Capital Growth

The COVID-19 pandemic has been devastating for Brazil, but heavy government spending and monetary policy easing have helped bring some stability to the economy.

U.S. workers who are being shepherded back to the office would rather continue doing their jobs from home, at least a few days a week.

A debate rages on whether ordinary investors should have equal access to financial markets.

Advisors need to help retirees and other investors limit downside risk and grow their wealth. We at Sierra share this goal, and in this webinar we will provide perspective on the challenges facing financial advisors. We will discuss how to build a well-diversified fixed income allocation that seeks to deliver the benefits of bonds, while mitigating against rising rates, defaults, bond market illiquidity and stock market volatility. We will also introduce a truly tactical, rules-based investment approach with the goals of limiting downside risk and producing returns that a conservative investor would deem satisfying.

Learning Objectives:

We will review:

1. The Emotional Challenge – Stocks vs. Bonds
2. Seven years of “yield fixation”
3. The risks in fixed income allocations through three lenses:
4. Interest rate risk
5. Bond funds that don’t act like bond funds
6. Does shortening duration provide rotection?

Markets have been walking a fine line, with a still-struggling economy on one side and hopes for a COVID-19 vaccine breakthrough on the other. Heading into the fourth quarter, there are both encouraging signs and cause for caution.

Your social network may be an untapped and robust source for uncovering prospects. While you may be suffering from COVID-19 fatigue, we believe prospecting and having introductory conversations about the services you provide could be one of the best uses of your time.

Adding intangible assets to book value provides a more robust measure of firm capital. But, just as a home buyer considers a host of variables when evaluating the price of a new house, we prefer to use multiple metrics, not book value alone, to get the most complete picture possible of a firm’s valuation.

Ed Perks and Gene Podkaminer of Franklin Templeton’s Multi-Asset Solutions team discuss the attractions of alternative assets that can offer natural portfolio diversification. Over a longer-term horizon, they continue to believe global stocks have greater performance potential than global bonds, or alternatives, but this outlook will not be reached along a smooth path.

The National Association of Home Builders (NAHB) Housing Market Index (HMI) is a gauge of builder opinion on the relative level of current and future single-family home sales. It is a diffusion index, which means that a reading above 50 indicates a favorable outlook on home sales; below 50 indicates a negative outlook. The latest reading of 83 is up 5 from last month's 78 and at its highest level in the indicator's history, exceeding its December 1998 record.

The December deadline for a Brexit deal is quickly approaching. One consequence of Brexit was that firms couldn’t plan—or they were forced to plan for a no-deal scenario. It’s a big reason why the pace of business investment was so sluggish in the years since the 2016 referendum...

The Census Bureau's Advance Retail Sales Report for August was released this morning. Headline sales came in at 0.6% month-over-month to one decimal and was below the Investing.com forecast of 1.0%. Core sales (ex Autos) came in at 0.7% MoM.

I got very excited when I came across an excerpt from Jordan Ellenberg’s book, How Not to Be Wrong. His book was written to teach readers how much logic and common sense is provided by math. He tells the story of Abraham Wald during World War II, who worked for the Statistical Research Group (SRG).

Markets may press even higher this year, but some areas may fall behind.

In recent years, global equities had slightly outpaced market forecasts for lower equity returns. Then the COVID-19 pandemic hit the global economy, putting an end to the 10-year bull market. Equity markets have now started to recover, but the pandemic introduced and exacerbated challenges that we expect to subdue financial market returns over the next five years.

Another market high, with expectations for a “V”accine-shaped recovery.

Market crashes, such as we experienced in March at the onset of the pandemic, drive assets to the safe haven of government bonds. But our research shows this flight to safety mindset did not translate to an increase in demand for annuities.

The yield on the 10-year note ended September 14, 2020, at 0.68%, the 2-year note ended at 0.14%, and the 30-year at 1.42%.

Six of eight indexes on our world watch list posted losses through September 14, 2020. The top performer is China's Shanghai with a gain of 7.50%. Our own S&P 500 is in second with a gain of 4.73% and in third is Tokyo's Nikkei 225 with a loss of 0.41%. Coming in last is London's FTSE 100 with a loss of 20.1%.

In today’s low interest rate environment, finding meaningful sources of yield can prove challenging for income-oriented investors. At the same time, as equity markets touch all-time highs despite difficult economic conditions, investors are questioning the further upside in stocks. In this webinar, we explore how covered call strategies may be useful in this environment, as they can be used to generate income and potentially mitigate downside risks.

