If finance could be distilled into one idea, it likely would be that there should be a tradeoff between risk and reward: an investment with low risk should have a low expected return, while one that could make you rich should also be one that could lose you a lot of money. The Overnight Effect flies in the face of this core tenet.
A number of key technical, sentiment and flow based indicators are suggesting we could see a relief in selling pressure over the coming weeks, and perhaps a countertrend rally in risk assets.
Two forecasting methods predict a 54% stock market loss in 2022. Someday the stock market bubble will burst. But the data says we have not seen the worst of equity market declines.
Why would I work to increase the profile of an active fund manager? My reasons reflect the increasing pressure on advisors to differentiate themselves and demonstrate value.
Lifetime income solutions are high on the wish lists of defined contribution (DC) plan participants, with the certainty of a guaranteed lifetime income stream ranking as the top feature in our surveys over the past decade.
In 2003, at age 19, Elizabeth Holmes founded Theranos, and it became a $10 billion company by 2014. But it was a fraud. Aspects of target date funds mirror the Holmes story.
Applying volatility benchmarks correctly is the key to effective portfolio management.
Persistent … or transitory? It’s the inflation question that has been weighing on financial markets over the last year. As each economic data point trickles out, it is analyzed and re-analyzed, with that focus in mind. But it may be the wrong question to ask.
Those who are familiar with my articles know that I see market crashes in stocks and bonds occurring in this decade, combined with serious inflation. Readers ask how I recommend protecting. This is it.
It started with bonds. Now even collateralized debt obligations (CDOs) come in green.
We strongly believe that the traditional benchmark-led approach to investing in emerging market debt can be far from optimal.
What do Netflix, Peloton Interactive, Coinbase, and Palantir Technologies have in common?
“What does a yellow light mean? Slow down!
The U.S. debt cannot be paid, even in inflated dollars. Serious inflation is inevitable that will crash stock and bond markets, in addition to devaluing the dollar.
The historical data has shown that the value premium is smaller for large-cap securities than for small caps. But new research shows that large-cap investors can increase the premium by pursuing an equal-weighted strategy.
Regular readers of WisdomTree blogs know that we are firm believers in both asset class and risk factor diversification when building our Model Portfolios.
This post explains why we believe GARP Investing may be another powerful way to protect and grow capital amid a speculative frenzy that appears to be on its way out.
When reviewing the current state of the global economy and investment markets, we recommend focusing on market signals and weeding out market noise.
Mortgage-backed securities (MBS) have taken a hit over the last several weeks with the news of the Fed’s plans to shrink its balance sheet. Today's guest, Dean Smith of FolioBeyond, will discuss why the combination of the rise in Treasury yields and the widening of MBS spreads is continuing to increase the valuations of certain types of mortgage-backed securities. With the expectation that the pace of rate hikes will soon be more aggressive, Dean will explain how the actively managed rising rates ETF, RISR, will benefit and generate alpha. The FolioBeyond Rising Rates ETF (RISR) is up 26.55% YTD (as of 4/13/2022) and is ranked #1 by Morningstar among non-traditional bond strategies.
An unusually strong tug of war between economic forces is playing out in global markets, with a booming economy and low unemployment offset by the effects of the Russian invasion of Ukraine and expanded inflation. Expectations over the timing and magnitude of Fed interest rate increases rapidly evolved as clarity began to emerge around central bank responses to inflation.
The market was tough in the first quarter. Find out what it means for long-term investors.
It’s not just interest rate changes that affect the markets, changes in the Fed balance sheet can also be a source of negative returns to equity and bond markets.
The Russian invasion of Ukraine has added pressure to the inflationary cycle that began in late 2020.
Antti Ilmanen’s Investing Amid Low Expected Returns updates his 2011 Expected Returns, a volume considered by many the definitive work on the subject.
The Bluetooth logo is a bind rune merging the Younger Futhark runes(Hagall) (ᚼ) and (Bjarkan) (ᛒ), Harald’s initials.
The Federal Reserve’s first rate hike in years has sparked bond volatility, pushing investors to search for yield elsewhere.
