The document provides an economic and market update for October 2012 and advice on asset allocation. It discusses positive developments in the US, Europe, and India that are supporting global equity markets. The RBI took steps to increase liquidity through a CRR cut. Inflation remains the near-term focus for RBI but commentary suggests room for future rate cuts. Recent government actions on fiscal reforms are expected to aid growth. The outlook is to increase equity allocation, with select banking, auto and infrastructure stocks seen as opportunities.
The document discusses how financial turmoil following the Arab Spring uprisings is influencing economic freedom in the region. It presents empirical evidence showing relationships between changes in economic freedom and stock market returns, currency exchange rates, and government debt yields. Recent declines in foreign investment, private equity funding, and public stock markets in Arab countries indicate decreased economic freedom. Policy decisions going forward will impact areas like subsidies, capital controls, privatization, and transparency. Delays in political transitions threaten further credit downgrades and reserve declines in Egypt.
The stock market in the United States weighed in with a
spectacular showing early this year, with the Dow Jones Industrial
Average up nearly 10.8% as of the week which ended March 15,
2013.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
FMP Market Themes and Outlook January 2013kmyoung1
This document provides a market outlook and investment themes for 2013 from FMPartners. It summarizes current economic conditions and sees modest GDP growth in the US. The main investment themes highlighted are global fiscal concerns, divergent growth between developed and emerging markets, credit dislocation, and inflationary pressures. The market outlook projects the S&P 500 will end 2013 around 1561 based on analyst forecasts. Key drivers of growth are seen as the ongoing US housing recovery, employment gains, manufacturing expansion, and domestic energy production. Equities are assessed as fairly valued currently based on dividend and debt yield comparisons. Risks in fixed income include the constrained credit environment and global deleveraging.
- Major stock markets experienced significant volatility in July as investor uncertainty grew over the ability of large economies like the US to avoid defaulting on debt obligations.
- Bond markets performed well as investors sought the safety of fixed-income assets, while gold prices rose as another safe-haven investment.
- Continued macroeconomic concerns around unresolved European sovereign debt issues and sluggish US economic data are expected to cause ongoing unsettled market conditions in the near future.
The document provides an economic and market update for October 2012 and advice on asset allocation. It discusses positive developments in the US, Europe, and India that are supporting global equity markets. The RBI took steps to increase liquidity through a CRR cut. Inflation remains the near-term focus for RBI but commentary suggests room for future rate cuts. Recent government actions on fiscal reforms are expected to aid growth. The outlook is to increase equity allocation, with select banking, auto and infrastructure stocks seen as opportunities.
The document discusses how financial turmoil following the Arab Spring uprisings is influencing economic freedom in the region. It presents empirical evidence showing relationships between changes in economic freedom and stock market returns, currency exchange rates, and government debt yields. Recent declines in foreign investment, private equity funding, and public stock markets in Arab countries indicate decreased economic freedom. Policy decisions going forward will impact areas like subsidies, capital controls, privatization, and transparency. Delays in political transitions threaten further credit downgrades and reserve declines in Egypt.
The stock market in the United States weighed in with a
spectacular showing early this year, with the Dow Jones Industrial
Average up nearly 10.8% as of the week which ended March 15,
2013.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
FMP Market Themes and Outlook January 2013kmyoung1
This document provides a market outlook and investment themes for 2013 from FMPartners. It summarizes current economic conditions and sees modest GDP growth in the US. The main investment themes highlighted are global fiscal concerns, divergent growth between developed and emerging markets, credit dislocation, and inflationary pressures. The market outlook projects the S&P 500 will end 2013 around 1561 based on analyst forecasts. Key drivers of growth are seen as the ongoing US housing recovery, employment gains, manufacturing expansion, and domestic energy production. Equities are assessed as fairly valued currently based on dividend and debt yield comparisons. Risks in fixed income include the constrained credit environment and global deleveraging.
- Major stock markets experienced significant volatility in July as investor uncertainty grew over the ability of large economies like the US to avoid defaulting on debt obligations.
- Bond markets performed well as investors sought the safety of fixed-income assets, while gold prices rose as another safe-haven investment.
- Continued macroeconomic concerns around unresolved European sovereign debt issues and sluggish US economic data are expected to cause ongoing unsettled market conditions in the near future.
