But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.
Investing in Japan: Learn to play in the land of the rising sun
If you’re looking for a simple way to invest in Japan, we suggest keeping it simple with a low cost ETF. The iShares MSCI Japan ETF (EWJ) provides diversified access to large- and mid-cap Japanese stocks.
Pension reallocation – Japan’s Government Pension Investment Fund, the world’s largest pension plan, significantly increased its overall allocation to domestic stocks, from 12% to 25%. This will provide a huge market boost:…
Earnings momentum – Worries about the impact of a new consumption tax led many Japanese companies to lower their earnings guidance for the year. Since then, a better-than-expected outcome has set the market scrambling to reprice.
Our view is that investors, who include gold in their portfolio for diversification reasons and as an inflation hedge, should maintain that position, and for long-term investors a small allocation to gold could be reasonable.
For now, we continue to expect a world in which U.S. growth overshadows that of other developed countries, resulting in a strong dollar and weaker commodity prices.
Stocks advanced again last week, driven by an improving economic picture and an encouraging earnings season by U.S. companies. But a stronger economy comes with a flip side: less need for monetary stimulus.
Rate will likely remain low “for considerable time” even after the conclusion of the bond buying program (TLT) in October.
I think stocks can make further gains, and would continue to favor Japanese equities while adopting a more positive stance on U.S. consumer stocks.
However, even though income growth is likely to remain lackluster, consumer spending could well be boosted going forward by lower energy prices and the recent drop in interest rates, which has pushed 30-year mortgage rates back down to 4%.
Indeed, a combination of sluggish income growth, below-trend spending and high valuations has resulted in significant under-performance: The sector is down year-to-date versus a 6% gain for the S&P 500.
What a difference a week makes. After a significant sell-off the week before, stocks staged a strong rebound last week. Now, with a seeming shift in sentiment, where do we see value in the market as we look ahead?
While the Fed has been busy in recent years with the modern equivalent of a printing press, the newly created money has been mostly sitting on bank balance sheets.
Within the United States, I recognize opportunities, particularly in large cap, cyclical names. On the fixed income side, high yield now represents an attractive option given recent spread widening.
What does this recent bout of volatility tell us about the economy and financial markets? Volatility is returning to its long-term average. First, to a large extent, the recent rise in…
Russ explains why the recent elevation in market volatility is normal and shares his four key takeaways from this changed investment climate.
Favor large- and mega-cap stocks. These market segments have held up better than their small- and mid-cap counterparts in the last few weeks, providing a bit of cushion from the volatility.
As for what this all means for investors going forward, while investor sentiment has clearly shifted, economic fundamentals remain relatively stable.
Russ provides the key facts about the global economy investors need to know now, and he shares the outlook for equity markets.
Diversification: Finally, companies in frontier markets tend to just focus on demand in their local countries and thus are less tied to the global economy than emerging markets like China…
As I’ve been warning for some time, this period of unusually quiet markets is coming to an end. Investors should expect elevated volatility going forward.