Real Estate

The best environment would be moderate U.S. growth, a sideways U.S. market and a weaker U.S. dollar.

2019 was a triumphant year for the US large cap equity market, with the S&P500 index up 31% on a total return basis. The resolution of two major concerns in the year, namely the US Fed being too aggressive on rate hikes, and the US/China trade relationship hanging in a total impasse, drove the market higher, particularly in 1st and 4th quarter.

Always being alert and anticipating the next inflection point in the business cycle can help you actively manage your investments while taking advantage of emerging profit opportunities and more importantly protect your wealth from the inevitable cyclical declines. This exceptionally long business cycle appears set to emerge from its third growth slowdown and has now reached the stage where a cyclical bull market in commodities can be expected.

It has been a great year for equity investors. The S&P 500 index posted a 31% annual return, the Dow 25%, and the NASDAQ a spectacular 39%. More than $6T of equity paper wealth was created for domestic investors this year alone.

Let’s walk through the first 20 years of the new millennium and the lessons for the next 20 years.

Following another year of strong returns, Emerging Markets (EM) fixed income has outperformed developed bond markets by a significant margin over the past four years. The outperformance is likely to continue in 2020, because EM fixed income remains attractively priced both in absolute terms and relative to bonds in developed markets as well as under-owned and well-supported by an improving fundamental backdrop.

I’m optimistic that the U.S. will stand as a beacon of freedom and opportunity in the 2020s and beyond, but with more and more younger Americans supporting socialism over capitalism, I believe it prudent to proceed with caution. That means making sure you’re holding some gold in your portfolio.

Valid until the market close on January 31, 2019.

The S&P 500 closed December with a monthly gain of 2.86% after a gain of 3.40% in November. All three S&P 500 MAs are signaling "invested" and all five Ivy Portfolio ETFs — Vanguard Total Stock Market ETF (VTI), Vanguard REIT Index ETF (VNQ), Vanguard FTSE All-World ETF (VEU), iShares Barclay 7-10 Year Treasury (IEF), and PowerShares DB Commodity Index (DBC) — are signaling "invested".

With today's release of the October S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.4% month over month which is cut to 0.2% with inflation adjustment.

The economic calendar is normal in another week split by a holiday. Many market participants will not show up until Thursday – and perhaps not even then. The ISM reports, manufacturing and non-manufacturing, are both post-holiday. My guess is that the financial media will continue the attention to 2020 outlook ideas. Some reporters will take a look instead at events from the past decade.

Today the National Association of Realtors released the November data for their Pending Home Sales Index. According to the National Association of Realtors®, "Pending home sales increased in November, rebounding from the prior month’s decline."

Given the undeniable benefit of being sincere, it’s surprising how often we retreat to the use of clichés, which denote a lack of genuineness. Using these phrases demonstrates laziness and very little thought.

What were the top financial news stories of 2019? To answer that question, Frank looks back at his five most visited articles from the year that was.

The latest Fed balance sheet shows a total net worth that is 89% above the 2009 trough. The nominal Q3 net worth is up 0.2% from the previous quarter and up 1.6% year-over-year.

The team at HSH.com, features a periodic update entitled "The Salary You Must Earn to Buy a Home in the 50 Largest Metro Areas". The key question is:

"How much salary do you need to earn in order to afford the principal and interest payments on a median-priced home in your metro area?"

Naturally, this is the time when market-watchers issue their forecasts for what may lie ahead, and my team is no exception. Simply put, we expect continued monetary policy accommodation with little fiscal stimulus. Therefore, we are more optimistic about capital markets than we are about the overall economy, and we favor risk assets over non-risk assets for 2020.

The economic calendar is very light and interrupted by the mid-week holiday. We can always see volatility when volume is low, but many market participants will be on an extended holiday. This includes much of the A-team punditry, but someone will be left to fill the airtime.

The growth of personal savings and investment in China of the last few years has a parallel in the boom in the “old Northwest” of the U.S. following the War of 1812. The parallel carries a fateful lesson for the future of China.

This morning's release of the November New Home Sales from the Census Bureau came in at 719K, up 1.3% month-over-month from a revised 710K in October.

With the release of this morning's report on November Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita. At two decimal places, the nominal 0.48% month-over-month change in disposable income was reduced to 0.32% when we adjust for inflation. This is up from last month's -0.02% nominal and down from the -0.26% real increase last month. The year-over-year metrics are 4.01% nominal and 2.50% real.

While US-China trade tensions and other concerns prompt a cautionary stance when it comes to risk assets, Franklin Templeton Multi-Asset Solutions’ Ed Perks and Gene Podkaminer nonetheless remain positive about the US equity market in the year ahead, citing a number of long-term growth drivers that still remain in place.

