Litman Gregory
Commentary
Monthly Market Update
by Team of Litman Gregory,
Last month lived up to October’s traditional reputation as a difficult one for global stock markets. As political pundits discussed an “October surprise” in the context of the U.S. presidential election, investors were busily reacting to a series of developments that ultimately depressed returns. Stocks were pushed down in part by better-than-expected economic data, which investors viewed as raising the odds the Federal Reserve will increase interest rates in December.
Commentary
Perception versus Reality: Managing Risk
While we spend time analyzing each of our individual positions and holdings, when it comes to portfolio management, the whole is very much more than simply the sum of its parts.
Commentary
Our Perspective on the Brexit Vote
by Team of Litman Gregory,
Britain's decision yesterday to leave the European Union roiled global markets today. Investors' significant negative reaction reflects several fears and concerns over the lasting impact of the vote. While we acknowledge Brexit may increase both the likelihood and magnitude of shorter-term downside risk, we have positioned our broadly diversified portfolios for resilience across a wide range of scenarios, including periods of increased volatility like this one. We will follow up if our assessment results in material changes to our views or portfolio positioning.
Commentary
A Look at the Municipal Bond Market
by Team of Litman Gregory,
Given the low yields that are a feature of the current investing environment, return expectations across fixed-income asset classes have been falling. So why are we reviewing munis now?
Commentary
Evaluating the Current Credit Cycle
by Team of Litman Gregory,
Like the equity markets and economic activity, the U.S. fixed-income market also moves in cycles. When we think about the credit cycle, we divide it into three broad stages: the recovery, the expansion, and the downturn. Based on qualitative and quantitative factors, we believe we are in the later innings of the expansion phase, as we explain in this piece.
Commentary
Market Cycles and Portfolio Positioning
by Team of Litman Gregory,
The post-financial-crisis period has been dominated by a few very strong market trends. It is important to view these for what we believe they are—cycles that will eventually turn and may be in the process of turning. In this commentary, we discuss the concept of cycles as well as several very specific cycles we’ve experienced in recent years.
Commentary
Why Alternatives, Why Now?
by Team of Litman Gregory,
U.S. stocks. and core bonds currently look unattractive relative to their return-generation and risk-reduction roles in our portfolios, leading us to research and invest in alternative strategies that we see as more compelling on a risk/return basis.
Commentary
Constructing a Balanced Portfolio
We often write about how our tactical asset allocation investment process seeks to use shorter-term market price volatility to our long-term advantage. Of course, while it is easy enough to say volatility creates opportunity, the reality is that volatility can be stressful and painful when you are actually experiencing it in your portfolio.
Commentary
Why We Believe Emerging-Markets Stocks are Attractive
by Rajat Jain of Litman Gregory,
There is certainly no arguing that over the short term, investing in emerging-markets stocks can be a bumpy ride. This is especially true if you invested in the asset class during the crisis-prone years of the late 1990s and early 2000s. When asked why we believe in investing in the asset class, we point to our overarching belief that emerging markets' macroeconomic fundamentals are much better now than they were during those crisis-prone years. In this update, we provide further background on our analysis.
Commentary
How We View the Big Picture
by Team of Litman Gregory,
We are regularly asked for our take on the broad macroeconomic topics of the day. Two of the more noteworthy big-picture subjects we have been asked about recently are the Greek debt crisis and the timing of the U.S. Federal Reserve rate hike. In most cases, we don’t believe we have new insights to add beyond the reams of commentary these topics typically inspire, and given the dynamic nature of these two topics, it is quite possible that new information will unfold as we publish this or shortly thereafter.
Commentary
Macro Is Not the Markets: The Global Economy and the Resulting Investment Environment
by Jeremy DeGroot of Litman Gregory,
In a recent client Q&A event, Litman Gregory chief investment officer Jeremy DeGroot shared his thoughts on the global economy. He pointed out that, historically, macroeconomic cycles and financial-market cycles have not coincided, which has implications for asset allocation. Investors need to analyze the stock market separately from the economy.
Commentary
The Case for Global Investing
by Team of Litman Gregory,
As U.S. stocks have outperformed developed international and emerging-markets stocks in recent years, we’re starting to hear more people question the benefit of investing outside of the United States. This is an important question, and we acknowledge that owning foreign stocks has been an unsatisfying experience over the past couple of years. Moreover, given some of the current economic and geopolitical forces, it can appear likely to continue this way.
Commentary
Knowing What You Can't Know, Knowing What You Don't Know, and Staying Disciplined in Your Investment
by Team of Litman Gregory,
In our investment analysis and decision-making, we try to focus on what is knowable with a reasonable degree of certainty or within a reasonable range of outcomes. We also recognize the importance of staying within our circle of competency, which means not investing in things we don't fully understand. And while our investment discipline requires us to adapt and change our views if the facts and circumstances change, it also protects us against getting swept up in the short-term noise and emotions of the markets.
Commentary
Second Quarter 2014 Investment Commentary
by Team of Litman Gregory,
Overall, our macro view and assessment of the risks and returns across the major asset classes has not changed meaningfully since last quarter. We continue to see the U.S. and global economies on a slow path of recovery from the 2008 financial crisis. ... Despite our more positive fundamental outlook, we also continue to view the markets as too dependent on central bank largesse, too short-term focused, and too complacent about the risks and imbalances that remain in the global economy in the aftermath of the financial crisis.
Commentary
2013 Year-End Investment Commentary
by Team of Litman Gregory,
We find ourselves with a more sanguine big-picture view, at least over the nearer term, than we have had in some time. U.S. and global economic fundamentals gradually improved over the past year across a number of dimensions, and seem poised for continued improvement or at least stability in 2014. However, as we look ahead, the longer-term risks related to excessive global debt, subpar growth, and unprecedented government policy that we have worried about since the aftermath of the 2008 financial crisis still remain largely unresolved.
