The Capital Growth Channel

The key to using active funds: Setting client expectations

Prepare clients for active fund volatility.

TESTING The S&P 500, Dow and Nasdaq Since Their 2000 Highs

Testing round three

This update is in response to a standing request for real (inflation-adjusted) charts of the S&P 500, Dow 30, and Nasdaq Composite. Here are two overlays — one with the nominal price, excluding dividends, and the other with the price adjusted for inflation based on the Consumer Price Index for Urban Consumers (which is usually just referred to as the CPI).

Are Factors Linked To Business Cycles?

There isn’t convincing evidence that a style-timing strategy, based on business cycles, can be expected to be profitable going forward.

Attempt 2: Margin Debt and the Market

Attempt 2

Note: The NYSE has suspended their NYSE Member Firm margin data as of December 2017. We have replaced our Margin Debt data with FINRA data, which includes data for all firms, not just NYSE member firms.

FINRA has released new data for margin debt, now available through January. The latest debt level is up 3.6% month-over-month. The January data gives us an additional sense of recent investor behavior.

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 $19,065for an annualized real return of 12.98%.

A Perspective on Secular Bull and Bear Markets

Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? At this point, nine years later, the S&P 500 has set a series of inflation-adjusted record highs based on monthly averages of daily closes. Let's examine the past to broaden our understanding of the range of historical trends in market performance. An obvious feature of this inflation-adjusted series is the pattern of long-term alternations between up-and down-trends.

Asset Allocation Views: Singles and Doubles

With market volatility on the rise, consider a broad set of relative value opportunities across global markets.

Why Volatility May Be a Bigger Threat Than Rates

Russ discusses why investors should worry less about higher interest rates and more about the volatility resulting from tighter financial conditions.

Market Valuation, Inflation and Treasury Yields: Clues from the Past

Our monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations on investment returns. In a "normal" market environment -- one with conventional business cycles, Federal Reserve policy, interest rates and inflation -- current valuation levels would be a serious concern.

But these are different times.

When Value Goes Global

When the value trade goes global, investors are poised to benefit. Evidence from the international equity, bond, currency, and commodity markets indicates that the value premium is a global phenomenon that can offer important portfolio diversification. However, the devil is in the details: we argue that the successful implementation of global value strategies critically depends on an economically motivated design.

Contemplating Value in Emerging Markets Intelligently, with a Little Help from Ben Graham

In the latest GMO Emerging Equity Insights, titled “Contemplating Value in Emerging Markets Intelligently, with a Little Help from Ben Graham” Amit Bhartia and Matt Seto revisit Ben Graham’s principles of value investing and extrapolate them to investing in emerging markets.

Three Ways Female Financial Advisors Can Help Other Women

At the core of it, every advisor is an entrepreneur. I love seeing successful female advisors because they have the potential to change the world. Here are the three most important ones that I’m celebrating on International Women’s Day.


“Smoot-Hawley Tariff was an act implementing protectionist trade policies sponsored by Senator Reed Smoot and Representative Willis C. Hawley and was signed into law on June 17, 1930. The act raised U.S. tariffs on over 20,000 imported goods.”. . . Wikipedia

Are US Stocks Disconnected from Earnings?

There’s a curious anomaly in the US stock market. Shares of highly profitable companies have risen more slowly than their earnings growth has in recent years. This is an important signpost for investors in today’s complex market conditions.

4 Big Reasons Why Short-Term Muni Bonds Should Excite You

Municipal bonds might not be the first thing that comes to mind when you think of a sexy investment. They don’t typically command news headlines like the stock market or bitcoin. That doesn’t mean investors should disregard short-term munis. In fact, munis play a very important role in any serious portfolio. Below are four big reasons why you should get excited about muni bonds.