Nobody likes to be stuck for too long on a crowded bus or train—especially when it’s time to get off. But when it comes to stocks, we often overlook the risks of getting trapped with too many people in an untenable position. (more…)
Investors eager for “safety” have been piling into indexed portfolios at the expense of actively managed strategies—and thus making a big, and risky, bet against deep value and for high-dividend yielding stocks. We think they’re pursuing just the wrong course. (more…)
Popular strategies for hedging against deflation and hyperinflation are likely to be disastrous if the economic outlook grows more benign as we expect.
One of the greatest challenges facing money managers in the aftermath of 2008 has been how to balance the fear of loss against the need to take risk in order to generate positive real returns. Striking the right balance between them will, I believe, be the key to investment success in 2012. (more…)
No portfolio is protective in all environments, but the best risk-management strategy is to maintain exposure to well-chosen investments and strategies with short, intermediate and long time horizons. Each group will be poised to outperform in different markets and in response to different investor moods. (more…)
Many Americans fear that China may curtail its buying of Treasury bonds, which could drive up interest rates and slow economic growth. But less Chinese investment in Treasuries might be a blessing in disguise (more…)
What do you do when equity markets are highly volatile within a relatively narrow trading range as a result of low levels of investor confidence?
Keep a foot in both the contrarian and momentum camps. (more…)
Trying to avoid a repeat of the last market disaster sows the seeds for the next one.
The collapse of large growth companies after the tech bubble burst in 2000 led to strong leadership by small-cap value stocks for many years. And the market plunge in 2008 has led to investors’ crowding into a number of “safe” trades, such as high-dividend stocks, Treasury bonds and passive equity strategies.
These are not unreasonable strategies, given today’s economic and political uncertainties. But with most investors on the same side, today’s “safe” trades have become very, very expensive. (more…)