor-based models are often criticized for data mining. One way to address that charge is with “out-of-sample” testing over longer time frames. But that takes time. New research provides an alternative out-of-sample test – using emerging-market bonds.
The Chinese Economy Charges Ahead in the Year of the Ox
Happy Year of the Ox! Today China and a number of other Asian countries celebrate the Lunar New Year, also known as the Spring Festival.
Reports of Value's Death May Be Greatly Exaggerated
Rob Arnott: “There hasn’t been a better time to be a value investor at any other time in my career. I look back at the tech bubble and I never thought I would see valuations stretched the way they were then. We're back to that, and then some." We invite you to revisit “Reports of Value’s Death Have Been Greatly Exaggerated” now published in the Financial Analysts Journal.
Booth’s Dimensional Makes $700 Million Splash in ETF Debut
Quantitative investment firm Dimensional Fund Advisors is already making waves in the $5.9 trillion exchange-traded fund market.
Cold Cash? How to Redeploy in Hot Markets
Investors have parked record piles of cash on the sidelines amid concerns about valuations and volatility. But short-term safety comes at a price. By defining long-term goals, investors can put idle cash to work despite uncertainty about the path to recovery.
Surprise! Factor Betas Don’t Deliver Factor Alphas
By buying or overweighting characteristics-based factor exposure and selling or underweighting beta-based factor exposure, investors can position their portfolios to reap the rewards of factor investing while bearing less risk.
Insights on Sustainable Investing
Sustainable investing in the United States continues to accelerate at a rapid pace. Here, we dive into the sustainable investing landscape and how the Shelton Green Alpha Fund (NEXTX) fits in a client portfolio with Portfolio Manager, Garvin Jabusch. NEXTX was the top U.S. Equity ESG Fund for 2020 according to Morningstar.
Coleman Leads $23 Billion Payday for 15 Hedge Fund Earners
It’s more than enough money, at going prices, to buy one GameStop, two AMC Entertainments and four Bed Bath & Beyond's.
Active Semi-Transparent ETFs: What’s Under the Hood?
This is a new type of exchange-traded ETF that is built differently from a traditional ETF.
Housing Prices Are Booming in U.S. Cities — Just Not San Francisco or New York
Maybe you’ve heard: The pandemic is killing cities, fueling a rush to spacious houses in the suburbs. But beyond pricey New York and San Francisco, real estate demand is booming in downtowns across America.
Biden Presidency Starts With a Giant Bet on Run-It-Hot Economics
Joe Biden’s administration has dedicated its first few weeks in office to spending more money on pandemic relief -- and shrugged off warnings that the economy may overheat as a result.
What’s the Value of a Dollar?
Rick Rieder and team think that today’s potent policy cocktail holds important implications for the path of economic growth, markets and the value of a dollar.
This COVID-19 Play Could Double Or Even Triple Your Money In 2021: Alpha Pro Tech Limited
It goes without saying that COVID-19 and the pandemic has been and is a terrible thing. People have gotten terribly sick and many have even succumbed to this horrible virus. Clearly, there is nothing good or positive that can be said about this scourge from a purely human or humanity perspective.
Vexing Today’s Convex Pricing Behavior
Fortunately, human behavior has a history of repeating itself at extremes. The worst buying decisions are made at the top. Just like bonds, the convexity is true when yields rise going forward. It’s a slippery slope and could be vexing.
How I Cracked the Code Behind LinkedIn's Algorithms
The fundamental concept that you must understand about LinkedIn is this: It is not a meritocracy, it’s an attention-getting contest.
Dire Bond Returns Have 60/40 Managers Juicing Portfolios With FX
It was a dinner conversation with former Federal Reserve Chairman Ben Bernanke in early 2020 that convinced Cesar Perez Ruiz that the golden age of bond investing was over.
Rising Interest Rates Can Wreak Havoc on Fixed Income Portfolios
At some point, interest rates will move higher. Advisors must understand the inherent risks, and proactively evaluate alternatives for their fixed income portfolios to manage through successfully.
Does Positive ESG News Move Stock Prices?
When companies take positive ESG steps, they attract asset flows from fund managers, according to new research. But the price spikes from those flows may not result in outperformance for long-term investors.
Could $1,400 Stimulus Checks Lift Air Travel Demand?