The pandemic hastens the evolution of the DC plan landscape and challenges plan sponsors to evolve.
When market volatility goes up, investors increase their investments in volatility strategies that they deem as capable of yielding the most lucrative returns.
PIMCO’s glide path for target date funds expresses the firm’s collective view on age-appropriate asset allocation that can help prepare defined contribution (DC) plan participants for successful retirements.
The 60/40 stock/bond allocation is ubiquitous, but that’s stupid because it’s just not right for everyone, especially baby boomers.
Given the war in the Ukraine, I thought it would be helpful to provide insights for advisors and investors to think about risk and what if any actions should be considered.
The Rest of the Story was a radio show that aired from 1942-2008. Host Paul Harvey revealed little known facts that were previously not reported. The rest of the Federal Reserve story is that it is just pretending to be in control, and the rest of the Russian invasion story is about China and the U.S. dollar.
Navigating the career risk associated with bubbles (especially superbubbles) has always been tricky and is one of the biggest failings in the investment management industry.
Advisors make seven predictably irrational mistakes when it comes to bonds, depleting their clients’ wealth and standard of living.
No, we did not run out of titles.
Interest rate manipulation has been achieved through massive money printing that is causing inflation. To control inflation, bond manipulation must stop. When the manipulation ends, bond prices will plummet, and stock prices will follow.
We’ll review what may be the most compelling bear case I’ve seen in a long time, along with some other unpleasant data. Then we’ll look at some equally compelling reasons those views may be wrong.
Given the many forces shaping the economy and markets, 2022 will be a stock picker’s—and a bond picker’s—market. Prices are indeed stretched in pockets of the market, but many areas offer attractive potential supported by compelling fundamentals and exposure to growth themes.
All 2-sigma equity bubbles in developed countries have broken back to trend.
Last year was a good year for stocks, but not bonds. The post-2008 recovery has been spectacular, one of the best 13-year U.S. stock markets. I provide details for the entire 96 years as well as five-year and 10-year sub-periods
Uncertainty has become an ongoing theme in markets, economies, and communities everywhere, and in this environment, PIMCO investment professionals gathered – virtually, once again – for our recent Cyclical Forum.
In this article, I examine the history of 13-year returns on stocks and bonds to put the most recent 13-year period into perspective. It has indeed been extraordinary.
With both the pandemic and inflation proving longer lasting than many had anticipated, what does that mean for central bank policy in the months ahead?
Our economic experience could be driven by a con game – a hustle.
Here is how I nudge clients (sometimes not so gently) to where they should be on their portfolio.
New research confirms that investing with an environmental, social and governance (ESG) mandate does not lead to higher risk-adjusted returns. But investors will reduce exposure to climate-related risks and get the “psychic” benefit of making a positive impact for society.
A Pittsburgh insurance broker and a Richmond, Virginia forensic accountant have developed an alternative rating system for measuring the ability of life/annuity companies to keep their promises even in market crises. They call it the transparency, surplus and riskier assets ratio, or “TSR” for short.
We hope you enjoy the latest newsletter from Harold Evensky.
Successful investors must answer three questions: Will we have serious inflation? Will interest rates increase? Will stock prices fall?
One of the interesting aspects of the brief selloff in stocks in late November was that breadth deteriorated markedly. The broad indexes were only down a few percentage points, but there were more than a thousand stocks making 52-week lows on a daily basis.
2021 has been a year of notable economic growth after unexpected change caused by the COVID-19 pandemic. In our Economic and Market Outlook for 2022, we lay out some of the “known unknowns” we believe could significantly affect the investing landscape...
High inflation and strong economic data may make the Fed hurry to conclude asset purchases.
Wall Street likes to warn that past performance doesn’t guarantee future results, but when it comes to the traditional 60/40 mix of stocks and bonds, it kind of has. Persistent inflation could bring that to an end.
This third quarter update of Global Investment Report’s 18th annual global hedge fund survey highlights some of the remarkable distortions revealed across markets, while reporting on the current sentiment of leading investors and tracking how the top 50 funds have performed through the first three quarters of 2021.
Portfolio manager Michael Fredericks reflects on markets and investing to generate income while managing risk over the last decade.
