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Russ Koesterich, CFA

Russ is Head of Asset Allocation for BlackRock’s Global Allocation Fund. He works with portfolio managers to establish the fund’s macro-level views and also develops systematic strategies to augment the team’s security-selection process and risk management. He is the author of two books, including “The Ten Trillion Dollar Gamble,” on positioning portfolios for the growing U.S. deficit.

Disclosure: The content Market Realist publishes should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of BlackRock.

More From Russ Koesterich, CFA

  • Disposable Income Is Still Below Historical Averages
    Macroeconomic Analysis

    Disposable Income Is Still Below Historical Averages

    Disposable income refers to the income available to a household or individual after paying off personal current taxes. Disposable income is still below historical averages.

    By Russ Koesterich, CFA
  • Why tight credit spreads usually mean a period of global expansion
    Financials

    Why tight credit spreads usually mean a period of global expansion

    Today, most measures of credit conditions are positive, with tight spreads across all of fixed income. Even high yield spreads have come in after a short scare last month.

    By Russ Koesterich, CFA
  • The Great American Deleveraging: Fact or Myth?
    Macroeconomic Analysis

    The Great American Deleveraging: Fact or Myth?

    The great American deleveraging has largely been limited to the financial sector (XLF) (IYF). Non-financial debt is still much higher than historical averages.

    By Russ Koesterich, CFA
  • Investors Should Avoid Defensive Sectors If Rates Rise
    Company & Industry Overviews

    Investors Should Avoid Defensive Sectors If Rates Rise

    Valuations are at the higher end of their historical range. Investors should avoid defensive sectors, which are highly sensitive to interest rate changes.

    By Russ Koesterich, CFA
  • Greek Debt Crisis 101: Getting To The Crux Of The Matter
    Miscellaneous

    Greek Debt Crisis 101: Getting To The Crux Of The Matter

    According to estimates by EuroStat, Greek debt stood at more than 315 billion euros at the end of September 2014.

    By Russ Koesterich, CFA
  • Financials

    Rate hike horizon: September’s jobs report was largely positive

    After September’s strong jobs numbers, a Fed rate hike could be on the horizon early next year. Russ explains two equity market implications.

    By Russ Koesterich, CFA
  • uploads///Greece debt timeline
    Macroeconomic Analysis

    Market Paradox: Stocks Reach Record Highs Despite Headwinds

    We’ll explore whether record highs signal a top for equity markets or whether there’s still some room for growth in the current bull market.

    By Russ Koesterich, CFA
  • uploads///Lower Yields Have Led to Higher Market Valuation
    Macroeconomic Analysis

    How Lower Interest Rates Elevated Market Valuations

    Lower interest rates have an inverse relationship with stock prices, so when interest rates are lower, the S&P 500’s trailing price-to-earnings multiple rises.

    By Russ Koesterich, CFA
  • uploads///Utilities Staged a Comeback Last Week
    Macroeconomic Analysis

    Get Ready for a ‘Low for Longer’ Interest Rate Environment

    With yield likely to be a scarce commodity due to the global slowdown, utilities and other high-dividend paying sectors like staples (FSTA) are gaining investor attention.

    By Russ Koesterich, CFA
  • Financials

    You should pay particular attention to this valuation metric

    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.

    By Russ Koesterich, CFA
  • uploads///goldcboe
    Company & Industry Overviews

    How Stocks and Bonds Reacted to Trump’s Victory

    The CBOE Volatility Index suddenly rose 6.0% on November 9, 2016, after it was clear that Trump had unexpectedly clinched the election.

    By Russ Koesterich, CFA
  • uploads///US equities bull run
    Macroeconomic Analysis

    Rising Stocks: Why It May Not Be Time for the Jitters

    Rising stocks have been buoyed by various factors, including the accommodative monetary policy of the Federal Reserve and robust US corporate earnings.

    By Russ Koesterich, CFA
  • Financials

    Things you need to do today before inflation takes off

    So what should investors be doing today? While inflation may take another year or more to get going, it’s not too early to start implementing long-term inflation hedges.