It’s hoped that an extra $1,400 in the pockets of everyday Americans may help support lagging U.S. consumption. We believe the stimulus, along with improved vaccine roll out, may also help support commercial air travel.
Quarterly Letter
The 4th quarter of 2020 began with tremendous anxiety and divisiveness around the Presidential election. Investment markets reflected that anxiety.
GameStop Frenzy Reinforces Need for Quality in US Stocks
The GameStop drama that has rattled US stocks reflects the growing power of individual investors to shape market events. But there are lessons for traditional, long-term investors, too. When markets ignore fundamentals, redoubling a focus on quality is the best way to produce consistent returns while reducing volatility.
How to Spot a High-Conflict Person
While your chances of winning an argument on any given topic are slim, there’s one situation where it’s non-existent. That’s when you’re confronted with a high-conflict personality.
Using a Barbell to Strengthen Your Equity Portfolio
Cyclically oriented value stocks could make a comeback in 2021, yet there’s still a place for durable growers in a balanced equity portfolio.
Beware the Shocks in the Road
Massive growth in central bank balance sheets via quantitative easing, debt monetization, and firing of “big bazooka” stimulus packages brings renewed focus to potential shocks in the business cycle. An awareness of the macroeconomic “shocks” and their impact on asset prices should be incorporated in investors’ tactical asset-allocation decisions.
Will Brexit Lead to Bruin? - The Cost of Absurdity
The UK-EU trade agreement entered into just before Christmas is a 1,200-page monster which contains far more cons than pros for the British economy despite Boris Johnson doing his very best to convince the British public of the opposite. In this month’s Absolute Return Letter, you can see why.
Detached Parabolas and Open Trap Doors
Nothing so animates a speculative herd as a parabolic price advance in an asset detached from any standard of value. I am convinced that future generations will use the present moment to define the concept of a reckless speculative extreme, in the same way our generation uses “1929” and “2000.”
Burton Malkiel’s Misguided View of ESG Investing
Malkiel and other detractors who claim ESG is a fad are missing a key element in their arguments, namely that companies are incorporating sustainability into their operations both in response to – and increasingly quite apart from – the ESG investing trend.
How to Choose a Sustainable Equity Portfolio
As inflows to sustainable equities break new records, here’s what investors should look for to identify portfolios that align with their responsible investing goals.
Does Time Diversification Work?
Does time diversification work in the real world? Do portfolios get less risky – i.e., converge to a more reliable expected return – the longer we wait?
The Latent Risks in Short Selling
The explosive rally in GameStop, pitting retail investors against hedge funds, has renewed calls to ban short selling. But new research shows how valuable short sellers are to the efficient functioning of markets.
Inflation and Broken Windows
I’m often asked if I foresee inflation or deflation. Both are possible in their own ways, and frankly I feel a little funny telling people I think we will see both. I would just like to have a growing economy and dependable money that holds its value.
Distressed Debt – A Compelling, and Timely, Opportunity
The COVID-19 pandemic has expanded the universe of companies in financial distress, creating a buyer’s market for distressed debt funds.
Precious Metals Outlook 2021: Renewable Energy Will Be a Key Driver
Precious metals in general did very well in 2020, and I expect them to keep pace in 2021, supported by heightened efforts in the U.S. and elsewhere to transition from fossil fuels to renewable energy.
2021 Outlook: Three Questions for the Mortgage and Structured Finance Sector Team
The Mortgage and Structured Finance Sector Team discusses key themes in the securitized market in 2021.
Welcome to the Jungle
For all Millennial readers, if you visited a casino in your lifetime only to see your money quickly disappear, you have not seen anything compared to trading versus professionals. So to all you Robinhood traders I say, “Welcome to the Jungle.”
Powell, With Year to Run at Fed, Aims to Avoid Past QE Mistake
Federal Reserve Chair Jerome Powell heads into what could be his last year atop the central bank determined not to repeat the mistake he made when he was a neophyte monetary policy maker seven years ago.
The Best and Worst Investment (and other) Books of 2020
It has been my tradition to informally rate the investment-related books I read in the past year. I have also included some novels and books of general interest. Here is my list of winners and losers.
A ‘Bear’ in This Market Is Someone Who Is Only 75% Long Stocks
When someone identifies as a bear, normally it means they’re selling. In this market, where anyone who dares do that gets crushed, it just means you’re a little less bullish than everyone else.