In the second quarter of 2010, global economic growth showed signs of moderating which drove investors to shift assets into safe havens like government bonds, the US dollar, and gold. Concerns over fiscal tightening in Europe, policy changes in China, and weaker US economic data contributed to the more risk-averse investor sentiment. The Canadian market declined in the quarter but outperformed other developed markets, led higher by gold stocks, while cyclical sectors tied to global growth fared worst.
The document discusses the old adage of "sell in May and go away" and argues that investors should instead "buy in June and stay tuned" in 2010. It notes that while stock returns have historically been weaker from May to October, returns are still positive about two-thirds of the time. Given that a pullback has already occurred, the author believes investors should buy stocks now rather than sell. However, investors need to "stay tuned" to changing economic conditions in the coming months as headwinds may increase volatility.
In this note I address the issue of where we are in the US business cycle and what comes next.
My bottom line is that the pieces are falling into place for a (mild) recession sometime in the middle of 2020.
The approach that I take is to line up the current expansion (which this month became the second longest ever) with the 7 other post-1960 expansions.
The economic data were mixed, but, generally, on the strong side of expectations. Consumer confidence improved in August. It is still relatively weak by historical standards, but moving in the right direction. Evaluations of current job availability remained depressed, but were not quite as bad as in July. New home sales rose 9.6% in July, while figures for the three previous months were revised higher. Durable goods orders jumped 4.9% in July, reflecting a spike in civilian aircraft orders (a moderately positive trend otherwise).
The document summarizes the ongoing economic battle between reflation and deflation forces in 2010. In the first quarter, reflation won as stock prices rose, but deflation fought back in the second quarter, causing stock prices to drop. Recent economic data and earnings reports have exceeded expectations, suggesting deflation may be easing. The investment firm maintains its outlook for the S&P 500 index to be within an 8% range for 2010 and believes interest rates will remain low compared to historical averages. It monitors economic indicators like Treasury yields and copper prices that currently suggest mixed messages about the global economy.
India strategy elara securities - august 2013umeshnihalani
- The Reserve Bank of India is struggling with the "impossible trinity" of maintaining an independent monetary policy, fixed exchange rates, and open capital accounts all at the same time given the differing economic cycles of India and the US.
- As US yields have risen, India has to choose between a floating exchange rate with monetary independence or a pegged rate to the USD that requires monetary tightening. For now, RBI is inclined toward the latter but may have to shift to the former to boost India's sagging economy.
- Trying to pursue both options through a "middle path" could distort policymaking and require short-term fixes rather than long-term solutions according to the analysis.
« Market Perspectives » est notre revue mensuelle des marchés. Elle présente de la façon la plus synthétique possible :
- notre analyse des principaux faits marquants et indicateurs macro susceptibles de dessiner les marchés sur le mois.
- notre vision sur les différentes classes d’actifs
Cette revue sera continument enrichie avec nos indicateurs quantitatifs.
La plupart de nos analyses sont disponibles sur www.finlightresearch.com
Our monthly publication “Market Perspectives” presents a synthetic view of all the asset classes we cover.
The report is composed of six sections covering Macro, Equities, FI & credit, FX, Commodities and Alternatives.
Each section is preceded by a summary of our views on the related asset class.
Most of our publications are available on our web site www.finlightresearch.com
The document discusses the recent fall in the Indian stock market. It provides 3 key reasons for the decline:
1) Negative signals from within India like high interest rates and economic slowdown.
2) Global market turmoil from the European and US debt crisis causing a decline in US stocks that spread worldwide.
3) Concerns around continued high unemployment and lack of immediate financial recovery in the US sparking fears of a recession.
The stock market indices across sectors like banking, infrastructure, IT, and healthcare all declined substantially over the past week.
This document summarizes the results of a survey of small business owners conducted in August 2011. Some key findings from the survey include:
- Small business owner optimism declined in August, with expectations for future sales growth and business conditions contributing significantly to the decline.
- Hiring plans improved slightly but remained at recession levels, with 5% of owners planning to create new jobs over the next three months.
- Capital spending plans also improved slightly but remained weak, with 21% of owners planning equipment purchases in the next 6 months.
- Expectations for future sales declined sharply, and a net negative 12% of owners expected sales to be higher.
- Inflation pressures eased as sales trends remained weak, limiting the
The economic data calendar was thin. The Institute for Supply Management’s (ISM) Non-Manufacturing Index rose to 50.9 in September, compared to 48.4 in August – 50 represents the breakeven level; anything greater than 50 indicates expansion. The trade deficit narrowed slightly in August – adjusted for inflation, so it appears that net exports will be a slight drag on gross domestic product (GDP) growth in the third quarter of 2009. Jobless claims fell somewhat, but there’s a fair amount of volatility in the numbers at this time of year.