Now that the US and China have agreed to begin easing trade tensions, the fog over China’s markets is starting to lift. Investors should consider Chinese equity opportunities that have been overlooked because of tariff fears.

The economic calendar is especially important. Several housing reports, JOLTs, and the final estimate for Q3 GDP lead the list. Despite this, I suspect a powerful draw from the Gregorian calendar. It is time for those annual forecasts!

Two Invesco strategists debate the prospects of a value rotation in 2020.

The current path we are on is unsustainable. The remedies being applied today is akin to using aspirin to treat cancer. Sure, it may make you feel better for the moment, but it isn’t curing the problem.

Brexit and trade talks provided lots of uncertainty this year. Last week saw progress on both fronts.

Predicting a major economic or financial event—whether that’s a recession, market downturn or even your own retirement—requires that you also take action. Otherwise your prediction was meaningless.

We expect to see flows back into UK equity and credit now that some of the Brexit uncertainty has been removed.

Did you know that more than $12 trillion in assets under management are engaged in one or more strategies of sustainable investment in the United States? This comprises more than 25 percent of the professional managed assets across the country and is a 38 percent growth from 2016 figures.

In the U.S., between one quarter and one third of all assets managed are done so with an ESG or SRI mandate. Outside the U.S., that percentage is even higher. The Vitium Global Fund, formerly the Vice Fund, buys what most ESG/SRI investors scorn, stocks in the tobacco, alcoholic beverage, gaming and aerospace/defense industries.

Research Affiliates discusses why they believe value investing is still alive and well and explains how changes to the display of expense ratios seek to enhance clarity for investors.

With REITs posting strong returns this year, should investors overweight them?

One way to address market volatility is through real assets – natural resources, infrastructure, and real estate. Those tend to have low correlations with traditional stock and bond allocations. I am speaking today with Michael Natale, who explains why an allocation to real assets can hedge against the risks in stocks and bonds.

We don’t have much time to get our house in order, either in the US or globally. Everything I’ve said today applies, to various degrees, throughout the developed world. Thinking that 2% inflation or zero interest rates coupled with massive deficits will somehow help is beyond wishful thinking.

While all eyes are on estimated sales throughout December, sector performance for the month is historically not impressive.

Yes, there is a downturn in the Global economy, numerous factors are combining together in what seems like a perfect storm of negativity to depress the global economy and quell even the hardiest of investors from any attempts at risk taking. Nothing could, or may I say should, be farther from the truth.

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

From freight volume to flight delays and real estate to recession risk, we share quick thoughts on a variety of economic subjects.

Black Friday is around the corner. Will US shoppers head to the mall? Or are malls out of fashion for good? The debate about the retail apocalypse is playing out in a single bond index.

The entrepreneurial mindset of determination and perseverance can bring significant financial rewards. Expanding that mindset to include a broader, more diversified view of investing for the future will turn those rewards into long-term financial independence.

Private markets remain a key source of income for institutional portfolios, but late-cycle concerns demand a thoughtful approach to opportunities and risks.

A wave of volatility may knock back a passive fund, but active managers can nimbly assess the situation.

College is expensive. We all know that – and that is why parents come to financial advisors to talk about how they’ll pay for it. What you and your clients’ families may not be aware of is that the posted tuitions are rarely the price anyone pays. College tuition discounts vary widely and the methodology used to calculate tuitions is not disclosed by any college.

We have argued recently that since almost nobody is worried about inflation, there are wonderful opportunities for investments which would benefit from the crowd being wrong.

The economic calendar is normal with a focus on housing. Some will be parsing the Fed minutes while others watch the impeachment hearings. This week’s topic may not be a media focus for the week ahead, but it gets constant attention. With a government shutdown and the debt ceiling on the agenda, let’s seize the moment and ask: Is it time to worry about debt? I suspect that many readers believe it is way past time!

As China's economy continues its shift toward services and consumption, small and medium-sized businesses are accelerating this transformation.

A review of last month’s market-moving events across countries and asset classes.

It’s hard to believe now, but the very first Singles Day in 2009 generated only about $7 million for Chinese mega-retailer Alibaba. No one could have guessed then that, 10 years later, the 24-hour shopping event would see that sales figure surge to an all-time record of $38.4 billion, an unbelievable multiple of 5,471.

ESG integration is best used as a tool to improve portfolio returns and/or reduce risk. While usually thought of as a company-level concern, material ESG data can be very useful at the country level as well, especially in emerging markets. ESG signals are only as good as the quality of their inputs.

