30 Sep 2015

Some Bonds Fall as Stocks Falter

As stocks fell over the past several weeks, the junk bond market has also sold off as seen in the chart below.  The orange line follows the Barclays High Yield, or junk, bond index and you can see how it has roughly tracked the S&P 500 this year. Some commentators have argued that junk bonds served as a bit of a ‘canary in the coal mine’ because they dropped off… Read More

By Tags:
29 Sep 2015

Can One Stock Foil the Market?

The selloff in stocks yesterday was a little different than what we’ve seen so far this month, both in terms of its magnitude, but also its suspected causes. Last month stocks sold off more sharply than they did yesterday, but things had quieted down a little bit, as you can see in the chart below. When stocks fell last month, the concerns were macro in nature: the slowdown in China,… Read More

By Tags:
28 Sep 2015

The Possible Impact of a Housing Slowdown in China

Vanguard put out an interesting research piece on Friday, which you can read in full here, arguing that the bursting stock market bubble in China isn’t as big of a risk as a potential fall in their housing market. According to their research, housing is a much larger portion of total household wealth than stock ownership, which is the opposite of the US.  In China, housing makes up 43 percent… Read More

By Tags:
23 Sep 2015

ALM Insights – September 2015

ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: Janet Blinked What if You Called Them Market Perfectly? Part II Another Debt Crisis?

23 Sep 2015

What Investors are Anxious About

Although there was no specific catalyst for yesterday’s trading action, investors are clearly worried about global growth.  The chart below shows the most recent Forecasts from the International Monetary Fund (IMF) that were produced in July. While the global growth picture is flat and advanced economies are growing, according to their projections, emerging markets and China are slowing down.  This isn’t news: the market volatility that we’ve been dealing with… Read More

By Tags:
22 Sep 2015

Don’t Worry, Be Happy and Live Longer

When we look at our financial planning model, a lot of clients say something like, ‘well, I’m never going to make it that long anyway.’ According to Society of Actuaries, more than half of Americans underestimate their life expectancy and that their financial planning time horizons are too short. When asked how long a person their age and gender was expected to live, 40 percent of respondents gave answers that… Read More

21 Sep 2015

Bonds Funds at 84 Cents on the Dollar

One of the smaller, but still very interesting types of securities are closed-end funds (CEF).  While traditional mutual funds (technically called open-ended funds) are much larger, the CEF market dates back to 1893 – 30 years before the first mutual fund. The major distinction between the two fund types (ignoring exchange-traded funds, or ETFs) is that mutual funds continuously create new shares as new investors come into the fund and shares… Read More

18 Sep 2015

Now That’s What They Call Dovish

Well, we’ve got at least a few more months of the Fed’s ongoing ‘will they or won’t they’ drama about when they will raise short-term interest rates. Although markets did not expect a rate increase, it’s really impossible to know until the announcement because it really boils down to the judgment of the 12 Federal Open Market Committee (FOMC) members. You might think we don’t know anything more than we… Read More

17 Sep 2015

Puzzling Hedge Fund Returns

We all know that stocks had a tough August with the S&P 500 down -6.03 percent.   Things weren’t better in other parts of the world either as the MSCI ACWI ex US index, which is basically the rest of the world outside of the US, fell by -7.59 percent. Even the bond market, as measured by the Barclays Agg lost money, fell -0.14 percent. If stocks and bonds lost money,… Read More