Elevation Wealth Management's quarterly review of the investment, financial, and economic landscape as of September 30, 2013. Key take-aways and useful insights for average and sophisticated investors alike.
- Stock markets around the world plunged in August as concerns about the global economy and debt crises in the US and Europe shook investor confidence.
- Bond markets strengthened and gold prices hit record highs as investors sought safe havens.
- In Canada, the materials sector was one of the few gainers for the month due to rising gold prices, which boosted Canadian gold companies.
- While volatility is likely to continue in the short-term, the author remains cautiously optimistic about the global economic outlook and believes current market conditions present long-term investment opportunities for a diversified portfolio.
The document provides a market review for the week ended February 15, 2013. It summarizes performance of global equity markets, bond yields, commodity prices, and currency exchange rates. It also reviews economic data and monetary policies in various regions including Asia, Europe, Americas, and India. Key highlights from the Indian market include a marginal decline in equity indices, mixed economic data, easing bond yields, and a weaker rupee.
The document discusses the Federal Reserve's focus on boosting corporate profits during the recent economic slowdown. The Fed has been contacting analysts weekly to get updates on plunging earnings. It is concerned that falling profits could trigger further cuts to business investment and hiring, tipping the economy into recession. By aggressively cutting interest rates, the Fed is betting it can support profits without igniting inflation. However, some see risks in this strategy if companies raise prices to boost margins, potentially leading to stagflation. Bond investors in particular are worried the Fed is ignoring inflation risks in its drive to prop up corporate earnings.
1) The document examines whether market timing strategies based on price-to-earnings ratios, dividend yields, and sentiment indexes can outperform a simple buy-and-hold strategy over the long run.
2) It finds that market timing strategies based on P/E ratios and dividend yields alone do not reliably outperform buy-and-hold, as these valuations measures combine both sentiment and fundamental value, which are difficult to disentangle.
3) A sentiment index may have some advantage over valuation ratios as a market timing tool, but the document concludes that successfully timing the market requires insights into future sentiment and value that are not fully captured by widely available indicators.
Viewpoint Newsletter from Clear View Wealth Advisors with a focus on the role of dividend-paying stocks and the inflation-deflation debate. Also includes links to the free financial roadmap tool.
The document provides an analysis of Asian economic trends and outlook. It finds that while growth in Asia will slow due to global factors like a declining US economy, domestic demand drivers in Asia like consumption, investment, and intra-Asian trade will help cushion the impact and allow growth to continue, albeit at a slower pace. Inflation remains a risk but proactive central bank actions can help prevent stagflation. Overall the analysis concludes Asia will experience a slowdown rather than a collapse.
Pinning of Stock Prices on Expiration Date - Equity OptionsRYAN RENICKER
Actionable trade ideas for stock market investors and traders seeking alpha by overlaying their portfolios with options, other derivatives, ETFs, and disciplined and applied Game Theory for hedge fund managers and other active fund managers worldwide. Ryan Renicker, CFA
The document discusses how market declines are normal and should be expected. It notes that there have been 370 declines of at least 5% and close to 60 declines of 15% or more since 1900. While declines are common, the stock market has historically trended upward in the long run. The document advocates maintaining a long-term focus during periods of market volatility.
The document provides an overview of market volatility and downturns. It discusses how declines are normal aspects of the market cycle and outlines historical data on the average length and frequency of different types of declines. It also notes that expansions have typically lasted longer than recessions throughout history.
In the second quarter of 2010, global economic growth showed signs of moderating which drove investors to shift assets into safe havens like government bonds, the US dollar, and gold. Concerns over fiscal tightening in Europe, policy changes in China, and weaker US economic data contributed to the more risk-averse investor sentiment. The Canadian market declined in the quarter but outperformed other developed markets, led higher by gold stocks, while cyclical sectors tied to global growth fared worst.
The document discusses the old adage of "sell in May and go away" and argues that investors should instead "buy in June and stay tuned" in 2010. It notes that while stock returns have historically been weaker from May to October, returns are still positive about two-thirds of the time. Given that a pullback has already occurred, the author believes investors should buy stocks now rather than sell. However, investors need to "stay tuned" to changing economic conditions in the coming months as headwinds may increase volatility.
In this note I address the issue of where we are in the US business cycle and what comes next.
