There’s a general playbook for investing when it comes to the macro-economic business cycle. The cycle includes four stages: Reflation, Recovery, Overheat and Stagflation. You might also hear other terms used to describe each stage but we’ll run with these because Merrill Lynch made this nice chart for us. Within each stage, investment assets tend…
Potential Sea Change
Last week’s FOMC meeting may have signaled a coming change in the investment markets. During the press conference, Janet Yellen began to lay out how the Fed will start to reduce its balance sheet (i.e. all of the bonds that they have purchased through QE). She said it could begin in the very near future. …
The Glacial Shifts that Affect Investment Markets
There are a couple of things I’ve been thinking about over the last year or so and a great interview last Friday with Michael Green on Real Vision TV helped me piece it all together. Quick side note – for anyone serious about following the investment markets, Real Vision is absolutely the best source for…
Recent Portfolio Updates
European Stocks European stocks and US stocks typically move with a fairly high correlation but they’ve diverged quite a bit over the past 3 years as both the euro currency and British pound have depreciated significantly against the US dollar. I’m thinking we’ll likely see this gap close over the next year so I started…
3 Waves of a Bull Market
Bull markets tend to evolve in 3 waves. The first phase is when the “smart money” and institutional investors are buying at relatively low valuations, typically following a bear market, that ends a decline starts a steady push higher. The second phase is when the media finally catches on after noticing that a market has…
Reducing Risk Exposure
I use a few different risk management systems to help in determining when to reduce exposure to higher risk investments like stocks and high yield bonds. These take into consideration economic data, market data (i.e. bond spreads, market breadth, etc.) and technical charting for trend strength. Monday was the last day of October and the…
Chart of the Week: Index vs Active Fund Flows
Here’s an interesting chart showing the cumulative change of money going into index funds and coming out of actively managed funds over the last 15 years. I’ve commented in the past on indexing. In short, I think it makes sense in some instances but not in others. Most of my concerns revolve around stock index…
Adapting Our Approach Toward Growth
Just about all of my clients are long-term, retirement oriented investors. The most frustrating thing the past few years for long-term investors is how the central banks have largely “killed” the markets in the traditional investment sense. What I mean by “killed” is that I cannot honestly consider bonds yielding less than 2% and stocks…