Expected returns are derived in two distinct ways: from Federal Reserve actions, since it is manipulating bond prices, and from momentum, which is driving stock prices. How long can both last?
Speculative psychology is the only thing standing between an hypervalued market that continues to advance and a hypervalued market that drops like a rock. Our best gauge of that psychology - the uniformity of market internals - remains divergent enough to keep market conditions in a trap-door situation.
It’s well-studied that factors like debt and financial uncertainty impact the way people feel about retirement and prepare for it. In this series, BlackRock explores insights from our 2021 DC Pulse research and additional work with the Employee Benefit Research Institute (EBRI) to recognize inequities and help find ways to build a better retirement for all.
The fate of the global economy and stock markets rests on the successes of just a few megafirms that reside in the U.S. But have the prices of the world’s largest companies been bid up beyond what is reasonable and fair?
The 60/40 is not dead, will never die, and you can’t kill it. That won’t stop the financial media and investment firms from staging mock funerals.
Is inflation truly transitory? Will central banks start to tighten the policy reins? Will earnings continue to boost equity valuations? Heading into year end, the K2 Advisors team ponders these and other questions in its fourth quarter (Q4) hedge-fund strategy outlook.
Reducing exposure to equities and bonds to accommodate non-correlated assets or alternative strategies may reduce risk, but at the expense of lower potential returns and painful tracking error. We introduce a novel investment concept, accessible to all investors, which is designed to seek higher returns with less risk and low tracking error by using new products which, in combination, can provide more than $1 of exposure for every dollar invested. The proposed solution harnesses the full potential of traditional portfolios plus the opportunity for higher returns and risk reduction from non-correlated investments. We show how to maximize “Return Stacking™” opportunities by choosing alternative fund managers already engaging in capital-efficient strategies.
Money supply has quintupled in the past year, and because of this money printing, inflation is here for the long run. Inflation will force increases in interest rates.
Investors and financial advisors alike want to understand the fascinating trends that are transforming the investment industry.
Last year, after the March market correction, I warned baby boomers against buying the dip. Since the market rebounded 100%, that was bad advice. But I double down on that advice today for the same reason.
Pooled employer plans (PEPs) are the latest 401(k) rage, but they can be an asset or a liability. The difference is in their qualified default investment alternative (QDIA).
The U.S. stock market is thriving, while China’s deteriorates. China could intervene to limit stock market losses, but it is not. Is China purposely losing a battle to win a war?
After several strong quarters for value stocks, the last few months have seen a sharp reversal in favor of growth.
For the third year in a row, the top 50 hedge fund managers, relying on a variety of strategies, generated net returns comparable to the S&P 500 with significantly less risk and performance that was largely independent of the market. Hedged equity, multistrategy, and global macro funds led the way with more than half the funds in the top 50 managing less than $1 billion.
With this video I am presenting 20 A rated or better attractively valued dividend growth stocks with low debt and above-market yields.
Clorox reported what many are describing as disastrous earnings for the 4th fiscal quarter 2021.
The stock market and economy are hanging by a thread over an economic abyss. That thread is zero interest rate policy (ZIRP).
I provide guidance on the “equity-like” risk of buffer and floor strategies when included in a diversified portfolio, assuming an S&P 500 underlying index.
The impacts of passive investing are not as well understood as they should be.
Heading into the second half of the year, pandemic concerns are not completely in the rear-view mirror.
“It’s different this time” is usually not true, but this time it is. Will we get amplifying extremes, or returns toward average? The feasible and likely scenario spells disaster.
We’ve had serious inflation, but don’t know it because the barometer we use to measure it ignores security price inflation.
Two Congressional chairs have authorized a review of target-date funds (TDFs). The last such review was in 2009, and all that changed was that risk increased. It would be a shame if this initiative failed to produce results.
The yield on the benchmark 10-year Treasury note is 1.62%, and that is up approximately 130 basis points from its low of 32 basis points in March of last year. Moreover, the central debate among economists is whether the U.S. faces a new regime of inflation and higher rates, or whether inflation will be only transitory, as the Fed expects. This context of volatility and uncertainty about interest rates makes the job for advisors who want to generate steady income for their clients exceedingly difficult. Here to discuss one solution to that problem is Scott Kefer of Victory Capital.