    By Russ Koesterich, CFA
  • Financials

    4 must-know facts about rising inflation and your portfolio

    Recent readings have shown that inflation has stabilized, which is a good thing, but signs of an imminent acceleration in inflation are still scant.

    By Russ Koesterich, CFA
  • uploads///Low Commodity Prices Have Impacted the Brazilian Economy
    Macroeconomic Analysis

    Why Is a Global Recession Unlikely?

    While 2016 is likely to be another year of slow global growth, I don’t foresee a global recession. China remains a genuine threat, but the government has additional tools to manage a slowdown.

    By Russ Koesterich, CFA
  • uploads///opinion polls
    Macroeconomic Analysis

    Why European Politics Are Likely To Take Center Stage in 2015

    After a year with relatively less drama, European politics are likely to return to center stage next year.

    By Russ Koesterich, CFA
  • uploads/// Value stocks
    Company & Industry Overviews

    Is It Time to Play Value Stocks?

    In the past few years, value stocks haven’t posted impressive gains. Many of them look cheap and have trailed the broader market as investors lap up growth stocks.

    By Russ Koesterich, CFA
  • uploads///The utilites sector is appearing overvalued
    Macroeconomic Analysis

    What Stretched Utility Sector Valuation Means

    Utility sector valuation appears stretched. 2014 was a great year for utilities, which gained 26.62% ex-dividends and were the best-performing sector.

    By Russ Koesterich, CFA
  • uploads///A SP  performance
    Company & Industry Overviews

    You Are Living in a Low-Return Environment

    Equities slumped worldwide after the shocking Brexit vote, but US equities had already become directionless. We’re definitely living in a low-return environment.

    By Russ Koesterich, CFA
  • Financials

    Must-know: The aging population’s impact on the economy

    The number of people above 65 years is expected to triple from 531 million in 2010 to 1.54 billion in 2050—the population of seniors in the U.S. (IVV) (SPY) is expected to more than double and increase from 41 to 86 million in the same time period.

    By Russ Koesterich, CFA
  • uploads///Unconstrained Bond Funds Holds Risky Assets Like Derivatives
    Macroeconomic Analysis

    Why Unconstrained Bond Funds Could Be Useful Now

    Unconstrained bond funds use leverage and derivatives in their portfolios, which magnifies their risk. They have exposure to both credit and interest-rate risk.

    By Russ Koesterich, CFA
  • uploads///What  in  is worth now
    Macroeconomic Analysis

    Why Holding Cash Is Risky In The Long Run

    Holding cash is risky, as it provides negative real returns in the long run.

    By Russ Koesterich, CFA
  • uploads///bbcbcdacebaaecadad
    Macroeconomic Analysis

    Why Volatility Is Likely to Stay High

    With growth projections of most major economies falling, it is likely that volatility will stay elevated.

    By Russ Koesterich, CFA
  • Financials

    Major central banks are now diverging in their monetary policies

    Major central banks are now diverging in their monetary policies, a dynamic we saw vividly on display last week with the Federal Reserve ending its quantitative easing (or QE) program, while Japan expanded its version of QE.

    By Russ Koesterich, CFA
  • uploads///Both Small and Large Caps Are Trading at Historical Valuations
    Macroeconomic Analysis

    Do Large Caps Offer More Value Relative to Small Caps?

    Large caps will be in a much better position to navigate through this period given their cash positions.

    By Russ Koesterich, CFA
  • Financials

    Why has volatility picked up in frontier markets?

    While these exotic markets are not for everyone, more aggressive investors should consider having a small strategic allocation to the frontier.

    By Russ Koesterich, CFA
  • uploads///GDP growth rate has picked up in the last two quarters
    Macroeconomic Analysis

    Does The US economic Recovery Mean That A Rate Hike Is Possible?

    The US economic recovery is truly on. This is great news for the US stock markets, which went up after the news.

