Downside Risk Dwarfs Upside Reward
Analyst Lance Roberts provides an insider’s look at the financial markets’ near-term horizon and compares it to the previous two cycles. The “Goldilocks economy,” the “permanently high plateau,” and the “buy and hold” strategy all died when the market reversed. The all-time high your portfolio is trying to accomplish when it’s 100% invested in the market could also be the last “all-time” high you’ll see for the next 6 to 10 years.
Apr 14, 2019 | Lance Roberts |
$10 Trillion in Bonds Are Losing Money
The stockpile of global bonds with below-zero yields just hit $10 trillion. Bloomberg reports that while negative yields on paper suggest investors lose money just by holding the obligations. risk assets may be entering the danger zone. “We’ve never seen monetary easing so long, so broad, so big,” says Brian Singer, head of dynamic allocation strategies at William Blair, a Chicago-based fund manager that oversees $70 billion overall. “What’s happened after every significant period of accommodation is a reckoning. This time, the bubble is lower-rated credit and illiquid private assets.”
Apr 04, 2019 | Cecile Gutscher |
Hedge Fund: Sell Stocks, Buy Gold Is the “Trade of the Century”
Crescat Capital has a history of outperforming the S&P 500 Index. Their Global Macro Fund returned 41% last year in a down market. Now, Crescat Capital is the latest hedge fund moving into gold and out of stocks. “U.S. economic data is deteriorating, and inversions remain across the Treasury yield curve. The last two times the credit markets had such a high distortion, asset bubbles began to fall apart shortly thereafter,” Crescat wrote, and they acted by moving 75% of its portfolio into gold. You have to ask yourself, “Can I afford not to follow the smart money?”
Mar 21, 2019 | Sarah Ponczek |
Your Pension Can Be Bought Out Against Your Wish
Pensions are slowly becoming a thing of the past as they are being eliminated because corporations are losing incentives to keep holding them. The federal government just made it easier for employers to get rid of pensions by allowing them to offload their pension obligations to the private sector. Companies may purchase an annuity plan for each retiree from an insurance company, or they can offer their employees a lump sum up front. Do you want to be in a position where, when you most need your pension’s income, you find yourself “out in the cold”?
Mar 21, 2019 | Lydia DePillis |
All Markets Work in Cycles
Ultimately, fundamentals drive the markets. Currently, the deterioration in the growth rate of corporate earnings, the soaring global debt, and our economic strength are not supportive of the levels of asset prices. Investors should realize that and understand it’s the central banks that keep the markets up and that they can only do this for a limited time. What happens when reality collides with widespread fantasy?
Mar 20, 2019 | Lance Roberts |
The Fed Cannot Fix Credit Exhaustion
Central banks cannot magically make noncreditworthy borrowers creditworthy or force those who have forsworn adding more debt to borrow more at high interest rates. As a result, they are powerless to stop the tide of credit from ebbing. The evidence is plain enough: student loan and auto loan defaults are already at monumental levels, and the recession hasn’t even started.
Mar 20, 2019 | Hugh Smith |