Preparing for Rising Interest Rates

A recent article in Advisor Perspectives addresses a number of issues related to rising interest rates and how investors can prepare for them. Here are some highlights: Yield curve outlook— The article argues that the potential for higher long-term interest rates is “still significantly greater than many forecasters would have you believe” due to the winding down of quantitative easing in Europe, inflation and rising federal budget deficits. The fixed income investor, the article says,… Read More

Stocks Facing the Economy Versus a World in Turmoil

The stock market has “some things going for it right now,” says a recent article in The Wall Street Journal, citing rising corporate earnings and economic growth as contributing factors. However, it adds, “what they hadn’t anticipated were the other risks that would weigh on stocks,” such as an aggressive Fed, slowing growth overseas and looming trade conflicts. Policy makers are leaning toward two more rate hikes this year, the article reports, and increasing inflation… Read More

Top Strategist Tells Investors to Focus on Growth

In a recent WealthTrack interview with Consuelo Mack, top-ranked portfolio strategist and co-founder of Cornerstone Macro Francois Trahan shared his insights on market trends and where investors should be focusing their attention. Trahan argued that when leading market indicators start to “top out,” as they are currently, it presents a difficult backdrop for investors–although the environment still “feels great” in terms of GDP growth, employment, etc, investors begin to fear a downturn. He adds that… Read More

Market Dominoes Might Be About to Fall

A Morgan Stanley index that tracks correlation among regions and assets classes has reached its peak, which may point to an enduring flight-to-safety by investors. This according to a recent article in Bloomberg. The index, which has reached its highest level since December 2016, reflects “a possible signal that the market’s defensive positioning could prove more lasting,” says Olivetree Financial executive director Tim Emmott. So far this year, the article says, flights to safety have… Read More

Paul Tudor Jones Sees Year-End Rally Spoiled by Fed

In an interview last month with CNBC, famed hedge fund manager Paul Tudor Jones predicted a strong year-end market rally but argued that the Fed’s continued rate hike campaign will lead to a downturn. This according to an article in Chief Investment Officer. “I think this is going to end with a lot higher prices forcing the Fed to shut it off,” said Jones. While he doesn’t predict a stock market crash (like he did… Read More

Howard Marks: Computers Won’t Replace the Best Investors

In his recent memo entitled, “Investing Without People” Oaktree co-founder Howard Marks argues that passive and quantitative investing will all help keep markets efficient and reduce costs for investors. This according to an article in The Wall Street Journal. But while active managers have underperformed their benchmarks for years while charging high fees to investors, Marks doesn’t think the strategy is “dead,” adding, “I doubt computers can do what the very best investors do.” The… Read More

Small-Business Optimism Harbors Contrarian Signal

In a recent survey by the National Federation of Independent Business, a record 34 percent of small business owners said that now is a good time to expand, but history tells a different story. This according to a recent Bloomberg article. Small-business sentiment has remained high since Trump’s election in late 2016 and has been bolstered by tax cuts, reduced regulation and a solid economic outlook. According to the article, the NFIB survey “suggests little… Read More

Rising Rates Hurt Real Estate Stocks

According to a recent article in The Wall Street Journal, the Fed’s rate-hike program is “upending real-estate investment trusts and other stocks with juicy dividend yields that had been thriving in a lower interest-rate environment.” While investors tend to purchase shares of real-estate firms and other stocks like utilities for “safe, bond-like returns,” the article reports, as the Fed implements further tightening, “the payouts on U.S. government bonds are rising and forcing investors to consider… Read More

Swedroe on Active Management in Emerging Markets

In a recent article in ETF.com, BAM Alliance director of research Larry Swedroe debates claims that active management is the “winning strategy” in emerging markets. Citing SPIVA and Morningstar data as well as academic research, Swedroe makes the case that, “at least for investors who do not have access to institutional EM funds, active management is a loser’s game.” For example, writes Swedroe, SPIVA data shows that for the last 5-, 10- and 15-year periods,… Read More

In Private Equity, the Past May Be a Guide to Future Results

A new study supports the notion that private equity and venture capital managers that “do well with one fund are more likely to do well with the next,” according to a recent article in The Wall Street Journal. The study, conducted by data company PitchBook, supports data reflected in several academic studies, the article says. However, the question remains as to whether performance comes down to a firm’s methods or the talent of individual deal makers.… Read More