30
Jan
2014
Fed Tapers as Bernanke Departs
Stock markets fell and bonds rose sharply yesterday as the Federal Reserve continued to pull back on their quantitative easing program and tensions about emerging markets ramped up. The yield on the 10-year Treasury dropped eight basis points to 2.69 percent, falling all the way from 3.0 percent at the start of the year. Even though January isn’t even over, the Barclays US Aggregate bond index has regained almost three-quarters… Read More
28
Jan
2014
Client Goals Trump Everything
Markets were lower yesterday across the board, but the feeling in the air, so to speak, was more calm, as evidenced by the four percent drop in the CBOE Volatility index. Granted, it was a four percent drop following a 40 percent increase last week, but the direction was right. Bonds fell, as measured by the 10-year US Treasury bond, as bond investors pulled away from the ‘flight-to-quality’ trade and… Read More
27
Jan
2014
Emerging Markets Tail Wags Dog
Concerns about a slowdown in China’s economy appears to be the ‘go-to’ rationale for the selloff, although there hasn’t been any new data since the Purchasing Index Managers (PMI) report that we discussed on Friday. A secondary, but possibly more plausible explanation is that investors are looking at the weakness in Emerging Markets currencies and are concerned about the end of the Federal Reserve’s quantitative easing program. We noted the… Read More
27
Jan
2014
Time to Exit Emerging Markets?
Emerging markets (EM) had a tough time last year, down about five percent while US markets rose by basically one-third. Given that the losses are extending into 2014, it’s natural to wonder whether we should remain invested in EM. The short answer is that we certainly don’t intend to withdraw or reduce our position there, and, in fact, we are actually considering increasing our allocation slightly. Acropolis has held EM… Read More
21
Jan
2014
Acropolis vs Harvard Endowment
I didn’t apply to Harvard because I was certain that they would not admit me. My grades were fine and scores were so-so, but at that time they were accepting only nine or ten percent of applications and I knew that the other kids had top grades and scores AND were fluent in four languages, captain of multiple teams and fought poverty on the side. Or, worse yet, their parents… Read More
17
Jan
2014
How We Use Past Performance
Yesterday’s insight about the Morningstar Manager of the Year generated a lot of interest and feedback from readers. Thank you! I appreciate your replies and make it a point to respond to all of them. While we’re on the subject, I also want to thank you for completing the satisfaction survey that we sent 10 days ago. I am pleased to report that when you were asked whether you would… Read More
16
Jan
2014
Morningstar’s Manager of the Year
Markets were higher today on upbeat earnings and manufacturing data. The S&P 500 closed at an all time high and is now up 0.07 percent for the year! Who knew such a little return could be so exciting. Much of the excitement about earnings came from Bank of America (BAC), which posted its highest annual profit since the financial crisis. Back in 2007, when BAC had a market capitalization of… Read More
13
Jan
2014
Bond Yields – Spread ’em
Stocks were almost back to even for the year when investors pulled back yesterday beginning after the lunch hour. There was no obvious single driver sending prices lower, although it appears to have started in consumer discretionary stocks, where losses were the heaviest, down -1.94 percent on news from the retail sector about a slow Christmas. The nervousness among stock investors has sent bond prices higher with the yield on… Read More
13
Jan
2014
December Jobs Data Disappoints
Markets were slightly higher on Friday despite the surprisingly weak employment situation that was well below expectations. Bonds rallied sharply on the report with the yield on the 10-year US Treasury bond dropping almost one tenth of one percent, from 2.97 percent to 2.88 percent on Friday.
10
Jan
2014
Are You Liquid?
US stocks were narrowly lower yesterday as markets effectively stood still in front of the employment report coming out this morning. Bond prices have gained ground as the 10-year Treasury note yield fell to 2.98 percent. Earnings season officially started yesterday with Alcoa, the aluminum maker, whose earnings were poor on two impairment charges for acquisitions made a decade ago. At the same time, Alcoa reported a settlement with the… Read More