2018 Five-Year Investing Trends
Here’s what you need to know about the forces that we believe will shape the economic and market landscape during the next five years. We share six key themes we see emerging across the global markets and economy, and offer our outlook for equity, fixed income and real asset classes.
What is the Best Strategy for Investing in Egypt, Nigeria, and South Africa?
Recently there has been talk of the emergence of smarter ways to capture beta in African markets, the major ones in question being Egypt, Nigeria, and South Africa. Here’s our take on the three largest forces we see disrupting markets in Africa for the better over the next 3 years and how to best gain exposure to them.
Rebalance or Rush Hour?
Embracing a disciplined approach to rebalancing can lead to better long-term investment outcomes. Overcoming the natural tendency to wait-and-see before repositioning our portfolios can be a difficult, but worthy, goal for investors to pursue. Advisors can help investors surmount this and other behavioral hurdles by adopting a systematic rebalancing approach that effectively institutionalizes contrarian investment behavior.
Despite another interest rate hike in June by the Federal Reserve that raised the target federal funds range to 1.75-2.00%, along with plenty of increased tariff talk and (some) implementation by the Trump administration, the investment world was relatively calm in the second quarter of 2018.
Charts for the beach - 2018
Don’t leave home without your summer essentials: sunglasses, sunscreen, towel and RBA’s Charts for the beach.
June Jobs Report: 157K New Jobs, Unemployment Rate at 3.9%, Worse Than Forecast
This morning's employment report for July showed a 157K increase in total nonfarm payrolls, which was worse than forecasts. The unemployment rate decreased to 3.9%. The Investing.com consensus was for 193K new jobs and the unemployment rate to drop to 3.9%.
ISM Non-Manufacturing: Continued Growth in July, at Slower Rate
The Institute of Supply Management (ISM) has now released the July Non-Manufacturing Purchasing Managers' Index (PMI), also known as the ISM Services PMI. The headline Composite Index is at 55.7 percent, down 3.4 from 59.1 last month. Today's number came in below the Investing.com forecast of 58.6 percent.
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 $19,357 for an annualized real return of 13.28%.
The S&P 500, Dow and Nasdaq Since Their 2000 Highs
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).
Questions I'd be Asking If I Owned Tesla Stock
If I were long in Tesla’s shares I’d be asking certain questions. After all, you’re paying $50 billion for a company that trades completely on the spoils of future dreams.
Market Remains Overvalued
Here is a summary of the four market valuation indicators we update on a monthly basis.
- The Crestmont Research P/E Ratio
- The cyclical P/E ratio using the trailing 10-year earnings as the divisor
- The Q Ratio, which is the total price of the market divided by its replacement cost
- The relationship of the S&P Composite price to a regression trendline
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.
The Danger in Private Real Estate Investments
A question I’m often asked involves the merits of investing in private real estate as an alternative to publicly available REITs. To answer that question, I will turn to the historical evidence.
Market Cap to GDP: An Updated Look at the Buffett Valuation Indicator
With the latest July close data and Q2 GDP Advance Estimate, we now have an updated look at the popular "Buffett Indicator" -- the ratio of corporate equities to GDP. The current reading is 129.16%, down from 132.7% the previous quarter.
The Q Ratio and Market Valuation: July Update
The Q Ratio is a popular method of estimating the fair value of the stock market developed by Nobel Laureate James Tobin. It's a fairly simple concept, but laborious to calculate. The Q Ratio is the total price of the market divided by the replacement cost of all its companies. This update includes the July close data.