Sir John Templeton famously said that “this time is different” are the four most dangerous words for investors.
The GMO Asset Allocation Team has released its latest 7-Year Asset Class Forecasts through May 2021 (click to view online or see chart below).
Managed futures strategies have historically delivered attractive returns over the long run with low equity correlations.
A proposal by the Biden administration would remove the preferential tax considerations for long-term holders of stocks. In so doing, it will cause investors to favor active ETFs over traditional actively managed mutual funds.
International banking regulators’ proposal to classify Bitcoin as the riskiest of assets dragged cryptocurrencies further into the mainstream financial world.
With only a few brief downturns in an otherwise upward trend in the U.S. equity market since the Global Financial Crisis, declining interest rates have pulled forward the net present value of distant earnings and propelled growth stocks (and the market as a whole) higher.
Generally, when inflations expectations are rising, we see value stocks favored more than growth stocks.
Who isn’t baffled by the continuing run-up in stock prices? Behavioral scientists. They explain that we have a host of biases that make us irrational. Here are the reasons that we have a stock market bubble, presented in two tables.
The pandemic forced us all to communicate via Zoom.
The switch on the U.S. economy is readying to come fully “on,” more than a year after the global pandemic forced abrupt closures around the world and across industries.
Retirement planning has evolved from a singular focus on savings to ensuring that account values provide income for life. Multiple generations of DC plan participants are concerned that they’ll outlive their retirement savings, and they’re turning to plan sponsors for solutions.
Specialty Investments
Night Moves: Is the Overnight Drift the Grandmother of All Market Anomalies?
If finance could be distilled into one idea, it likely would be that there should be a tradeoff between risk and reward: an investment with low risk should have a low expected return, while one that could make you rich should also be one that could lose you a lot of money. The Overnight Effect flies in the face of this core tenet.
Stocks Sniffing A Bear Market Rally
A number of key technical, sentiment and flow based indicators are suggesting we could see a relief in selling pressure over the coming weeks, and perhaps a countertrend rally in risk assets.
This is Not the Market Bottom
Two forecasting methods predict a 54% stock market loss in 2022. Someday the stock market bubble will burst. But the data says we have not seen the worst of equity market declines.
Why I Consulted with an Active Fund Manager
Why would I work to increase the profile of an active fund manager? My reasons reflect the increasing pressure on advisors to differentiate themselves and demonstrate value.
Lifetime Income Fees vs. Costs: Look Beneath the Tip of the Iceberg
Lifetime income solutions are high on the wish lists of defined contribution (DC) plan participants, with the certainty of a guaranteed lifetime income stream ranking as the top feature in our surveys over the past decade.
Elizabeth Holmes’ Lesson for Target-Date Funds
In 2003, at age 19, Elizabeth Holmes founded Theranos, and it became a $10 billion company by 2014. But it was a fraud. Aspects of target date funds mirror the Holmes story.
Utilizing Volatility Benchmarks In Building Long-short Stock Pairs
Applying volatility benchmarks correctly is the key to effective portfolio management.
Inflation Risk: Persistent or Transitory is the Wrong Question
Persistent … or transitory? It’s the inflation question that has been weighing on financial markets over the last year. As each economic data point trickles out, it is analyzed and re-analyzed, with that focus in mind. But it may be the wrong question to ask.
How I Protect Against the Coming Market Crash
Those who are familiar with my articles know that I see market crashes in stocks and bonds occurring in this decade, combined with serious inflation. Readers ask how I recommend protecting. This is it.
Does This CDO Come in Green? With ESG Everywhere, Buyers Beware
It started with bonds. Now even collateralized debt obligations (CDOs) come in green.
No Stone Unturned
We strongly believe that the traditional benchmark-led approach to investing in emerging market debt can be far from optimal.
Growth Traps Snap Shut
What do Netflix, Peloton Interactive, Coinbase, and Palantir Technologies have in common?
What Does A Yellow Light Mean?