You will be learning:

1) Understand the challenges associated with finding income in the current macro environment
2) Understand what a covered call strategy is and how it works
3) Gain knowledge of the market environments best suited for a covered call strategy
4) Discover the importance Nasdaq 100 Index can be used as an income generating solution

The risk of a “no deal” Brexit and the potential economic harm that accompanies it increased last week.

Review the latest Weekly Headings by CIO Larry Adam.

A strong understanding of market dynamics exposes some valuable gems. When the time comes, these stocks will make playing defense productive.

There are opportunities for investors to monetize market volatility while also hedging credit risk to enhance returns and reduce correlation through a tactical approach using alternative, multi-asset strategies.

The third generation of financial planning mathematical infrastructure has emerged, which incorporates additional variables to more realistically reflect potential future outcomes.

New research disproves a pearl of conventional wisdom – that a move to a democratic form of government is good for investors in that country.

Should your clients convert some of their traditional tax-deferred money (e.g. IRA or 401K) to an after-tax Roth account? There are some myths that are just plain wrong. Here are the seven situations to consider when advising on this issue.

At the recent Jackson Hole Economic Summit, Jerome Powell unveiled the Fed’s new monetary policy designed to create inflation. In today’s #Macroview, we will discuss the 5-reasons why the Fed will not get inflation, and why deflation is the bigger risk.

One of our favorite natural resource companies, Ivanhoe has returned more than 146 percent in the past six months alone as investors anticipate the start of production at the Kakula Mine, which has the potential to become the world’s second-largest copper mining complex, with annual output projected to be 800,000 metric tonnes a year.

The U.S. stock market hit pause in early September, as investors took a harder look at market overconcentration and frothy sentiment. Meanwhile, global economies may be entering a new phase, and the Federal Reserve’s newly announced inflation policy is likely to keep U.S. rates lower for longer.

The Federal Reserve has changed its inflation policy. Here’s what it may mean for markets.

Resiliency and diversification potential remain critical in a world with meaningful uncertainty ahead.

Sovereign bonds have long been the prime defensive asset for multi-asset portfolios. But in today’s extraordinary market conditions, should investors make more extensive use of other defensive choices?

Franklin Small Cap Value Fund Portfolio Manager Steve Raineri gives five reasons why he thinks small-capitalization (small-cap) value stocks could perform well as the US economy continues to recover from the COVID-19 pandemic.

It’s open season on capital gains. Four ways advisors can help clients navigate potential unpleasant taxable distributions.

Our monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations on investment returns.

Portfolio managers Taizo Ishida and Michael Oh, CFA, explore the growth drivers for Asia's new economy sectors, including how to measure and assign potential future value of intangible assets.

Equity investors in emerging markets (EM) typically focus on large-cap companies. But allocating to smaller companies can help broaden an EM allocation by providing a different mix of exposures to opportunities across countries and sectors—and can bring potential for higher added value.

With the COVID-19 crisis far from over, we expect increased policy stability in the U.S. next year, no matter who wins in November.

At a time when some Americans are being tempted to pour their savings into risky investments, the son of a Wall Street veteran is encouraging them to set aside more money.

The snarky comments about financial engineering practically write themselves: An exchange-traded fund investing in collateralized loan obligations? What could go wrong?

The S&P 500 SPX and Nasdaq NASD have recently hit a series of fresh all-time highs and the Dow DJIA now sits less than 2% off of its all-time high which has many people wondering if the market is overbought and due for a correction.

Domestic equity markets have certainly shown a significant amount of movement thus far through 2020, with the S&P 500 Index SPX undergoing its swiftest decline from all-time highs in March, only to rally over the next few months to print new all-time highs at the beginning of September

Rotation away from the market’s prior momentum darlings continues. Friday’s jobs report had bullets for both the optimists’ and pessimists’ case studies. And improving productivity, partly due to work-from-home trends, could persist as a positive economic driver.

Passive bond funds – particular those that track the popular Barclay’s AGG index – offer the worst risk-return profile ever, according to Jeffrey Gundlach’s DoubleLine Capital.

Federal Reserve and other major central bank stimulus should benefit high-quality value stocks and foster inflation’s “green shoots” as the global economy emerges from recession.

After a wicked stock market decline into late March and impressive 60% advance off the low, it seems a stretch to expect still higher equity prices. However, a major extension to the post March rally is definitely supported by the five reliable long-term indicators featured in this research note. Their current position is far more consistent with a major long-term buying opportunity than a selling one.