    By Russ Koesterich, CFA
  • uploads///Low interest rates have kept bond yields low
    Macroeconomic Analysis

    Low Interest Rates Have Kept Bond Yields Low

    Weakness in the labor market means low interest rates. The US economy is gaining momentum with stellar growth rates in the last two quarters. It grew by 4.6% in 2Q14.

    By Russ Koesterich, CFA
  • uploads///Treasury yields continue to be on the lower side
    Macroeconomic Analysis

    Why wage growth could cause rates to rise

    Wage growth could cause rates to rise. A hike in wage rates could boost consumption and encourage individuals outside the labor force to join. This will increase disposable income.

    By Russ Koesterich, CFA
  • Financials

    Why analysts expect a further slowdown in Europe to be modest

    In addition, many market watchers are concerned about slowing growth in the Eurozone. While the region is unlikely to boom anytime soon, there are some signs that any further slowdown there should be modest.

    By Russ Koesterich, CFA
  • Financials

    Why frontier markets are good diversifiers for your portfolio

    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 and Brazil. As my colleagues Del Stafford and Daniel Morillo pointed out last fall in blog posts, this means frontier markets have exhibited a low […]

    By Russ Koesterich, CFA
  • uploads///GDP Growth in the Eurozone Is Steady
    Macroeconomic Analysis

    Developed Markets Offer Value after the Rout

    Developed markets are offering value. The Eurozone has come out of the recession and is seeing some green shoots of growth.

    By Russ Koesterich, CFA
  • uploads///The WTI and the dollar index move in opposite directions
    Macroeconomic Analysis

    The Strengthening US Dollar Has Affected Oil Prices

    Weak global demand and a strengthening dollar have affected oil prices.

    By Russ Koesterich, CFA
  • uploads///PIMCO sector allocation
    Macroeconomic Analysis

    Turn to Financials and Healthcare When Fears of Rate Hike Loom

    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.

    By Russ Koesterich, CFA
  • Financials

    Why investor sentiment can show overvaluation in US markets

    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.

    By Russ Koesterich, CFA
  • uploads///Consumer credit in Australia is burgeoning
    Macroeconomic Analysis

    Why Consumption Will Remain Soft in Australia

    Much like US consumers, Australian consumers are in the process of repairing their balance sheets.

    By Russ Koesterich, CFA
  • uploads///Retail Sales Have Slipped in the Last Three Months
    Macroeconomic Analysis

    Subdued Retail Sales Could Hurt Consumer Stocks

    The last three months have seen subdued retail sales despite lower oil prices.

    By Russ Koesterich, CFA
  • uploads///The Euro has been weakening against the US dollar since March
    Macroeconomic Analysis

    A Weaker Euro Could Lead to Inflation in Europe

    A weaker euro could lead to inflation in Europe. The depreciation in the euro was initially due to the appreciation in the dollar.

    By Russ Koesterich, CFA
  • uploads///ACWI
    Financials

    Must-know: Which safe havens are truly safe?

    Although not considered safe haven assets, in the current context of high geopolitical risk and consequently volatility, investors could consider investing in sectors like energy and large cap companies.

    By Russ Koesterich, CFA
  • uploads///Inflation fell in November
    Macroeconomic Analysis

    Inflation Remains Subdued

    Inflation remains subdued by all measures. Since inflation is way below the Fed’s long-term target, the Fed can afford to keep interest rates lower for a little longer.

    By Russ Koesterich, CFA
  • uploads///China PMI
    Macroeconomic Analysis

    Slower Growth Has a Silver Lining!

    Slower growth has a silver lining: the potential for greater monetary and fiscal stimulus.

    By Russ Koesterich, CFA
  • uploads///Commodities Could Fall Further
    Macroeconomic Analysis

    The Pressure on Cyclical Commodities Is Likely to Continue

    Commodity (DBC) prices have been heading lower since 2011, and commodities have been the worst-performing asset class of 2015.

    By Russ Koesterich, CFA
  • uploads///Transport Stocks Have Seen a Multiple Contraction in
    Macroeconomic Analysis

    What Has Caused the Correction in Transportation Stocks?

