More Emerging Markets, Less Volatility?

The steep drop in returns for emerging-market stocks this year—even worse than the drop for  developed-market stocks—provides a useful reminder that the asset class remains risky, despite its many attractions.

How can investors capture the strong economic and earnings growth in emerging markets without taking on so much risk? I see two ways: One is by investing in developed-market stocks that benefit from rapid demand growth in emerging markets. The second, perhaps less familiar, strategy, is a multi-asset approach, as described below by my colleague Morgan Harting.

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Do Investors Really Think Earnings Are Going off a Cliff?

Investor concerns about the future of global and US economic growth and corporate profitability are understandable. But corporate profitability has never been as low as the equity risk premium (ERP) now suggests. Thus, we believe the long-term upside potential in equities is extraordinary, as my colleague Joseph G. Paul explains in the article below. (more…)


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Where Are US Treasury Bond Yields Headed?

US Treasury bond yields have crashed to record lows in 2011. Sovereign-debt worries in Europe, concerns about the slowing economy and the Federal Reserve’s commitment to low rates have all boosted demand for Treasuries, and thus depressed their yields.

Can Treasury yields really go any lower? Or should we be worried about a rapid bounce off current, historically low levels? (more…)


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Global Economy Poised for Uneven Regional Growth in 2012

As challenges to the global economy intensify, regional growth is likely to diverge next year. During 2012, we expect stronger gross domestic product (GDP) growth in Japan and the US, while economic growth in many European countries is likely to decelerate sharply or even contract a bit.  

Europe is the epicenter of global weakness. We now expect the European economy as a whole to contract modestly (by 0.1%) in 2012. This change in our view on Europe prompted us to reduce our estimates of global GDP growth to 2.8% for 2011 and 2.8% for 2012. (more…)


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Looking for a Haven from Stormy Markets?

It’s easy to understand why investors are seeking a safe haven now. The 2008 financial crisis is still a fresh memory, and the global economic recovery appears to be losing steam. Meanwhile, politicians in both Europe and the US cannot decide how to address their pressing problems. Every bad piece of news seems to push investors further toward supposedly safe assets.

But what investments are really safe?

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Is Dollar-Cost Averaging a Good Way to Enter the Market?

The Wall Street Journal this week confirmed what investors feel in their gut: Stock market volatility is intense. Between September 21 and October 10, the Dow Jones Industrial Average moved more than 1% on 11 of 13 trading days, and five of those moves exceeded 2%, the Journal article said.

This creates a dilemma if you want to invest a large lump sum for the long term. What if you enter the market and it suddenly plunges? (more…)


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