“What does a yellow light mean? Slow down!
Our Debt Cannot Be Inflated Away
The U.S. debt cannot be paid, even in inflated dollars. Serious inflation is inevitable that will crash stock and bond markets, in addition to devaluing the dollar.
Good News for Large-Cap Value Investors
The historical data has shown that the value premium is smaller for large-cap securities than for small caps. But new research shows that large-cap investors can increase the premium by pursuing an equal-weighted strategy.
The WisdomTree Q2 2022 Asset Class and Risk Factor Review and Outlook
Regular readers of WisdomTree blogs know that we are firm believers in both asset class and risk factor diversification when building our Model Portfolios.
GARP Stocks: Common Sense in an Age of False Narratives
This post explains why we believe GARP Investing may be another powerful way to protect and grow capital amid a speculative frenzy that appears to be on its way out.
The WisdomTree Q2 2022 Economic and Market Outlook in 10 Charts or Less
When reviewing the current state of the global economy and investment markets, we recommend focusing on market signals and weeding out market noise.
A Top-Performing ETF for Rising Rates
Mortgage-backed securities (MBS) have taken a hit over the last several weeks with the news of the Fed’s plans to shrink its balance sheet. Today's guest, Dean Smith of FolioBeyond, will discuss why the combination of the rise in Treasury yields and the widening of MBS spreads is continuing to increase the valuations of certain types of mortgage-backed securities. With the expectation that the pace of rate hikes will soon be more aggressive, Dean will explain how the actively managed rising rates ETF, RISR, will benefit and generate alpha. The FolioBeyond Rising Rates ETF (RISR) is up 26.55% YTD (as of 4/13/2022) and is ranked #1 by Morningstar among non-traditional bond strategies.
Q1 2022: Tug of War
An unusually strong tug of war between economic forces is playing out in global markets, with a booming economy and low unemployment offset by the effects of the Russian invasion of Ukraine and expanded inflation. Expectations over the timing and magnitude of Fed interest rate increases rapidly evolved as clarity began to emerge around central bank responses to inflation.
Market review Q122
The market was tough in the first quarter. Find out what it means for long-term investors.
Watch Out For The Balance Sheet
It’s not just interest rate changes that affect the markets, changes in the Fed balance sheet can also be a source of negative returns to equity and bond markets.
K2 Hedge Fund Strategy Outlook: Second Quarter 2022
The Russian invasion of Ukraine has added pressure to the inflationary cycle that began in late 2020.
Antti Ilmanen: Investing Amid Low Expected Returns
Antti Ilmanen’s Investing Amid Low Expected Returns updates his 2011 Expected Returns, a volume considered by many the definitive work on the subject.
NewsLetter - Vol 15, No. 1 - March 2022
The Bluetooth logo is a bind rune merging the Younger Futhark runes(Hagall) (ᚼ) and (Bjarkan) (ᛒ), Harald’s initials.
Why High Dividend Stocks Make Sense Amid Bond Volatility
The Federal Reserve’s first rate hike in years has sparked bond volatility, pushing investors to search for yield elsewhere.
The New Defined Contribution Landscape
The pandemic hastens the evolution of the DC plan landscape and challenges plan sponsors to evolve.
Offsetting Risks with A Market-Neutral Approach
When market volatility goes up, investors increase their investments in volatility strategies that they deem as capable of yielding the most lucrative returns.
PIMCO Updates Its 2022 Glide Path for Target Date Funds
PIMCO’s glide path for target date funds expresses the firm’s collective view on age-appropriate asset allocation that can help prepare defined contribution (DC) plan participants for successful retirements.
Why the 60/40 is Wrong for Baby Boomers
The 60/40 stock/bond allocation is ubiquitous, but that’s stupid because it’s just not right for everyone, especially baby boomers.
Managing Risk Amid Geopolitical Uncertainty
Given the war in the Ukraine, I thought it would be helpful to provide insights for advisors and investors to think about risk and what if any actions should be considered.
What Awaits Behind the Russia and Inflation Headlines?