Emerging markets overall felt a dose of optimism in August amid hopes for a COVID-19 vaccine, continued easy monetary policy globally and improving economic data pointing toward recovery. Our emerging markets equity team breaks down the key trends, news and events it has an eye on, and shares its latest market outlook.

A former AQR research head says Biden-Harris propose to tax 401(k) plans at both contribution and distribution.

As the brutal technology rout deepens, exchange-traded fund investors are placing bets on value.

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 $17,220 for an annualized real return of 10.92%.

We hear numerous market strategists talk about stocks which are going up because “there is no alternative” to owning them. In the Wall Street vernacular, this goes by the phrase TINA.

Take a look at real (inflation-adjusted) charts of the S&P 500, Dow 30, and Nasdaq Composite since 2000. We've updated this through the August 31, 2020 close

Evaluating the unusual characteristics of the profitability factor

Throughout the second half of 2020, a deterioration within the U.S. Dollar has been among the primary themes in focus, and understanding the Dollar’s impact on the positions in our portfolios is important.

September has historically been one of the weakest months for the S&P 500. The momentum factor, on the other hand, has historically been very strong in September.

The headline number for August came in at 100.2, up 1.4 from the previous month. The index is at the 56th percentile in this series.

At the recent Jackson Hole Economic Summit, Jerome Powell unveiled the Fed’s new monetary policy designed to create inflation. In today’s #Macroview, we will discuss the 5-reasons why the Fed will not get inflation, and why deflation is the bigger risk.

The legendary fund manager, Bob Rodriguez, doesn’t like either stocks or bonds, but he explains the particular strategy he is pursuing for buying hard assets.

In a low-yield environment, advisors need to use financial planning tools like no-commission annuities to improve after-tax, after-advisory fee bond returns.

In the age of Anthony Trollope, in hindsight, the variable cash returns of common stocks and their dividends deserved greater premiums; the certainties of fixed income coupons deserved lesser ones. Our family office is betting on a similar shift in market discounting.

As against the widely touted long-run, expected real returns from equities of 6.5%, we show that the true expectation for global stocks is in the range of 4.5 to 5%.

In his new autobiography, Steve Madden bares all.

Here’s the evidence.

Supply is getting tight. Helium is notoriously difficult and expensive to store, for the very good reason that it escapes every known container over time.

The unintended consequences from recent Fed “policy” changes, not to mention those initiated in prior decades, have been at the very epicenter of some of the national problems we have. The Fed would vigorously deny this course, but the results are plain for all to see.

Here is a summary of the four market valuation indicators we update on a monthly basis.

• The Crestmont Research P/E Ratio
• The cyclical P/E ratio using the trailing 10-year earnings as the divisor
• The Q Ratio, which is the total price of the market divided by its replacement cost
• The relationship of the S&P Composite price to a regression trendline

Different investors will choose different paths in response to the challenge of low rates and high credit uncertainty. Some may want to fight the trend by taking on more risk to achieve a target level of income or return.

With the Q2 GDP Second Estimate, we now have an updated look at the popular "Buffett Indicator" -- the ratio of corporate equities to GDP. The current reading is 130.9%, up from 123.3% the previous quarter.

Major tech-focused shares fell after helping drive the fastest stock market recovery in history.

While most people generally understand that the stock market and the economy do not move in lock step, there is still an underlying belief that a strong market reflects a strong economy. But according to that logic, our current economy must be historically strong.

There are technical distinctions between investing versus speculating. Nevertheless, both concepts are often thought about or utilized interchangeably. Moreover, there are nuanced distinctions between a rational or well-thought-out speculation versus outright gambling.

Equity investors in emerging markets (EM) typically focus on large-cap companies. But allocating to smaller companies can help broaden an EM allocation by providing a different mix of exposures to opportunities across countries and sectors—and can bring potential for higher added value.

The investment grade fixed income market has been unusually active in 2020. Initial concerns about Covid-19 triggered a sharp selloff, but sentiment abruptly reversed when the Fed announced plans to purchase corporate bonds. Spreads have nearly returned to their pre-pandemic levels, but not all sectors have recovered equally, creating interesting opportunities for savvy investors.

This morning's employment report for August showed a 1.37M increase in total nonfarm payrolls, which was slightly below the Investing.com forecast of 1.4M.

Here is the latest update of a popular market valuation method using the most recent Standard & Poor's "as reported" earnings and earnings estimates and the index monthly average of daily closes for the past month.