Fortuna Redux - Strategic Income Outlook July 2020
Markets rebounded during the second quarter, aided by monumental support from the Fed. We expect the economy to continue improving, but given the recent wave of Covid cases we also expect some bumps along the way.
Buffett's Contributions Transcend His Alpha And Present A Lesson For Advisors
The article discusses Warren Buffett's disappearing alpha but why that doesn't matter to most of the investors with Buffett, who act as high-quality, long-term shareholders. The article outlines eight contributions Buffett has made that transcend his performance.
We’ll start with a dozen or so charts showing the market is either very highly valued, or extremely overvalued, or merely stretched. But in general, you will see markets are indeed at the upper end of historical valuations. Then we’ll consider some reasons why this is so, and why stocks could even go higher.
The Enduring Futility of the Endowment Model
Investors have no chance of adding alpha by pursuing an “endowment” model. New research shows that even the most sophisticated institutions do worse when they increase exposure to alternative asset classes, and that investors would be better served with a passive, 60/40 allocation.
Another Ride on the Roller Coaster?
A point we have increasingly been making is the self-mitigating nature of: (1) market returns and (2) capital market assumptions (“CMAs”). There is a demonstrable pattern of CMAs coming down after significant rallies in equity markets and going up after a decline.
Tales from the Front: BDC Exposure
In recent years Business Development Companies may have caught your eye and your client’s attention as well. The growing BDC market offers broad access to potentially high-yielding private equity, if an alternative PE investment fits your portfolio needs.