But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.
Must-know: Palladium is the new game in town
Gold is usually a safe haven for investors. However, gold has eroded investor value to a large extent, at -27%, in the last 24 months. It could make sense to have palladium complement the gold position in your portfolio.
Gold (GLD) (IAU) has declined by almost 8% in the last 12 months. Gold usually does well when the equity markets (IVV) are troubled. Gold has an inverse relationship with the U.S. dollar (or UUP). When the U.S. dollar weakens, investors turn to gold for value storage.
In recent months, Russ has been advocating that investors focus on market segments offering relative value. One such sector: global financials. Russ explains, giving three forward-looking reasons why these stocks look attractively valued.
But despite stocks’ strong recent performance, investors may want to exercise a bit of caution going into the fall, as I write in my new weekly commentary “Two Notes of Caution as Fall Arrives.”
The same is true for a market gauge highlighted in Squeezing Out More Juice, the 2014 Investment Outlook from the BlackRock Investment Institute.
A second measure to watch is a survey conducted by the American Association of Individual Investors (or AAII). The survey tracks the percentage of self-described bulls and bears.
While valuation is important, investors should also pay attention to sentiment. The goal is to gauge how – to steal a phrase – “irrationally exuberant” investors have become.
I would pay particular attention to the Shiller P/E Ratio, which is a variation on the Cyclically Adjusted P/E or CAPE. This indicator is worth watching as it has historically correlated with long-term stock market returns.
My main argument against a bubble in U.S. equities is that while valuations are no longer cheap, they are a far cry from previous peaks.
Worried that the U.S. market is about to tilt into bubble territory? Though Russ doesn’t believe that U.S. equities are in a bubble yet, he highlights two sets of data investors can watch to gauge a bubble’s arrival.
If you’re Matt Tucker, everything reminds you of investing, even the last barbecue of the summer. Read on to discover how your bond portfolio may very well resemble a Labor Day mixed grill.
The stock market continues to wrestle with a series of counterforces, and for now, low rates and an improving U.S. economy are trumping full valuations and lingering geopolitical risks, allowing stocks to move higher.
Investor behavior has been pointing to a search for value for some time now. According to Russ, money continued to flow into emerging markets (EEM) and U.S. large caps (SPY) (IVV) in the last week. High-yield bonds (HYG), which are relatively attractive in terms of valuations, also saw inflows in the past week.
April saw an increase of 0.6% in U.S. retail sales over the past month. May increased by 0.4%. June increased only by 0.2%. Retail sales have increased 3.7% from July, 2013. This is less than the 4.3% increase in June, 2014 from last year.
The small-caps have been diverging from broad market indices like the S&P 500 (SPY) (IVV), the Dow Jones Industrial Average Index (DIA), and NASDAQ (QQQ) in 2014. An impending correction would negatively impact the stocks.
When Russell Indexes issued its annual fund reconstitution for 2014, it made some key changes that investors might want to think about. Of particular note is the increased market capitalization threshold between the large-cap Russell 1000 (or IWB) and small-cap Russell 2000 (IWM) benchmarks.
The U.S. markets could be headed for a correction. The reasons for this include the increase in volatility (VXX), overvaluation of stocks, rising geopolitical tensions, and a five-year bull run coming to a close.
The seeming disconnect between investor angst and a proclivity for more exotic markets can be reconciled fairly simply: investors have a newfound interest in relative value.
Gold, a classic safe-haven asset, remains well below its spring highs, and certain defensive sectors — notably utilities, telecommunications and health care — have struggled month-to-date.
Despite recent rising geopolitical tensions, stocks haven’t completely followed the typical “risk-off” script and a number of high-risk segments have performed relatively well.