Leveraged and Inverse Funds

American ingenuity is something to take pride in this weekend as we (safely) celebrate the Fourth of July.

As states ease their COVID-19 lockdown measures, rising case numbers have put pressure on equity markets.

The case for considering tactical and long-term allocations to small cap stocks.

This morning's employment report for June showed a 4.8M increase in total nonfarm payrolls, which was above the Investing.com forecast of 3M.

After a decade of steady growth and rising asset prices, economies and financial markets were rocked by the COVID-19 pandemic. The global health crisis forced most governments to lock down their communities, halting economic activity almost overnight and causing financial markets to reprice lower at an unprecedented speed.

We have heard from five prospects that our site looks “dated.”

In the municipal bond market, the issuance of green bonds has provided an attractive solution for investors interested in socially responsible investments while also receiving the tax-exempt income benefit municipal bonds offer. Franklin Templeton’s Municipal Bond team provides an overview of green bonds, including potential benefits and risk considerations.

As we reach the half-way point of what has been an extremely eventful year in asset markets, this week we take a step back and assess the current landscape from a momentum perspective. Where is the momentum and how likely is it to persist?

He argues stretched corporate balance sheets and overly rosy economic projections make it too early to dive back in.

In a post-coronavirus investment world, Jeff argues that investors should be rethinking the role of fixed income in portfolio construction and ask themselves if they are at risk of investing without a parachute?

In short, a demand-driven recession can’t end until demand returns. It doesn’t necessarily need to be the same kind of demand. Indeed, it probably won’t be. But something must restore consumer spending. A lot of entrepreneurs are spending late nights (and days) trying to figure out how to restore consumer spending.

FINRA has released new data for margin debt, now available through May. The latest debt level is up 5.3% month-over-month.

With sentiment currently at very high levels, combined with low volatility, and a high degree of investor complacency, all the ingredients necessary for a market reversal are currently present. Am I sounding an “alarm bell” and calling for a massive correction? No.

Value stocks have underperformed in the coronavirus crisis. Yet some higher-quality companies are now trading at valuations that underestimate their ability to withstand shorter-term stress—and their longer-term recovery potential.

While technicals for the asset class remain a headwind in the near-term, bank loans may provide an attractive opportunity and relative value.

The historic protests sweeping America were long overdue, not just as a response to racism and police violence, but also as a revolt against entrenched plutocracy. With a growing number of Americans falling into unemployment and economic insecurity, while major corporations take bailouts and slash labor costs, something had to give.

Investors should consider these various investments—cautiously. Given the challenging economic outlook and high level of uncertainty, we believe bouts of volatility are possible, albeit not to the level witnessed in February and March.

Rick Rieder, Russ Brownback and Trevor Slaven contend that in the tug-of-war between the considerable economic damage stemming from the coronavirus and subsequent lockdowns, and the fiscal and monetary policy responses put in place, the latter factor is being underestimated by markets. Further, the instruments used by investors in previous years won’t be what’s required for the time ahead.

Can you reignite the growth of your business in the the second half of 2020? We think so. Here’s why we believe the next six months may hold a once-in-a-lifetime opportunity.

Rich hedge fund managers are talking about it. So are not-so-rich millennials. And fast-twitch gamers, and bored sports fans and -- in all likelihood -- some 15-year-olds you know.

In this latest survey, 68 leading bond and currency managers considered valuations, expectations and outlooks for the coming months.

Is it 1999 or 2007? Retail investors flood the market as speculation grows rampant with a palpable exuberance and belief of no downside risk. What could go wrong?

Banks undergo a true stress test, smartphones measure movement, and poverty may rise.

Deficits are rising across the developed world as governments aggressively loosen their purse strings in response to the COVID-19 pandemic. But what are the ramifications of all this debt?

Emily presents key takeaways on the exercise of green bond impact reporting.

I’m sharing and analyzing five examples of great visual content from financial advisors.

Returns for most fixed income asset classes are positive so far this year, but the numbers mask the rocky road markets have traveled since January.