    DJTI’s price-to-earnings ratio climbed from 15.7x at the start of 2013 to 20.2x at the end of 2014. This year, transportation stocks (IYT) have taken a hit, leading to multiple contractions.

    By Russ Koesterich, CFA
  • uploads///The Dollar Index Has Soared in the Last Few Months
    Macroeconomic Analysis

    A Strong Dollar Is a Major Headwind for Export-Oriented Stocks

    A stronger dollar is a headwind for export-oriented stocks. The US economy is relatively robust.

    By Russ Koesterich, CFA
  • uploads///Chart
    Company & Industry Overviews

    High Yield Still Has a Place in Most Portfolios

    The three-month Volatility Index (or VIX), which measures the implied volatility of options on the S&P 500 stock market index, is approaching record lows.

    By Russ Koesterich, CFA
  • Financials

    Must-know: Why volatility is likely to tick up in September 2014

    While volatility fell over the course of August, the VIX’s daily average for last month was approximately 15% higher than its average over the previous three months.

    By Russ Koesterich, CFA
  • uploads///dbafeededdcae
    Macroeconomic Analysis

    Why Small-Cap Banks Have Been Underperforming

    Small-cap banks have been underperforming due to the yield curve that has been flattening since the start of 2014.

    By Russ Koesterich, CFA
  • uploads///borrowed funds fueled rise in stocks
    Macroeconomic Analysis

    Why a Chinese Market Slump Won’t Affect the Economy

    The Chinese market slump is not likely to dampen consumer spending or affect the economy. Stocks make up a mere 15% of Chinese household financial assets.

    By Russ Koesterich, CFA
  • Financials

    Why emerging markets offer value to your portfolio

    Truth: Emerging markets offer value. Given that they’re generally growing faster than their developed world counterparts, emerging markets still look cheap by most metrics.

    By Russ Koesterich, CFA
  • uploads///PMI
    Macroeconomic Analysis

    Why Real US Rates Have Been Climbing

    Real US rates have been climbing, while rates are falling in much of the rest of the world. As Russ explains, this divergence has a number of implications for investors.

    By Russ Koesterich, CFA
  • uploads///Inflation Expectations Are At Multi Year Lows
    Macroeconomic Analysis

    Why Changing Gears to Focus on TIPS Could Be Rewarding

    The market may be too complacent about inflation expectations at the moment. If this is true, this makes TIPS attractive at the moment.

    By Russ Koesterich, CFA
  • Financials

    Must-know: Factors that could be headwinds for stocks in 2015

    The Fed has already ended the quantitative easing (or QE) program. It could increase rates in mid-2015. This could be another headwind for equities.

    By Russ Koesterich, CFA
  • uploads///market rebound has led to lesser volatility
    Company & Industry Overviews

    Market Rebound Causes Stretched Valuations

    A market rebound of more than 12% from the depths seen in October has left investor sentiment buoyant.

    By Russ Koesterich, CFA
  • uploads///US dollar headwinds
    Macroeconomic Analysis

    The Strong Dollar Is Dragging Down US Companies’ Revenues

    As earnings reports and analyst call transcripts show, many of the companies reporting sales misses cited the strong dollar as a contributing factor.

    By Russ Koesterich, CFA
  • uploads///High Yield Bonds Appear Attractive
    Macroeconomic Analysis

    High Yield Offers Attractive Potential in a Yield-Starved World

    In an environment of generally decent, albeit recently disappointing, growth and gently rising yields, high yield offers attractive potential in a yield-starved world.

    By Russ Koesterich, CFA
  • uploads///GDP growth in Europe is faltering
    Macroeconomic Analysis

    Soft European Growth Could Affect US Indexes

    Soft European growth could affect US stocks. Growth in Europe (EZU) has been weak for a while now, which is concerning.

    By Russ Koesterich, CFA
  • Miscellaneous

    Could your portfolio handle a spike in geopolitical risks?