The Rest of the Story was a radio show that aired from 1942-2008. Host Paul Harvey revealed little known facts that were previously not reported. The rest of the Federal Reserve story is that it is just pretending to be in control, and the rest of the Russian invasion story is about China and the U.S. dollar.
Making Money And Reducing Risk In An Equity Superbubble
Navigating the career risk associated with bubbles (especially superbubbles) has always been tricky and is one of the biggest failings in the investment management industry.
The Cost of Being Wrong About Interest Rates
Advisors make seven predictably irrational mistakes when it comes to bonds, depleting their clients’ wealth and standard of living.
Blueberries, Blowups And Babies
No, we did not run out of titles.
What Will Interest Rates be When the Manipulation Ends?
Interest rate manipulation has been achieved through massive money printing that is causing inflation. To control inflation, bond manipulation must stop. When the manipulation ends, bond prices will plummet, and stock prices will follow.
So Goes the Year?
We’ll review what may be the most compelling bear case I’ve seen in a long time, along with some other unpleasant data. Then we’ll look at some equally compelling reasons those views may be wrong.
1Q 2022 Outlooks from the Calamos Investment Team
Given the many forces shaping the economy and markets, 2022 will be a stock picker’s—and a bond picker’s—market. Prices are indeed stretched in pockets of the market, but many areas offer attractive potential supported by compelling fundamentals and exposure to growth themes.
Let The Wild Rumpus Begin
All 2-sigma equity bubbles in developed countries have broken back to trend.
Nine Charts Summarizing the 96-Year Capital Markets History
Last year was a good year for stocks, but not bonds. The post-2008 recovery has been spectacular, one of the best 13-year U.S. stock markets. I provide details for the entire 96 years as well as five-year and 10-year sub-periods
Investing in a Fast‑Moving Cycle
Uncertainty has become an ongoing theme in markets, economies, and communities everywhere, and in this environment, PIMCO investment professionals gathered – virtually, once again – for our recent Cyclical Forum.
Lucky 13-Year Investment Returns
In this article, I examine the history of 13-year returns on stocks and bonds to put the most recent 13-year period into perspective. It has indeed been extraordinary.
K2 Hedge-Fund Strategy Outlook: First Quarter 2022
With both the pandemic and inflation proving longer lasting than many had anticipated, what does that mean for central bank policy in the months ahead?
Are We Being Hustled? A Mental “What If”
Our economic experience could be driven by a con game – a hustle.
The 10 Toughest Client Objections to Overcome
Here is how I nudge clients (sometimes not so gently) to where they should be on their portfolio.
The Non-Performance Benefits of ESG Investing
New research confirms that investing with an environmental, social and governance (ESG) mandate does not lead to higher risk-adjusted returns. But investors will reduce exposure to climate-related risks and get the “psychic” benefit of making a positive impact for society.
A Revolt Against PE-Led Annuity Issuers
A Pittsburgh insurance broker and a Richmond, Virginia forensic accountant have developed an alternative rating system for measuring the ability of life/annuity companies to keep their promises even in market crises. They call it the transparency, surplus and riskier assets ratio, or “TSR” for short.
NewsLetter - December 2021
We hope you enjoy the latest newsletter from Harold Evensky.
A Brief Quiz on the Economy
Successful investors must answer three questions: Will we have serious inflation? Will interest rates increase? Will stock prices fall?
The Stock Market Is Suffering From Bad Breadth
One of the interesting aspects of the brief selloff in stocks in late November was that breadth deteriorated markedly. The broad indexes were only down a few percentage points, but there were more than a thousand stocks making 52-week lows on a daily basis.
2022 Economic & Market Outlook
2021 has been a year of notable economic growth after unexpected change caused by the COVID-19 pandemic. In our Economic and Market Outlook for 2022, we lay out some of the “known unknowns” we believe could significantly affect the investing landscape...
The Fed's Taper: Accelerando
High inflation and strong economic data may make the Fed hurry to conclude asset purchases.
Inflation Is the Biggest Threat to the Bedrock 60/40 Portfolio
Wall Street likes to warn that past performance doesn’t guarantee future results, but when it comes to the traditional 60/40 mix of stocks and bonds, it kind of has. Persistent inflation could bring that to an end.