Research Affiliates discusses how its research partnerships with academic thought leaders inform its process and examines the All Asset strategies’ returns per unit of equity beta.

REIT investors can diversify through a fund or ETF tied to an index, such as the FTSE NAREIT Index. But new research shows that a factor-based approach will have superior risk-adjusted returns.

Wealth taxes are politically resonant but difficult to enact. Oil prices are steady despite disruptions, while the EU’s food exports face tariffs.

Although economic signals are mixed, bottom-up sector fundamentals help inform decisions on sector ratings.

It’s been a largely solid run for U.S. stocks in 2019. With the year now in its final quarter, Tony DeSpirito addresses three questions on investors’ minds.

In my previous article, I talked about how important it is to know who you best serve and what types of people and personalities are right for your firm. Now, let’s determine how to reach those people and grow your firm.

We took a close look at the "Big-3" recession precursors and concluded it's too soon to bet on a U.S. recession.

One of our least favorite things about investing is the remarkable imprecision of language. There are so many terms like “risk,” “momentum,” “smart beta”, and “asset class” (among many others) that have no precise definition– and yet, everyone assumes they know what those terms mean.

Since the earliest days of the current economic expansion, there have been naysayers asserting the US was on the brink of another recession. Remember all the fear about another wave of home foreclosures, or a disaster in commercial real estate, or the Fiscal Cliff, or Greece potentially leaving the Eurozone, or German bank defaults, or even the inverted yield curve earlier this year?

Rising issuance of munis available only to qualified institutional buyers (QIBs) may offer higher yields to investors who can access them.

The economic calendar is a light one in sharp contrast to last week’s. That was a good time to observe the market reaction to a wide range of news. Now is the time for investors to use the information.

Investors may assume they have adequate exposure to gold because they’re invested in a commodities fund. But many of these funds have a relatively small weighting in gold, and so their gold exposure is much smaller than they realized.

Welcome to Emerging Markets! A huge array of economies all at various stages of development and maturity with different capital market structures. Add in as many different currencies, political frameworks and policy stances and the result is a complex, diverse, evolving and inefficient market universe.

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 Q3 2019.

Listen... do you hear that? A bubble is popping. No, we aren’t talking about the stock market... well, at least not the stock market you’re probably thinking about. Generally, public companies have the economics to back up their lofty valuations, even if those valuations are, well, lofty. It is the market for private companies, specifically those backed by venture capital (VC), that looks truly bubblelicious.

Preferred securities represent a relatively underappreciated opportunity for income-oriented investors in an overall low yield environment where attractive investments may seem hard to find. In the current market they offer yields and returns comparable to high yield debt, but with quality and trading characteristics more nearly approaching investment grade credits.

We focus on fundamentals such as moving averages and standard deviation. We follow leading indicators such as the purchasing manager’s index (PMI) and consumer confidence index. These factors are many times more effective than the headline news at shining a light on the right path.

For certain sectors, a change in interest rates has a relatively large impact—and that impact has increased significantly in the “new normal” environment of low interest rates.

Are equity managers reconsidering their exposure to more expensive growth stocks? Check out the latest insights from our manager research team.

Although the relative performance of the Wasatch investment strategies was mixed during the third quarter — some strategies were a bit ahead of their benchmarks and some were a bit behind— the 2019 year-to-date and longer-term results (i.e., five years) have been exceptional across most of our strategies.

In financial euphoria episodes, investors become immune to the risks of capital destruction by blacking out to their normal risk aversion. Usually these episodes come from extrapolating the recent past out many years into the future. What can we learn from other disciplines about blacking out? How did this happen with investors in the past and where are risks in the U.S. stock market blacked out today?

Internet retailers are fundamentally disrupting the traditional retail industry. This trend toward e-commerce is having a profound impact on some segments of the fixed income markets, with commercial mortgage-backed securities (CMBS) and corporate debt issued by retailers and real estate investment trusts (REITs) feeling the most meaningful effects.

A review of the risks which keep the markets range-bound. Investors are bearish, but remain aggressively allocated.

Looking at the beginning and ending levels for equities and fixed income during the third quarter, one might erroneously conclude that it was another summer snoozefest. However, there was volatility during the quarter as the equity markets shrugged off a sloppy August awash in second quarter earnings disappointments and staged a solid comeback rally through September.

Smoke detectors and fire extinguishers are critical safety devices. But investors in every cycle ignore the markets’ warning signals regarding risk. Rather than ignore the warnings, we are dusting off and priming the traditional portfolio “fire extinguishers”.