    The fact that volatility levels remain as low as they are today suggests that the market hasn’t factored in the possibility of geopolitical risks picking up.

    By Russ Koesterich, CFA
  • uploads///The Volatility Index Spiked in  After a Calm Spell
    Company & Industry Overviews

    2015 Saw Rising Volatility yet Stagnant Returns

    Keeping with his annual tradition, Russ compares the year that was to the year that he expected.

    By Russ Koesterich, CFA
  • uploads///US Equities Are Relatively Expensive
    Macroeconomic Analysis

    US Stocks Are Less Attractive than Global Options

    As we’ve suggested throughout this series, US stocks don’t have a clear growth catalyst once interest rates rise. Still, you may find value in select sectors such as financials and technology.

    By Russ Koesterich, CFA
  • Financials

    Could an adverse reaction to Fed tightening rattle the markets?

    Another possibility is that an adverse reaction to Federal Reserve (or Fed) tightening could rattle markets. But here again, the risks are likely overstated.

    By Russ Koesterich, CFA
  • uploads///IAU demand catagorized by purpose
    Basic Materials

    Why demand for gold may be waning around the world

    The fraction of total gold output held by central banks around the world has continued to decrease over the last decade and a sharp reversal in this trend is unlikely.

    By Russ Koesterich, CFA
  • uploads///euro
    Miscellaneous

    European Euphoria Captured Markets Last Week

    European euphoria captured markets in Europe and took them by storm. The Stoxx Euro 600 Index surged 5.1%, marking its biggest weekly increase in almost three years.

    By Russ Koesterich, CFA
  • Financials

    Must-know: Many investors fear stocks—is this good for markets?

    Currently, the S&P 500 is giving year-to-date (or YTD) returns of more than 8%. It posted gains for seven consecutive quarters. The S&P 500 Index (SPY) closed at a new high 34 times in 2014.

    By Russ Koesterich, CFA
  • uploads///top m and a deals
    Miscellaneous

    Increased Mergers and Acquistions Help, But Headwinds Persist

    Increased mergers and acquisitions activity in the past couple of weeks has supported US equity markets (SPY).

    By Russ Koesterich, CFA
  • uploads///The Top NASDAQ Stocks in  Were Richly Valued
    Macroeconomic Analysis

    Dotcom Bubble 2.0? We Don’t Think So!

    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.

    By Russ Koesterich, CFA
  • uploads///demand supply shortfall
    Macroeconomic Analysis

    Structural Considerations Could Mean Lower Yields in the Future

    Many structural considerations are likely to keep yields low in the future. Demand for Treasuries and bonds is likely to be more than the supply in the next two years.

    By Russ Koesterich, CFA
  • Financials

    Why there might be a downside to a strong US economy

    Of course, a strengthening U.S. economy may have a downside. If the Federal Reserve (or Fed) increases interest rates too soon or by too much, markets could be rattled.

    By Russ Koesterich, CFA
  • uploads///A Chicago Fed
    Company & Industry Overviews

    Why the CFNAI Has Historically Led Overall Growth

    There are no truly reliable measures of future growth. That said, certain economic statistics have historically led overall growth.

    By Russ Koesterich, CFA
  • Financials

    Stellar returns: Why you should consider frontier markets

    While a traditional emerging market benchmark is up 1.5% year-to-date, frontier, or “pre-emerging” markets, have been performing well.

    By Russ Koesterich, CFA
  • uploads///Mega caps tend to outperform small caps when interest rates rise
    Macroeconomic Analysis

    When Do Mega Caps Outperform Small Caps?

    Mega caps outperform small caps when interest rates rise. The last two rising rates scenarios took place during the late 90s and in the mid-2000s.

    By Russ Koesterich, CFA
  • uploads///Consumption driven economies look more attractive
    Macroeconomic Analysis

    Consumption-Driven Emerging Markets Appear Attractive

    Not all emerging markets (EEM) seem investment-worthy. Only some consumption-driven emerging markets appear attractive.

