Q3 2021 Market Perspectives: "A Global Shift"
After beginning the quarter on a relatively upbeat note, familiar themes returned as fears of inflation, ambiguity over the end of the pandemic, and uncertainty about the future of Chinese capitalism raised concerns for investors.
The 60/40 Portfolio Isn't Dead, Just More Expensive: Allison Schrager
Volatile, pandemic-riven markets for stocks and bonds has Wall Street ready — again — to declare the traditional 60/40 portfolio split a dead strategy. The prospect of a low-growth, high-inflation economy (stagflation) dims the prospects of both investment categories, and certainly demands a rethink of where to stash your savings.
James Montier on Whether Inflation will be Transitory
If there was a word of the year for 2021, it would be “transitory.” Ever since the Fed declared that inflation would be transitory in March 2021, analysts have challenged that assertion and, indeed, have questioned the definition of transitory. Inflation has broad ramification for financial plans, since it affects interest rates, the price of assets and whether cash flows will be sufficient to keep pace with rising prices of goods and services. Here to discuss that question is James Montier, the co-author of two recent commentaries on the likelihood of transitory inflation and how investors should protect against various outcomes.
Planting the Seeds for High Cash Flow, With 5 Years Until “Go-Go”
I was speaking with an industry friend and colleague the other day, and we got to riffing about music and retirement planning. A free and creative thinker, she said that when talking to clients about future retirement income, the sweet spot timing wise seems to be about five years before clients retire.
Banks Analysts Warn That 60/40 Portfolios Could Be Battered by Inflation
The recent synchronized selloff in equities and Treasuries was likely just the beginning of what’s to come for the popular 60/40 stock-bond portfolio strategy, a growing chorus of Wall Street strategists warn.
ESG Funds Fail a Big Test
New research shows that mutual funds and ETFs with an ESG mandate failed to live up to their promises. Those funds, for example, had worse track records for compliance with labor and environmental laws and were less likely to voluntarily disclose emissions data than non-ESG investments.
Our Take on China and India
Investors need to understand the differences between Chinese capitalism and Western capitalism in order to properly assess the opportunities in China. Meanwhile, norms in India more closely resemble those in the United States— but India has dramatically larger headroom for growth.
Waiting for Rates to Rise? What You May Miss by Staying in Cash
There is a cost to waiting for interest rates to rise—you may be missing out on higher coupon rates and yields elsewhere. Rather than waiting on the sidelines for yields to rise, investors should consider short-term corporate bonds today—specifically those with fixed coupon rates.
Q3 2021 Market Commentary Answers to Our Most Recent Client Questions
US stocks, as seen by the S&P 500, ended the third quarter unchanged, having shed over 4% in September as fears over the debt ceiling and the Fed’s options erased the summer’s progress. Certainly, the market environment has changed a lot over the past 18 months. Valuations are up, economic data is varied, and the prospects of potential Fed action are growing.
The Latest Look at the Total Return Roller Coaster
Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $20,803 for an annualized real return of 14.7%.
The View from the Mountaintop
As we sit atop our prosperous peak, admiring the views of the fastest economic growth since 1984, the best start to a bull market and the record-breaking quarter of earnings growth, it’s wise to remember that not too long ago we began our uphill journey from the depths of the COVID-19 ravine. Often, the best views come after the hardest climbs.