Greece Will Continue to Be a Source of Headline Risk
Looking forward, Greece will continue to be a source of headline risk. My short- and long-term outlook for Greece helps explain why: Short-term outlook: A deal is still the most…
Higher rates could be good news for consumers. Personal interest income has been more or less stagnant over the last few years.
Low rates have helped households. The new home sales figure touched its seven-year high in May when 546,000 new homes were sold.
In the June FOMC meeting, the weighted average forecast was much lower at ~70 basis points. Both stocks and bonds rallied after the meeting.
You should ensure that you hedge your European exposure. Many analysts are predicting euro–dollar parity by the end of the year.
Grexit might not precipitate a financial contagion, but the possibility of a political contagion is very likely. Spain and Italy may decide to follow suit.
The seemingly never-ending Greek debt (GREK) saga continues to play out, complete with twists, turns, and obstacles à la typical potboiler.
The tech sector (XLK) looks to be a good investment opportunity, all things considered. The US tech sector is markedly different from what it was in 2000.
Technological change (XLK) is advancing by leaps and bounds. The adoption and diffusion rates of new technologies has risen over the years.
Recent cybersecurity breaches has fanned paranoia and veered companies towards increased security spending—a major tailwind for US cybersecurity stocks.
The tech arms race (XLK) has been heating up due to greater cybersecurity breaches. The intensity and magnitude of the breaches has been rising.
Although tech stocks have been buoyant in 2015, we don’t think that this means the advent of dotcom bubble 2.0. There are some key differences.
US technology stocks have been split this year. NASDAQ closed at an all-time high of 5,106.6 on May 27. It took NASDAQ almost 15 years to regain the 5,000 levels.
What’s the right amount of bonds for your portfolio? The proportion of bonds in your portfolio depends on your age and risk-taking ability.
Bonds can add value to your portfolio by providing a cushion during bear markets in equities. Adding bonds gives you a better risk-adjusted return.
Treasuries usually perform well during crises when equities erode your wealth, and vice versa. So if you think bonds are only for the older investor, think again.
With classic safe havens providing little protection, turn to financials and healthcare sectors for opportunities. Healthcare stocks usually hold up well in the run-up to a rate hike.
The Fed looks poised to lead a rate liftoff later this year. Safe haven plays like U.S. Treasuries, precious metals, and bond-market proxies might prove to be quite the opposite.
The recent bond market rout seems to have resurrected the ghosts of a taper tantrum. The rout could be a precursor to a taper tantrum, and a much worse one at that.
The relationship between stocks and bonds seems to be changing. Higher rates are causing them to react similarly.
But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.