Real Estate

Tina is an old friend of mine, but she is also a sad case of hubris, over-confidence and misguided pride. I first met Tina about 38 years ago but, more recently, I have been reminded of her presence every single day. Sometimes valuations get so much out of whack that I get goose bumps all over, and this is one of those situations.

You know it’s a bubble when you have to edit the Y axis on all of your charts because valuations have broken above every historical peak, and estimated future market returns have fallen beyond the lowest points in history, including 1929.

While listening to Rob Arnott on a recent Morningstar podcast, I became enamored with something that Arnott was emphatic about. He pointed out that the structural advantage of being a contrarian isn’t being smarter. Every winning purchase in the stock market comes as an opportunity cost to the seller.

Valid until the market close on September 30, 2020.

The S&P 500 closed August with a monthly gain of 7.01% after a gain of 5.51% in July. At this point, before the close on the last day of the month, all three S&P 500 strategies are signaling "invested" — unchanged from last month's triple "invested" signal. All five Ivy Portfolio ETFs — Vanguard Total Stock Market ETF (VTI), Vanguard FTSE All-World ex-US ETF (VEU), and iShares Barclays 7-10 Year Treasury (IEF), Vanguard REIT Index ETF (VNQ), and Invesco DB Commodity Index Tracking (DBC) — are signaling "invested", an increase from last month's triple "invested" signal.

The data used to measure a company’s compliance with ESG guidelines is inconsistent and leads to misleading results. Moreover, when teams at the same company manage comparable ESG and non-ESG funds, the former more often underperforms the latter.

It’s a tale of two bull markets. One part of the market is trading as you would expect with near depressionary economic numbers. The only description for the other part is “insane.”

The Fed’s new take on inflation was a long time coming, while Japan’s downturn drags on and U.S. housing stays strong.

Here is an advance preview of the monthly moving averages we track after the close of the last business day of the month.

With the release of this morning's report on July Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita. At two decimal places, the nominal 0.18% month-over-month change in disposable income was at -0.15% when we adjust for inflation. This is an increase from last month's 1.36% nominal and 1.83% real decreases last month. The year-over-year metrics are 8.96% nominal and 7.89% real.

Today the National Association of Realtors released the July data for their Pending Home Sales Index. According to the National Association of Realtors®, "Pending home sales in July achieved another month of positive contract activity, marking three consecutive months of growth."

Since the inflation cocktail is closely related to value stock outperformance, we are very excited about our future value investing possibilities.

With today's release of the June S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index saw no change month over month which is cut to -0.09% with inflation adjustment.

The Federal Housing Finance Agency (FHFA) has released its U.S. House Price Index (HPI) for June. U.S. house prices were up 0.9 percent on a seasonally adjusted nominal basis from the previous month. Year-over-year the index is up 5.7%. After adjusting for inflation and seasonality, the index is up 0.1% in June and up 5.9% year-over-year (seasonally adjusted).

This morning's release of the July New Home Sales from the Census Bureau came in at 901K, up 13.9% month-over-month from a revised 791K in June.

In a speedy round-trip, the S&P 500 hit an all-time high last week; meaning the rally since March is now an “official” bull market.

Although many suggest that wealth inequality is attributable to globalization and technological advancements, what they miss is the role of speculative finance and the complicity of the central bank in driving this process.

Berkshire unexpectedly announced that, as of the end of the second quarter, it held a $565 million position in Barrick Gold, the world’s second largest producer of the metal.

This morning's release of the July Existing-Home Sales showed that sales rose to a seasonally adjusted annual rate of 5.86 million units from the previous month's revised 4.70 million. The Investing.com consensus was for 5.38 million. The latest number represents a 24.7% increase from the previous month, it's largest monthly increase ever, and an 8.7% increase year-over-year.

Research Affiliates discusses the increase in portfolio tactical shifts and recent research efforts supporting the All Asset strategies in today’s evolving investment environment.

Investors should consider alternatives such as private credit as they search for positive yield in a world of low or negative interest rates, says Nuveen.

The skyscrapers are mostly empty, the tourists are home and talk of New York’s decay is back. For the city’s real-estate barons, it’s time to put an end to it.

Everybody is wondering how the stock market can be so high while the U.S. economy is so low. But you don’t hear the same rumbling concerns about the bond market – even though something very similar to ultra-high P/Es is going on in the fixed income side of your portfolio.

The price of gold had its first down week since early June, ending a spectacular nine-week rally. The yellow metal briefly fell below $1,900 an ounce on Wednesday as stocks neared their all-time closing high and the 10-year Treasury yield jumped on record supply.

Eight advisors describe the worst money moves they’ve witnessed clients make in a recession.

The Northern Trust Economics team forecasts the U.S. economy’s recovery from a record-breaking decline.

Jeffrey Gundlach, who famously predicted Donald Trump’s victory in 2016, said that the president will defeat the presumptive Democratic nominee, Joe Biden, in November. He also dimmed the expectations of fixed-income investors when he said to avoid short- and long-term bonds.

Growing challenges to banks have weighed on recovery hopes for value stocks. But our research of Japan’s experience and global value trends suggests value stocks don’t necessarily need financials to turn the corner.

The 62-year-old has been taking the world of business and finance to task for its role in systemic racism for longer than most. Now she and her team have hatched a new game plan.

COVID-19 causes growth in government debt, liability risks, and stress for women.

For the week, airlines stocks increased 9 percent, its best weekly performance since early June. Wheels up!

As I file this letter Friday morning, people are reacting to the July jobs report. My own reaction: The headline report is absurd.

The moves threaten to upend huge swaths of the real estate market and the half-trillion dollar market for commercial mortgage-backed securities.