    By Russ Koesterich, CFA
  • uploads///Dividend funds give you cushion during volatility
    Macroeconomic Analysis

    High-Dividend Emerging Market Funds Offer A Cushion

    High-dividend emerging market funds offer a cushion when you face market volatility.

    By Russ Koesterich, CFA
  • Financials

    Recommendation: Keep municipal bonds in mind

    While no longer cheap per se after their extraordinary run in 2014, municipal bonds continue to look attractive versus both Treasuries and corporate bonds.

    By Russ Koesterich, CFA
  • uploads///Federal funds rate has remained low
    Macroeconomic Analysis

    The Federal Funds Rate: Why The US Dollar Could Appreciate Further

    The federal funds rate is a tool that the Fed uses to control the interest rate in the economy. The rate has been close to zero for over six years.

    By Russ Koesterich, CFA
  • Financials

    Why emerging markets offer far less “fiscal baggage”

    Finally, the majority of the emerging market countries have much less “fiscal baggage” than their developed market counterparts.

    By Russ Koesterich, CFA
  • uploads///High yield bonds outperformed investment grade and Treasury bonds during the last period of rising rates
    Macroeconomic Analysis

    Why You Should Favor Credit over Duration When it Comes to Bonds

    Favor credit over duration as interest rates rise. Look for tactical opportunities within fixed income.

    By Russ Koesterich, CFA
  • uploads///REITS
    Company & Industry Overviews

    Defensive Stocks And REITs Look Overpriced

    REITs are providing an average dividend yield of 3.5%, so investors are drawn to them. This is causing rich valuations and making REITs look overpriced.

    By Russ Koesterich, CFA
  • uploads///The Federal Funds Rate Has Been Stuck at around  for over  Years
    Macroeconomic Analysis

    A Softer Rebound Could Move Markets in the 2Q

    A softer rebound could move markets in the second quarter. If the economy remains weak in the second quarter, the Fed has some leeway to maneuver the rate.

    By Russ Koesterich, CFA
  • Financials

    Why small-cap stocks have been lagging behind in 2014

    For example, at least historically, small cap valuations have been more sensitive to changes in monetary conditions than their large-cap counterparts, and this was evident last week.

    By Russ Koesterich, CFA
  • Earnings Report

    Why some bad news may be good news for international stocks

    Bad news may be good news for international stocks. Europe is struggling with deflationary headwinds and Japan is suffering under the burden of last April’s hike in the consumption tax.

    By Russ Koesterich, CFA
  • uploads///Inflation fell in November
    Macroeconomic Analysis

    Your Best Bets For A Good Inflation Hedge Right Now

    Although inflation is low, it’s a good idea to have a small amount of inflation hedge in your portfolio. A small inflation hedge adds diversification.

    By Russ Koesterich, CFA
  • uploads///Municipal Bonds Outperformed Other Bond Classes in
    Macroeconomic Analysis

    How to Ballast Your Portfolio with Bonds

    Municipal bonds (or munis) were the best performers in 2015 with returns of 3.2%. Meanwhile, investment-grade corporate bonds (LQD), long-dated Treasuries (TLT), and high-yield bonds (HYG) all gave negative returns in 2015.

    By Russ Koesterich, CFA
  • uploads///Emerging market dividend indexes are trading at a discount
    Macroeconomic Analysis

    Emerging Market Dividend Payers Currently Offer Value

    Emerging market dividend payers are offering value, given their high volatility.

    By Russ Koesterich, CFA
  • Financials

    4 must-know reasons why you should invest in frontier markets

    So-called frontier markets (FM) – those markets that are still at a very early stage of development — have been among the best performers in 2014, outperforming global markets (ACWI) year to date.

    By Russ Koesterich, CFA
  • Financials

    Why frontier markets are still cheaper than emerging markets

    And while firms in frontier markets are less profitable than emerging market companies, frontier stocks look inexpensive even when this difference in profitability is accounted for.

    By Russ Koesterich, CFA
  • Financials

    Why you should stick with US large caps and high yield

    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.