My bottom line is that the pieces are falling into place for a (mild) recession sometime in the middle of 2020.
The approach that I take is to line up the current expansion (which this month became the second longest ever) with the 7 other post-1960 expansions.
The economic data were mixed, but, generally, on the strong side of expectations. Consumer confidence improved in August. It is still relatively weak by historical standards, but moving in the right direction. Evaluations of current job availability remained depressed, but were not quite as bad as in July. New home sales rose 9.6% in July, while figures for the three previous months were revised higher. Durable goods orders jumped 4.9% in July, reflecting a spike in civilian aircraft orders (a moderately positive trend otherwise).
The document summarizes the ongoing economic battle between reflation and deflation forces in 2010. In the first quarter, reflation won as stock prices rose, but deflation fought back in the second quarter, causing stock prices to drop. Recent economic data and earnings reports have exceeded expectations, suggesting deflation may be easing. The investment firm maintains its outlook for the S&P 500 index to be within an 8% range for 2010 and believes interest rates will remain low compared to historical averages. It monitors economic indicators like Treasury yields and copper prices that currently suggest mixed messages about the global economy.
India strategy elara securities - august 2013umeshnihalani
- The Reserve Bank of India is struggling with the "impossible trinity" of maintaining an independent monetary policy, fixed exchange rates, and open capital accounts all at the same time given the differing economic cycles of India and the US.
- As US yields have risen, India has to choose between a floating exchange rate with monetary independence or a pegged rate to the USD that requires monetary tightening. For now, RBI is inclined toward the latter but may have to shift to the former to boost India's sagging economy.
- Trying to pursue both options through a "middle path" could distort policymaking and require short-term fixes rather than long-term solutions according to the analysis.
« Market Perspectives » est notre revue mensuelle des marchés. Elle présente de la façon la plus synthétique possible :
- notre analyse des principaux faits marquants et indicateurs macro susceptibles de dessiner les marchés sur le mois.
- notre vision sur les différentes classes d’actifs
Cette revue sera continument enrichie avec nos indicateurs quantitatifs.
La plupart de nos analyses sont disponibles sur www.finlightresearch.com
Our monthly publication “Market Perspectives” presents a synthetic view of all the asset classes we cover.
The report is composed of six sections covering Macro, Equities, FI & credit, FX, Commodities and Alternatives.
Each section is preceded by a summary of our views on the related asset class.
Most of our publications are available on our web site www.finlightresearch.com
The document discusses the recent fall in the Indian stock market. It provides 3 key reasons for the decline:
1) Negative signals from within India like high interest rates and economic slowdown.
2) Global market turmoil from the European and US debt crisis causing a decline in US stocks that spread worldwide.
3) Concerns around continued high unemployment and lack of immediate financial recovery in the US sparking fears of a recession.
The stock market indices across sectors like banking, infrastructure, IT, and healthcare all declined substantially over the past week.
This document summarizes the results of a survey of small business owners conducted in August 2011. Some key findings from the survey include:
- Small business owner optimism declined in August, with expectations for future sales growth and business conditions contributing significantly to the decline.
- Hiring plans improved slightly but remained at recession levels, with 5% of owners planning to create new jobs over the next three months.
- Capital spending plans also improved slightly but remained weak, with 21% of owners planning equipment purchases in the next 6 months.
- Expectations for future sales declined sharply, and a net negative 12% of owners expected sales to be higher.
- Inflation pressures eased as sales trends remained weak, limiting the
The economic data calendar was thin. The Institute for Supply Management’s (ISM) Non-Manufacturing Index rose to 50.9 in September, compared to 48.4 in August – 50 represents the breakeven level; anything greater than 50 indicates expansion. The trade deficit narrowed slightly in August – adjusted for inflation, so it appears that net exports will be a slight drag on gross domestic product (GDP) growth in the third quarter of 2009. Jobless claims fell somewhat, but there’s a fair amount of volatility in the numbers at this time of year.
Elevation Wealth Management's quarterly review of the investment, financial, and economic landscape as of September 30, 2013. Key take-aways and useful insights for average and sophisticated investors alike.
- Stock markets around the world plunged in August as concerns about the global economy and debt crises in the US and Europe shook investor confidence.
- Bond markets strengthened and gold prices hit record highs as investors sought safe havens.
- In Canada, the materials sector was one of the few gainers for the month due to rising gold prices, which boosted Canadian gold companies.