Tim Wang and Julia Laumont of Clarion Partners dig into the state of the U.S. commercial real estate market and where they are finding bright spots of opportunity.

Read Harold Evensky's latest NewsLetter.

What kind of role does private markets play in building a resilient portfolio in the post-Covid world? Mike explains.

Before you invest time and money on marketing, ensure you have these five things in place.

The appearance of a record-long economic expansion was fueled by expanding levels of debt and corporate share buybacks. The façade of recovery, a soaring stock market, convinced most people that it was real.

There are a tremendous number of things that can go wrong in the months ahead. Such is particularly the case of surging stocks against a depressionary economy.

Cambiar Investors Senior Analyst Charmaine Chan, who holds a doctorate in molecular biophysics and biochemistry from Yale University, details the latest on possible vaccines, the likeliness of a second wave of coronavirus and the next steps for the U.S. on the road to recovery.

In their effort to improve things/prevent pain, Fed officials past and present financialized the economy. That, along with more unintended consequences from government debt and regulatory interventions (all well-intentioned, you understand) brought us to where we are today. We can’t walk it back without a great deal of pain no one wants to take, including your humble analyst.

Why did stocks rise over the past month despite grim economic news? The Federal Reserve’s massive liquidity injection is one reason.

Bain Capital Credit examines the historical performance of US equities, leveraged loans, and high-yield bonds in periods of high, low, and moderate GDP growth from January 1997 to September 2019. The authors use this data to make the case for why investors are better off holding credit assets through the cycle instead of attempting to time the markets.

The month of May closed with a challenging brew of the lingering pandemic, tentative reopening, trade tensions, and political unrest. Markets, however, continued their remarkable recovery. The month ended with the S&P 500 37% higher than its March 23 low.

I consider Oracle an attractively valued dividend growth stock with an emphasis on growth. Oracle has a long history of generating above-average growth of earnings and cash flows, and since paying its first dividend in 2009, its dividend growth has been nothing short of extraordinary.

One of the most popular and successful strategies over the last decade has been low-risk (i.e., low-beta or low-volatility) investing. New research shows that those strategies have persisted even after the publication of the research documenting their existence, and that they can be pursued in low-cost, low-turnover portfolios.

Severe economic recessions often feature what might be called an “incubation phase,” where an exuberant rebound from initial stock market losses becomes detached from the quiet underlying deterioration of economic fundamentals and corporate balance sheets.

In the current market environment, both the bulls and the bears have data points on which they can stake their case. In this note we highlight both sides of the argument and then look at each asset class in an objective way to get a sense for what the market truly believes.

Investors have been eager to buy. In the past two months, investment-grade spreads have compressed nearly 200 basis points.

Our senior advisor wants us to add in prospecting and developing new business along with our other “virtual” activities.

Seasons of adversity reveal our shortcomings. Advisory businesses with the following qualities have the best chance of not only surviving the pandemic but finding ways to thrive in spite of it.

U.S. equity growth has been led by companies benefiting from heavy exposure to technology and an increase in remote work.

In this part 2, I want to share an additional perspective that my research on the growing levels of corporate debt uncovered.

As troubling as these developments are, it’s important not to lose sight of the good that appears to be taking place right now. Investors that focus only on the negative tend to miss out on the opportunities.

Today I’ll share some more insights from the Virtual Strategic Investment Conference. Frankly, I could go on for weeks like this, but this is going to be my last letter on the SIC. We had so much expertise and wisdom beamed in from all over the world. I’ll give you a few more highlights and then offer my own personal takeaway.

The accompanying chart is a way to visualize real GDP change since 2007 and uses stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself. Here is the latest overview from the Bureau of Labor Statistics.

It may surprise some investors to learn that the leverage profile of emerging market (EM) corporations appears to be in better shape than that of their US counterparts. Maybe it’s a matter of “been there, done that.”

Rick Rieder and Jacob Caplain contend that with profound uncertainties still present in the economy and markets, and the dislocations witnessed in many market segments in the past couple months, investors don’t need to resort to lower-quality assets. In fact, to achieve potentially attractive returns, higher-quality spread assets can serve quite well.