Mind the Gap – Q3 Hedge Fund Performance Review
This third quarter update of Global Investment Report’s 18th annual global hedge fund survey highlights some of the remarkable distortions revealed across markets, while reporting on the current sentiment of leading investors and tracking how the top 50 funds have performed through the first three quarters of 2021.
Three Things That Have Surprised Me – And One Thing I Wouldn’t Change
Portfolio manager Michael Fredericks reflects on markets and investing to generate income while managing risk over the last decade.
The Dubious Assumptions Underlying Stock and Bond Prices
Expected returns are derived in two distinct ways: from Federal Reserve actions, since it is manipulating bond prices, and from momentum, which is driving stock prices. How long can both last?
When Bubble Meets Trouble
Speculative psychology is the only thing standing between an hypervalued market that continues to advance and a hypervalued market that drops like a rock. Our best gauge of that psychology - the uniformity of market internals - remains divergent enough to keep market conditions in a trap-door situation.
Higher Interest: Debt Influences Demand for Secure Retirement Income
It’s well-studied that factors like debt and financial uncertainty impact the way people feel about retirement and prepare for it. In this series, BlackRock explores insights from our 2021 DC Pulse research and additional work with the Employee Benefit Research Institute (EBRI) to recognize inequities and help find ways to build a better retirement for all.
The Unprecedented Concentration Risk in U.S. Equities
The fate of the global economy and stock markets rests on the successes of just a few megafirms that reside in the U.S. But have the prices of the world’s largest companies been bid up beyond what is reasonable and fair?
Why the 60/40 is Not Dead, Will Never Die, and Why You Can't Kill It
The 60/40 is not dead, will never die, and you can’t kill it. That won’t stop the financial media and investment firms from staging mock funerals.
K2 Hedge Fund Strategy Outlook: Fourth Quarter 2021
Is inflation truly transitory? Will central banks start to tighten the policy reins? Will earnings continue to boost equity valuations? Heading into year end, the K2 Advisors team ponders these and other questions in its fourth quarter (Q4) hedge-fund strategy outlook.
Return Stacking: Strategies for Overcoming A Low Return Environment
Reducing exposure to equities and bonds to accommodate non-correlated assets or alternative strategies may reduce risk, but at the expense of lower potential returns and painful tracking error. We introduce a novel investment concept, accessible to all investors, which is designed to seek higher returns with less risk and low tracking error by using new products which, in combination, can provide more than $1 of exposure for every dollar invested. The proposed solution harnesses the full potential of traditional portfolios plus the opportunity for higher returns and risk reduction from non-correlated investments. We show how to maximize “Return Stacking™” opportunities by choosing alternative fund managers already engaging in capital-efficient strategies.
Going Up! Interest Rates Must Increase
Money supply has quintupled in the past year, and because of this money printing, inflation is here for the long run. Inflation will force increases in interest rates.
Digital Trends Impacting Investors and Advisors
Investors and financial advisors alike want to understand the fascinating trends that are transforming the investment industry.
Don’t Be a Dip and Buy the Dip
Last year, after the March market correction, I warned baby boomers against buying the dip. Since the market rebounded 100%, that was bad advice. But I double down on that advice today for the same reason.
Pooled Employer Plans (PEPs) Can Be Dangerous
Pooled employer plans (PEPs) are the latest 401(k) rage, but they can be an asset or a liability. The difference is in their qualified default investment alternative (QDIA).
What is China Doing to Its Stock Market and Why? A Hypothesis.
The U.S. stock market is thriving, while China’s deteriorates. China could intervene to limit stock market losses, but it is not. Is China purposely losing a battle to win a war?
2Q 2021 GMO Quarterly Letter
After several strong quarters for value stocks, the last few months have seen a sharp reversal in favor of growth.
2021 Survey of the Top 50 Hedge Funds
For the third year in a row, the top 50 hedge fund managers, relying on a variety of strategies, generated net returns comparable to the S&P 500 with significantly less risk and performance that was largely independent of the market. Hedged equity, multistrategy, and global macro funds led the way with more than half the funds in the top 50 managing less than $1 billion.