Hedge Funds Are Back – Can Allocators Get Hedge Fund Alpha in an ETF?
Heading into 2021, advisors face numerous headwinds: a potential return of inflation, sky high equity prices, possible negative returns on bonds. Yet advisors with retail clients have few good options to protect against these risks, and many that embraced alternative mutual funds and ETFs have been disappointed with low returns, high fees and large drawdowns.
The questions advisors are asking today is:
How can retail investors gain exposure to leading hedge funds yet with the client-friendly features of an ETF? Given the difficulties for many hedge funds in the 2010s, will hedge funds will return to the Golden Age of the 2000s, when they generated alpha through two bear markets?
The January Effect
There have been a small number of consistent alpha-creating axioms in the U.S. stock market over time. Value beat growth over long time frames, tech stocks hit bottom in the summer and crowded trades separate you from your money, to name a few.
Gerard O’Reilly on the Future of Value Investing
The decade-long onslaught inflicted by growth stocks on value investors is due to end, according to Gerard O’Reilly. But the data is too “noisy” for him to say when that will happen.
Small Change and the Depression of 1837-1843 - Part Two
By the end of the first decade of the 19th century, everyone in the U.S. was accepting denominations printed on paper by banks as payments in dollars. Americans had invented retail credit banking and discovered how much they liked it.
The Fiscal Policy Outlook
As expected, the new administration has hit the ground running. In his first two days in office, President Biden issued executive orders which rescinded a number of previous directives or were aimed at ending the pandemic and easing the pandemic’s economic impact.
Closing the Gold Window Opened the Door to Modern Monetary Theory (MMT)
In the years since the end of the gold standard, there’s been a significant lack of discipline in government spending. Today, the federal debt is closing in on an astronomical $28 trillion, which is more than 130% of the size of the U.S. economy.
Forecast 2021: The Stock Market
The 2020s are going to be about rifle shots, not the shotgun approach of index funds.
The Heavy Lifting
Wall Street and Main Street are two different zip codes. In 2020, one neighborhood struggled with rising economic uncertainty, while the other posted strong gains underscored by a loose fiscal and monetary environment. In 2021, we expect the neighborhood's economic fortunes to converge.
The Inauguration and the Next Economy
The newly inaugurated President and Vice President of the United States are proposing much that will have significance for advisors interested in ESG and impact investing.
LDI Programs: Finding a Better Replacement for Treasury STRIPS
A holistic LDI portfolio may provide a superior liability hedge.
A 2021 Cybersecurity Checklist
You can take active steps to protect your practice, clients, and employees by following this checklist.
Outlook 2021: “Frenzy” is the Opposite of Bull Market Stew
Our outlook for 2021 is formed by the need to get away from the crowd and to expect some very stormy weather in the U.S. stock market. We are not afraid of drowning. Therefore, we will review the circumstances at the bottom of the market in 2009 with today’s market to see where the crowd is and where we need to go to avoid the coming storm.
The Speculative “V”
The speculative “V” is one of the most interesting and challenging features of the market cycle. For passive investors, it can be a period of exhilaration followed by panic.
Unmasked Potential for Munis in 2021
2021 market outlook from BlackRock's municipal bond team.
Tail Winds Provide Lift for Emerging Markets Investments
A confluence of dynamics are set to accelerate global capital flows to emerging markets amid attractive valuations.
Rediscovering the Appeal of Emerging Market Equities
Emerging-market stocks rebounded in 2020 even as the COVID-19 pandemic spread globally. As vaccines and other favorable conditions unfold, investors have good reasons to consider EM equities in 2021 while strategically considering their potential risks.
Understanding the Political Divide
This video explores the mindsets of those who support and oppose President Trump. It was recorded on November 24, six weeks before the rioting at the Capitol building.
Final Review of 2020 “Sure Things”
Every January, I start keeping track of the predictions for the upcoming year I hear in the financial media and from advisors and investors. With the arrival of 2021, it’s time for my final review of how the 2020 forecasts played out.
The Grip Tightens
Today we’ll begin by looking at new virus developments, some of which are good, some very good, and some frightening. We (the entire world) are in a very tight race with dire consequences if we lose.