Already, apartment rents are plunging in cities such as San Francisco, Seattle and New York. But a significant constraint is going to be how much out-of-the-way communities are willing or able to grow.

The 30 most economically damaged industry categories could be de-listed before tomorrow’s market open, and it would hardly shave more than a few percentage points off the S&P 500.

Should I be abandoning the idea of allowing everyone to work virtually if it is so disruptive to two of my best advisors?

In 1832, Martin Van Buren helped Andrew Jackson decide precisely when he would end the charter for the Second Bank of the United States – the only American central bank of issue before the establishment of the Federal Reserve.

Several equity factors diverged significantly from their typical performance patterns during the COVID-19 crisis. By understanding how factor returns behaved in this market correction relative to their historic norms, investors can not only prepare for future volatility but also take advantage of short-term market dislocations.

Florida’s favorable tax laws have long been a draw for high-net-worth individuals, but the pandemic’s disruptions -- to work, school, public safety and northern states’ budgets -- have increased the allure.

The conclusions have implications for wealth management, where women represent just 15% of financial advisors.

Advisors are blissfully unaware of the risk inherent in their jobs.

Over the last decade, the general trend has been consistent: The rate of home ownership continues to struggle. The Census Bureau has now released its latest quarterly report with data through Q2.

With Monday's (7/20) intraday price action, the default Point and Figure chart of the S&P 500 Index (SPX) broke a spread quadruple top with a move to 3240 before moving higher to 3270 on Tuesday. This latest buy signal marks the third consecutive on the chart, confirming that demand is in control.

The U.S. and EU deliberate how to disburse aid, China’s recovery carries risks, and U.S. mortgage rates find a floor.

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.

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.

Higher-income assets underperformed in the second-quarter rebound. But that also means there’s pent-up potential in income-generating assets that may begin to show in later stages of the recovery.

The pandemic-driven market volatility has advisors rethinking client allocations – with many favoring private market and hedged strategies.

Value (investing) is dead. Long live value investing. Such certainly seems to be the mantra as investors continue to pile into growth stocks while rationalizing valuations using methodologies which historically have not worked well.

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.

Politicians love saying small businesses are important to the economy. In this case, it isn’t just rhetoric. The millions of little companies with a handful of workers are, collectively, more important than the few hundred large enterprises we see in the news.

Read Harold Evensky's latest newsletter.

Wells Fargo & Co. plummeted after reporting its first quarterly loss since 2008 as loan-loss provisions soared with the bank expecting a more severe downturn from the coronavirus pandemic.

More managers are questioning whether the traditional asset mix can produce the same returns going forward.

The value of this year’s annual hedge fund performance survey was turned on its head when a pandemic shut down the global economy and sent securities plummeting. But a deeper look at consistently performing funds revealed managers that as a group have largely been able to weather the storm better than the market and their peers.

When looking at the acceleration in the price of the Nasdaq, and particularly within the small group of stocks driving that advance, you can begin to fathom our concerns. Furthermore, the divergence between the Nasdaq and the S&P 500 index is emulating the late 90’s.

Today we’ll look at the data, including some non-government sources. As you will see, millions of workers will stumble through this period, and they may be the lucky ones.

The first half of 2020 was dominated by the COVID-19 pandemic, which hit the municipal bond market hard. State and local governments experienced a sharp and sudden drop in revenue, and an increase in expenses, amid stay-at-home orders and business shutdowns.

Low yields plus rising defaults seemingly leave little ground for bond investors seeking safety or income—or both. But for investors who remain flexible, those objectives aren’t as distant as many think.

Against the backdrop of this new reality, and as most people are doing these days, I found myself browsing through Netflix. That’s when I noticed that the classic Robert Zemeckis movie, Back to the Future, was one of the trending titles. This made me think: what if we could travel back in time, not even as far back as 1955, but rather to January 1 of this year?

But a survey did flag some promising growth areas for wealth managers.

The journey to a full recovery will be a long one, but at least we’ve taken some initial steps.

Here are the red flags that your client is sneaking and creeping around with another advisor.

Picking up a salad at lunch might have been a part of your routine. Grocery stores are doing whatever it takes to save that business.

The pandemic has created an extraordinary risk/return trade-off for the shares of high quality U.S. banks. We believe there is the potential for decent returns for bank investors without improvement in the current environment, and the potential for enormous returns if the rate of change in the economy remains positive.

Pricing dislocations and adjustments between companies, industries, regions and asset classes due to the impact of COVID-19 offer opportunities for select hedged strategies, according to K2 Advisors.

Economic fallout from the coronavirus crisis was especially hard on real estate, mostly from misperceptions that the asset class is dominated by hotels, malls and office parks. But a look inside shows a diverse group of sectors that are more pandemic resilient than investors may think.

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.

More infections lead to more worry, while the commercial real estate and tourism sectors are put to the test.

A simple mix of stocks and short to medium-term bonds is probably a better bet than investments widely peddled as inflation protection.

Pundits, prognosticators, and even investment boards often make misleading declarations that an asset class is broken, that its prospects for earning investors a reasonable future return are very dim. These proclamations can lead to investors’ abandoning these assets to chase recent winners.

Email marketing is a powerful tool to grow your business. But be aware of etiquette as well as some common pitfalls and mistakes that can cost you.

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

Coronavirus cases and hospitalizations are spiking again in several countries, including the U.S. California had its biggest one-day jump in infections. Arizona, Florida and Texas are also turning into new hotspots.

Looking to generate income from your nest egg? Make sure you don’t get it all from just one basket. Karen explains two funds designed to provide income that aren’t over reliant on any one source.

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.