The idea that different assets move independently of one another over time is the cornerstone of true diversification… and yet it hasn’t truly existed since 2007. In fact, most stocks, bonds, commodities and currencies have all fallen or risen together; the only differences have been matters of degree, not direction.
With that said, research group ConvergEx recently suggested that the “Risk-On-Risk-Off” [...] [...more]
It smells a bit like 2009 to me. Specifically, emerging markets are outperforming foreign markets… and foreign markets are outperforming U.S. markets.
The driving forces? One, investors perceive that China demands materials and energy vis-a-vis a “reflation trade.” Two, currency traders are “short” the U.S. dollar once more vis-a-vis a “carry trade.”
Reflation may not be occurring by direct [...] [...more]
It’s been a spectacular week for the bulls… no doubt about it. Both the S&P 500 and the Russell 2000 gained ground in all 5 trading sessions. In fact, the iShares Russell 2000 (IWM) hit fresh 52-week highs, closing in on territory not seen since the Lehman bankruptcy (9/2008).
Some attribute the new-found desire for stock assets to better-than-anticipated jobs numbers [...] [...more]
In a recent editorial, I explained why regional European funds might come back in favor. I even made a case for why iShares MSCI Italy (EWI) could be particularly rewarding.
By the same token, however, I am not taking that risk personally. The only significant exposure to European stocks that my investment advisory clients might have is through Vanguard Total World (VT).
I [...] [...more]
In one form or another, I continue to get the question: Do you STILL think emerging markets are safer than the U.S.? Answer… Yes.
This is not to say that emerging market ETFs aren’t extensively overbought. They are. And it’s not to say that they won’t get whacked for 15%-20% losses if the U.S. is hit [...] [...more]
There seems to be a relentless focus by the mainstream media on how well stock assets are performing in 2009. If I had an Australian dollar for every time a columnist discussed broad market gains of more than 50% off of the March lows…
Unfortunately, the wearisome coverage of the S&P 500’s 54% since March 9 of ‘09 is a bit of [...] [...more]
Baffling. No… utterly shocking!
Is there a better way to describe the unlikely, unholy triumvirate between stocks, U.S. treasuries and gold? In what universe do all 3 asset classes show strong, positive correlations for a significant length of time?
Put another way, when diversification failed asset allocators in the credit collapse circa Sept – Nov 2008, U.S treasury [...] [...more]
