The Asset Allocation Channel

Fourth Quarter 2018 - The Year When Nothing Worked

2018 will be broadly remembered as a year when nothing worked and daily stock market volatility spiked. This contrasted with 2017 where seemingly everything pushed higher, and volatility was low. But in 2018, nearly every single asset class and all but one major stock market index (Brazil) around the globe posted negative returns.

Is Good News Bad or Good?

With unemployment below 4% (considered full employment by the Fed) and wage inflation pressure still positive, the Fed will want to continue to remove the stimulus from its policy. This means continuing to hike interest rates, albeit it at a reduced pace from the last two years.

Weighing the Week Ahead: Will Corporate Earnings Results Change the Message of the Markets?

It is a light economic calendar without any of the most important reports. The government shutdown will command increasing attention as long as it continues. Finally, there is some real competition in financial news – the start of earnings season.

3 Ways to Protect Clients' Investments This Year

Stock market participants for most of the past few years have eschewed protection. It was all about making large amount of gains. Almost every advisor lost clients from “cocktail party” conversations about who had made the most money recently.

Steering Equity Portfolios Through Stormy Style Seas

As volatility returned to global markets in 2018, return patterns for equity styles were very unstable. With more signs of turbulence ahead, investors should prepare to reduce the impact of short-term factor swings on portfolio performance.

New Research on the Value of Global Diversification

Despite representing about one-eighth of global equity market capitalization, and despite the attractive valuations and growth prospects, the vast majority of U.S. investors have portfolios that dramatically underweight emerging market stocks. Here’s why that is a costly mistake.

Every Rose Has its Thorn: Healthy Rally, but Risks Linger

At a recent client event I was asked about our ongoing view that volatility would remain elevated—specifically, whether the rally off the December 2018 low in U.S. stocks was an indication that our view might be wrong.

Stocks are Cheap(ish)

After December’s rout, are stocks now reasonably valued? Russ’ answer may surprise you.

Larry Swedroe’s Best Investment Books

I’m often asked for a list of what I consider the best books on the science of investing. With that in mind, I sat down and narrowed my collection to the top baker’s dozen.

Crisis and Opportunity in Emerging Debt

Periodic bouts of volatility are a fact of life for emerging market investors, but for those who can ride out such periods of real or perceived crisis, dollar-denominated EM sovereign debt can offer compelling returns.

2019 Outlook - Party On or Party Over?

Free from a house view on economies, markets or stocks, J O Hambro CapitalManagement’s (JOHCM) fund managers invariably see the world in different ways. We asked a number of our managers for their thoughts on the outlook for their asset class next year, what they would like to see and the possible surprises that 2019 could bring.

The Latest Look at the Total Return Roller Coaster

Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $14,727 for an annualized real return of 7.77%.

Brandes Quarterly Letter: What a Difference a Year Can Make

Brandes believes increased market volatility and valuation readjustments in the final quarter of 2018 mean a better outlook for a global value investing approach in 2019 and beyond.

NFIB Small Business Survey: "Small Business Optimism Virtually Unchanged..."

The headline number for December came in at 104.4, down 0.4 from the previous month. The index is at the 92nd percentile in this series. Today's number came in above the forecast of 103.6.

Does the “Bucket Approach” Destroy Wealth?

The “bucket approach” to retirement planning has been routinely adopted by financial planners, ever since it was popularized by Harold Evensky. Clients keep several years of assets in safe, liquid investments, while investing the rest of their portfolio more aggressively. But new research shows that this approach actually destroys a portion of clients’ wealth.