    By Russ Koesterich, CFA
  • Financials

    Key investor takeaways: Pay attention to Japanese equities

    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.

    By Russ Koesterich, CFA
  • Financials

    Must-know: Why investors should focus on relative value

    Focus on relative value. Given that most asset classes look expensive, I continue to prefer market segments that offer relative value.

    By Russ Koesterich, CFA
  • uploads///volatilities of gold vs sp
    Miscellaneous

    How Has the Volatility of Gold Changed over the Years?

    The performance of gold as a contrast to the S&P 500 is reflected during periods of high and low volatility. The S&P 500 has always outperformed gold since April 10, 2013, during periods of both high and low volatility.

    By Russ Koesterich, CFA
  • uploads///Diversify Your Portfolio for Better Risk Adjusted Returns
    Macroeconomic Analysis

    The Basic Tenet of Portfolio Construction: Diversify

    Diversify your portfolio for better risk-adjusted returns. From a portfolio diversification point of view, the correlation between two asset classes should be close to zero.

    By Russ Koesterich, CFA
  • uploads///allocation to cash
    Macroeconomic Analysis

    What Should Be The “Right Amount” of Cash Allocation?

    If you’re preparing your portfolio for the short term, the allocation to cash should be high. As the horizon increases, allocation to cash should go down.

    By Russ Koesterich, CFA
  • Financials

    Recommendation: Look outside the US for stock bargains

    U.S. stocks are no longer cheap, and that has stocks outside U.S. borders looking even more reasonable. Specifically, I see opportunities in Japan.

    By Russ Koesterich, CFA
  • uploads///The Currency Hedged Versions of Developed Market ETFs Have Performed Better in
    Macroeconomic Analysis

    Where Can You Invest, Given the Strength of the Dollar?

    Where can you invest if the strength of the dollar is likely to continue? The stronger dollar is going to hurt the performance of large-cap stocks that have exposures abroad.

    By Russ Koesterich, CFA
  • uploads///New Orders Rebounded Sharply in June
    Macroeconomic Analysis

    Times Change: Why the Dow Theory Is Less Applicable Today

    The economic make-up of the US has changed significantly over the past century, making the Dow Theory less applicable today than it might once have been.

    By Russ Koesterich, CFA
  • Financials

    Why emerging markets seem relatively well-priced

    EM currently trades at a big discount to DM. Emerging market (EM) equities are trading at 1.5x book value, while developed markets (DM) are trading at 2x.

    By Russ Koesterich, CFA
  • Financials

    Must-read: Key takeaways for investors in the banking sector

    The longer term outlook for Eurozone banks does look more positive than a year ago given reasons including the substantial deleveraging, capital raising by local banks and the European Central Bank (or ECB)’s recently announced ABS purchase program.

    By Russ Koesterich, CFA
  • Financials

    Small caps trade at a premium, but can you justify this premium?

    Today, small-cap indices are trading at a relatively expensive level versus large-cap companies. When real rates were negative, this premium was more justified.

    By Russ Koesterich, CFA
  • uploads///IMFs projections on global economic growth July
    Macroeconomic Analysis

    Slowing Global Growth Could Keep Commodity Prices Low

    Industrial commodities are likely to see lower prices as demand falls with slowing global growth. Yet a decent entry point doesn’t seem to be on the horizon.

    By Russ Koesterich, CFA
  • Financials

    Why Fed and Bank of Japan monetary policies are at odds

    Last week, the Bank of Japan unexpectedly expanded its own version of quantitative easing. This announcement came shortly after an inflation report showed that Japan’s CPI has dipped to 1%, meaningfully below its target.

    By Russ Koesterich, CFA
  • uploads///Crude Oil Production in the US Has Increased
    Macroeconomic Analysis

    Where Are Oil Prices Heading?

    Oil prices are expected to be lower for longer. This is bad news for high yield bond funds (HYG) (JNK) in the United States.

    By Russ Koesterich, CFA
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