Is it too soon to think about downsizing our space?

High-achieving female advisors have five things that they focus on daily.

Currently, the Fed is injecting liquidity into the markets and economy at a record pace. While liquidity does have positive short-term benefits, is the Fed walking into a trap?

If rates stay low, the returns on stocks will be better than for bonds, according to Leon (“Lee”) Cooperman. “Bonds are the high-risk investment,” he said.

With markets starting to make a comeback, our Multi-Asset Solutions CIO Ed Perks looks ahead to second half of the year, including the implications of the US economy opening up, the ongoing impact of the massive monetary and fiscal response, and the risk for a wave of downgrades and defaults.

Potential for a large payoff on value strategies may exist soon, if history is any guide.

For years I have been warning that during the age of permanent stimulus (which began in earnest with the Federal Reserve’s reaction to the dotcom crash of 2000), each successive economic contraction would have to be met with ever larger, increasingly ineffective, doses of monetary and fiscal stimulus to keep the economy from spiraling into depression.

JPMorgan Chase’s CEO says the pandemic should serve as a call to action for business and government to think, act and invest for the common good and confront the structural obstacles that have inhibited inclusive economic growth for years.

A compassionate society has both economic reason and ethical responsibility to provide a social safety net to its most vulnerable members. It is an act of both economic insanity and ethical corruption to provide a financial safety net to its most reckless speculators.

An effort by investment giants including State Street, Vanguard, Fidelity and Invesco to redefine the $4 trillion U.S. exchange-traded fund universe has the industry’s smaller players bristling.

Bonnie Wongtrakool, Global Head of ESG Investments at Western Asset Management, digs into a post-COVID world when it comes to ESG investing and what factors investors should evaluate in companies moving forward so they’re better positioned to add value to their clients over future economic cycles.

What to own, how to do so, and when are the most important questions investors face. In my article, I discuss how a framework of collateral, leverage, and volatility can be used to help answer them.

The legal framework by which paper money and coins came to be accepted for use in private transactions and international trade was established in the 18^th century by George Washington and Alexander Hamilton.

• Central bank policies are more desperate than ever to fight the deflation of financial markets;
• Once countercyclical policies unravel, it is hard to escape the dire whirlpool of side effects;
• Can the Tocalino Index say anything about the bouts of exuberance in U.S. stock exchanges?

Our Head of Equities Stephen Dover gives his take on the new globalization, how the US Midwest may be the next emerging market, and what he thinks it means for strategic industries and supply chains.

The bitcoin halving that occurred this past Monday is only the third such event in the cryptocurrency’s 11-year history. In the months following the first and second halvings, bitcoin prices surged as it became abundantly clear that at some point in the near future, new bitcoin issuances will come to a halt.

Our Head of Equities Stephen Dover gives his take on the new globalization, how the US Midwest may be the next emerging market, and what he thinks it means for strategic industries and supply chains.

In a new white paper, GMO Credit Opportunities Strategy co-PM Jeff Friedman looks at the Federal Reserve’s unprecedented actions in the corporate credit market amid the COVID-19 pandemic and highlights an area of the market where investors might capture attractive opportunities.

The U.S. political focus has shifted to the reopening of the economy.

The fiscal and monetary responses to the “coronavirus” created a surge in savings. While many hope those savings will go back to work, the “savings mirage” won’t save the economy.

The First Eagle Overseas fund (SGOVX) has an exceptional 27-year history. Since its inception, it has returned 9.15% versus 4.03% for the MSCI EAFE index. It was originally managed by the legendary Jean-Marie Eveillard. I spoke with its current management team about how the fund has performed during the coronavirus crisis and why financial professionals should look to diversify outside the U.S. markets.

This century is barely 20% complete, yet investors have suffered through three extreme bear markets. Let’s look at which asset classes provided the much-sought diversification to offset losses in U.S. equities.

Leverage is probably one of the most controversial subjects in investing. Used properly (and given a bit of good fortune), the benefits of leverage can be amazing. Leverage is the reason why home ownership is often viewed as one of the best ways of building wealth.