Some experts today argue that the world has entered a “New Normal” condition in which stocks have permanently lost their return edge. We’ve heard this before. It was wrong then, and we think it’s wrong now, too.
Individual and institutional investors alike have been shifting their capital from stocks to cash and bonds at a rapid rate in recent years, despite extraordinarily low interest rates. But if investors stop to weigh the importance of two different types of risk, they’ll see they still need stocks.
A famous Business Week article, “The Death of Equities,” concluded, “Today, the old attitude of buying solid stocks as a cornerstone for one’s life savings and retirement has simply disappeared.” Sound familiar? The article was published in August 1979. (more…)
Underfunded pension systems pose significant challenges to many state and local governments. For a few, it’s an immediate problem. But as my colleague Joe Rosenblum explains, for most municipalities, pension troubles aren’t really the proverbial last straw. (more…)
The 2008 market crash has given variable annuities (VAs) a new lease on life. As clients search for ways to rebuild retirement nest eggs with less downside risk, US financial advisors are increasingly prescribing VAs as part of the solution. (more…)
As US Treasury yields continue to plumb record lows, some have quipped that government bonds have gone from offering risk-free returns to “return-free risk.” Indeed, when interest rates inevitably rise from their current levels, bondholders face the prospect of poor or even negative returns. (more…)
Germany may have the strongest economy in the troubled euro area, but the euro has not been a massive “free lunch”, as some critics claim. Germany’s strength has come at the cost of many painful years of sacrifice. (more…)
The US economic recovery is progressing in fits and starts. Short-lived “risk-on” periods, when companies and consumers invest more, seem to constantly give way to “risk-off” periods, with anxiety and fear restraining economic activity. (more…)
Global bond funds continue to attract strong inflows as near-zero interest rates lead many investors to look abroad for assets with attractive yields. As we’ve argued before, global bonds provide many important benefits, but it’s crucial that investors select the right type of fund. (more…)
While investors have flocked to emerging-market government bonds in recent years, some still perceive emerging-market corporate bonds as an immature asset class. Shamaila Khan, who manages global credit portfolios, questions some assumptions about emerging credit. (more…)