20 Dividend Growth Stocks A Rated Or Better Attractively Valued Blue-Chip
With this video I am presenting 20 A rated or better attractively valued dividend growth stocks with low debt and above-market yields.
Clorox Crashed: Buy, Sell or Hold?
Clorox reported what many are describing as disastrous earnings for the 4th fiscal quarter 2021.
Hanging by a ZIRP Thread
The stock market and economy are hanging by a thread over an economic abyss. That thread is zero interest rate policy (ZIRP).
The Risk of Buffer and Floor Strategies
I provide guidance on the “equity-like” risk of buffer and floor strategies when included in a diversified portfolio, assuming an S&P 500 underlying index.
The Consequences of Passive Investing
The impacts of passive investing are not as well understood as they should be.
K2 Advisors Third Quarter Hedge-Fund Strategy Outlook
Heading into the second half of the year, pandemic concerns are not completely in the rear-view mirror.
Five Ways It’s Different This Time
“It’s different this time” is usually not true, but this time it is. Will we get amplifying extremes, or returns toward average? The feasible and likely scenario spells disaster.
Inflation is Looming and Hiding in Plain View
We’ve had serious inflation, but don’t know it because the barometer we use to measure it ignores security price inflation.
The GAO Takes on Target-Date Funds
Two Congressional chairs have authorized a review of target-date funds (TDFs). The last such review was in 2009, and all that changed was that risk increased. It would be a shame if this initiative failed to produce results.
Creative Solutions to Generate Income for Clients
The yield on the benchmark 10-year Treasury note is 1.62%, and that is up approximately 130 basis points from its low of 32 basis points in March of last year. Moreover, the central debate among economists is whether the U.S. faces a new regime of inflation and higher rates, or whether inflation will be only transitory, as the Fed expects. This context of volatility and uncertainty about interest rates makes the job for advisors who want to generate steady income for their clients exceedingly difficult. Here to discuss one solution to that problem is Scott Kefer of Victory Capital.
Quick Thoughts: Sourcing Income in Bonds, Real Estate, and Multi-Asset Solutions
Sir John Templeton famously said that “this time is different” are the four most dangerous words for investors.
GMO 7-year Asset Class Forecast: May 2021
The GMO Asset Allocation Team has released its latest 7-Year Asset Class Forecasts through May 2021 (click to view online or see chart below).
PIMCO Trends: Managed Futures: Seeking Diversification and Returns
Managed futures strategies have historically delivered attractive returns over the long run with low equity correlations.
Proposed Tax Law Changes Will Favor Active ETFs
A proposal by the Biden administration would remove the preferential tax considerations for long-term holders of stocks. In so doing, it will cause investors to favor active ETFs over traditional actively managed mutual funds.
Bitcoin Plan Roils Crypto World Seeking Regulatory Clarity
International banking regulators’ proposal to classify Bitcoin as the riskiest of assets dragged cryptocurrencies further into the mainstream financial world.
Real World Overlay Solutions in Challenging Times
With only a few brief downturns in an otherwise upward trend in the U.S. equity market since the Global Financial Crisis, declining interest rates have pulled forward the net present value of distant earnings and propelled growth stocks (and the market as a whole) higher.
Inflation Is A Boon For Value Equities
Generally, when inflations expectations are rising, we see value stocks favored more than growth stocks.
Behavioral Finance Explains the Stock Market Bubble
Who isn’t baffled by the continuing run-up in stock prices? Behavioral scientists. They explain that we have a host of biases that make us irrational. Here are the reasons that we have a stock market bubble, presented in two tables.
Zooming To Booming
The pandemic forced us all to communicate via Zoom.
One Hot Economy, Two Burning Questions on Value and Income
The switch on the U.S. economy is readying to come fully “on,” more than a year after the global pandemic forced abrupt closures around the world and across industries.
The Current State of Retirement Income
Retirement planning has evolved from a singular focus on savings to ensuring that account values provide income for life. Multiple generations of DC plan participants are concerned that they’ll outlive their retirement savings, and they’re turning to plan sponsors for solutions.