In today’s investing world, it appears that the search for safety is trumping risk. Although frequent commentary trumpets bubbles in riskier investments, that is not consistent with the hard data on money flows. The result of so much money chasing safety is quite the opposite of what we might want: So much money pouring into assets perceived as safe is actually making those assets riskier. Those riskier assets are attracting less money and fewer players, and as a result, may be safer than they appear. In short, today’s market presents a conundrum: There may be more risk in safety, and more safety in risk.
Read moreAre Companies Thinking for the Long Term Again?
Larry Fink, the CEO of BlackRock, the world’s largest asset manager, recently penned a letter urging a fundamental shift in corporate thinking. Dispatched to the CEOs of the world’s largest companies, Fink’s letter criticized the relentless pressure of “activist” shareholders who push for immediate returns. He wrote, “More and more corporate leaders have responded with actions that can deliver immediate returns to shareholders, such as buybacks or dividend increases, while underinvesting in innovation, skilled workforces or essential capital expenditures necessary to sustain long-term growth.”
Read moreWill Your Next Financial Advisor Be a Machine?
On July 1, the film Terminator: Genisys will debut in theaters across the United States and throughout the world. It will be the fourth installment of a series that began more than 30 years ago, which in many ways defined contemporary fears of the rise of the machines: a world where the brilliant programs designed by humans themselves become the masters and turn against their human creators.
Read moreIs 2015 Really the Year for Foreign Stocks?
Famed Nobel Laureate Robert Shiller made some waves recently when he suggested that he might sell his holdings of U.S. stocks and instead buy European equities. The reason? “Europe is so much cheaper.”
Read moreSolving the Active Vs. Passive Investing Debate
Active versus passive. No, it’s not a debate to stir the passions of the public, but in the world of investing and deciding how to gain exposure to sectors, it is a rivalry up there with the Hatfields versus the McCoys, the North versus the South, the Yankees and the Red Sox. Proponents of active investing tout the ability of astute fund managers to beat the managers and add “alpha,” that amount of outperformance attributable to the skill of the manager. On the flip side, advocates of passive investing point to the long-term inability of most active managers to beat the market and to the high fees charged for sub-par performance, not to mention the tax inefficiencies. And so the debate goes.
Read moreWhat Should Investors Expect in 2015?
‘Tis the season for looks back and looks forward. The financial world will be replete with such missives in the weeks to come, and that is actually all for the best. Given the fluid nature of money and planning and investing, regular assessments of what worked and what didn’t, how the year played out versus expectations, and what might lie just ahead, are vital. While it is true that forecasts about the future usually say more about present sentiment, thinking ahead does provide a framework for assessing likely risks and potential opportunities.
Read moreDon’t Fight Powerful Stock-Market Trends
Unless you have been living under a proverbial rock for the past few weeks (though unlikely if you are reading this), you know that the midterm elections in the United States saw a Republican sweep, with enough senatorial seats gained to take control of the Senate, more seats added to their majority in the House, and a few extra governorships picked up along the way.
Read moreInvesting in Do-Good Stocks Is Sustainable
Faced with the daily noise of markets’ ebbs and flows (and of late, that news has been coming in at a fast and furious clip), it’s easy to overlook the deeper trends.
Yes, a series of geopolitical crises and challenges remain and create current headwinds; yes, few feel overly confident about the tenuous state of the global economy; and yes, the recent market selloff has only fueled legitimate concerns about the future direction of interest rates and equities.
Read moreConsider a No-Drama Bond Market
We are, at long last, nearing the end of one of the great central banking experiments: the U.S. Federal Reserve's policy of quantitative easing, which began in the wake of the financial crisis of 2008–2009. And the primary question is quite simple: will interest rates rise and if so, by how much and when
Read moreShould Investors Fear Global Tensions?
Over the past few months, geopolitical crises seem to have proliferated. First, in March, long-simmering tension between Russia and the Ukraine metastasized to a full-blown crisis after the government of Ukraine was toppled by a popular revolt. That then led to the Russian annexation of Crimea, which was followed by sanctions imposed by the Western states, armed conflict between Russian separatists and the Ukrainian government in eastern Ukraine, and even more sanctions.
Read moreIn Looking at Stocks, Valuation Is Overvalued
Barely a day goes by of late without someone in the financial media announcing that equities are overvalued and primed for a fall. The most popular article on one of the most popular financial websites recently blared "U.S. stocks will be very disappointing for 10 years." The argument? That on multiple gauges, the current valuation of the market is higher than it was during the vast majority of market peaks in the past.
Read moreDon't Fear Risky Assets
We live in a world that emphasizes risk. That is true in general, but is especially so in the financial world. Since the financial crisis of 2008–2009, financial professionals have been acutely attuned to risk—and for good reason. Too many felt they were caught off-guard and unprepared by the near-implosion of five years ago. That in turn followed volatile periods from the Internet bubble of 1999 into early 2000, through the events of 9/11, and then a sharp market contraction until October 2002. After nearly 15 years of drama, it is hardly surprising that the financial world is primed for risk.
Read moreThe Opportunity in Flat Stock Markets
One obvious consequence of the information technology revolution has been an explosion of news and noise. We are bombarded daily with information and commentary that comes at us online, in print, and over various airwaves. This information overload is especially acute in the world of finance and financial markets.
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