Last year at this time, I was heartily in the camp that the US would enter a recession in 2023. I’m always fine being wrong (it happens more than I care to admit), but I’m especially happy that we didn’t enter a recession. Part of my thinking is a chart that we will see a later in this Insight that shows the drawdown of Leading Economic Indicators. I won’t bury… Read More
Perhaps the subject line should have read: Happy Old Year! Today will be brief but take a moment to look at the charts below, which show the return for various stock and bond market indexes in the fourth quarter and for the year that was. The worst major asset class return was just shy of 10 percent, and the best was more than 26 percent – a result that almost… Read More
Halloween turned out much more treat and much less trick this year, as it ushered in an early Santa Claus rally. Since October 27th, the S&P 500 is up 14.6 percent, which is more than we hope for in a good year. For the year, the S&P 500 is up almost 25 percent. We’ve still got a few more weeks, so it’s too early to start counting your chickens, but… Read More
Probably not surprisingly, I follow the major economic data releases, but I often look at charts because I find the charts provide useful context about the new information. Take the nonfarm payrolls release last Friday. Everyone seems pretty excited about the data because it beat expectations and suggests that the economy is holding up reasonably well despite much higher interest rates. The chart below shows the monthly nonfarm payrolls for… Read More
I wasn’t sure what I was going to write about this week and thought about simply starting with a picture of inflation, as measured by the Federal Reserve’s preferred measure, the core Personal Consumption Expenditure, or PCE. Like the core Consumer Price Index, core PCE strips out food and energy prices because they are so volatile, but don’t really change the numbers of the long run. Said, another way, they… Read More
Private investments, or simply ‘privates’ in the current vernacular, are among the hottest investments in recent years. Private investments, which are often considered one of the most prominent alternative investments, means owning securities that aren’t publicly traded. Private markets can include equity (stocks), credit (bonds), and real estate. Each major group has subcategories. Private equity can be venture capital, buyout equity, or growth equity. Credit can mean direct loans, mezzanine… Read More
My subject line is taken from an article written by the PhD Head of Investment Research at Dimensional Fund Advisors (DFA), but I cheated and left out the second half of the sentence. Here’s their full headline: We Found 30 Timing Strategies that “Worked” and 690 that Didn’t. I guess I’m not above clickbait, but I also don’t have enough space to get the full headline into the subject line…. Read More
Before the big rally last week, a client asked me whether bonds had become more volatile than stocks. Although he was partially kidding, his point was right on: bonds have been volatile this year, especially in recent weeks. And the rally last week still adds to volatility, it’s just easier to stomach when prices are rising. To illustrate the rise on bond volatility, I calculate the 20-day rolling volatility of… Read More
I think that most people in the investment business have at one point, or another wrestled with the question about whether the market is efficient and what you should do about it, regardless of your answer. In simple terms, an efficient market quickly incorporates news and information into prices. It’s easy to find examples of market inefficiency, like when companies added .com to their name in the late 1990s and… Read More
Earlier this year, when Congress seemed to come together and avoid a debt ceiling crisis, I listened to a podcast that said we would right back to the same problem in the fall. I didn’t pay much attention because I was annoyed with the government and the fall was months away. Although I am loving the cooler weather, I’m annoyed again because the deadline to deal avoid a government shutdown… Read More