- While volatility is likely to continue in the short-term, the author remains cautiously optimistic about the global economic outlook and believes current market conditions present long-term investment opportunities for a diversified portfolio.
The document provides a market review for the week ended February 15, 2013. It summarizes performance of global equity markets, bond yields, commodity prices, and currency exchange rates. It also reviews economic data and monetary policies in various regions including Asia, Europe, Americas, and India. Key highlights from the Indian market include a marginal decline in equity indices, mixed economic data, easing bond yields, and a weaker rupee.
The document discusses the Federal Reserve's focus on boosting corporate profits during the recent economic slowdown. The Fed has been contacting analysts weekly to get updates on plunging earnings. It is concerned that falling profits could trigger further cuts to business investment and hiring, tipping the economy into recession. By aggressively cutting interest rates, the Fed is betting it can support profits without igniting inflation. However, some see risks in this strategy if companies raise prices to boost margins, potentially leading to stagflation. Bond investors in particular are worried the Fed is ignoring inflation risks in its drive to prop up corporate earnings.
1) The document examines whether market timing strategies based on price-to-earnings ratios, dividend yields, and sentiment indexes can outperform a simple buy-and-hold strategy over the long run.
2) It finds that market timing strategies based on P/E ratios and dividend yields alone do not reliably outperform buy-and-hold, as these valuations measures combine both sentiment and fundamental value, which are difficult to disentangle.
3) A sentiment index may have some advantage over valuation ratios as a market timing tool, but the document concludes that successfully timing the market requires insights into future sentiment and value that are not fully captured by widely available indicators.
Viewpoint Newsletter from Clear View Wealth Advisors with a focus on the role of dividend-paying stocks and the inflation-deflation debate. Also includes links to the free financial roadmap tool.
The document provides an analysis of Asian economic trends and outlook. It finds that while growth in Asia will slow due to global factors like a declining US economy, domestic demand drivers in Asia like consumption, investment, and intra-Asian trade will help cushion the impact and allow growth to continue, albeit at a slower pace. Inflation remains a risk but proactive central bank actions can help prevent stagflation. Overall the analysis concludes Asia will experience a slowdown rather than a collapse.
Pinning of Stock Prices on Expiration Date - Equity OptionsRYAN RENICKER
Actionable trade ideas for stock market investors and traders seeking alpha by overlaying their portfolios with options, other derivatives, ETFs, and disciplined and applied Game Theory for hedge fund managers and other active fund managers worldwide. Ryan Renicker, CFA
The document discusses how market declines are normal and should be expected. It notes that there have been 370 declines of at least 5% and close to 60 declines of 15% or more since 1900. While declines are common, the stock market has historically trended upward in the long run. The document advocates maintaining a long-term focus during periods of market volatility.
The document provides an overview of market volatility and downturns. It discusses how declines are normal aspects of the market cycle and outlines historical data on the average length and frequency of different types of declines. It also notes that expansions have typically lasted longer than recessions throughout history.
Juris wealth the corona virus, market declines and volatilityTimothy Corriero
This document discusses market reactions to past epidemics and crises. It provides charts showing the S&P 500 index from 1926-2019 with bear and bull markets labeled. Another chart shows the cumulative returns of a balanced portfolio following past crises like stock market crashes, recessions, and health epidemics. The document emphasizes that reacting to short-term market volatility can hurt long-term performance and that investors should focus on diversifying and maintaining a disciplined investment plan.
The document provides an overview and analysis of financial markets in 2009. It discusses the economic turmoil affecting markets, outlines different types of market declines, and analyzes stock and bond returns over time. The document emphasizes maintaining realistic expectations, the benefits of long-term investing, and risks of trying to time the market.
The document summarizes key topics discussed in a seminar on financial empowerment for educators, including common financial questions from young couples, kids, and about financial security, estate planning, sources of income in retirement, lessons for lifetime investing, and tips for investing strategies.
The document provides advice on navigating volatile market conditions, emphasizing the importance of diversification, maintaining a long-term perspective, and not abandoning one's investment plan. It highlights data showing that markets have historically recovered from downturns and notes opportunities currently available in international markets and other asset classes. The overall message is that staying invested and working with a financial advisor can help investors weather periods of market turbulence.
- The document discusses historical data on bear markets, corrections, and business cycles since the late 19th century. It finds that on average, corrections occur every 2.9 years with a 12.3% loss, while bear markets occur every 5.1 years with a 36.3% average loss.
- It also examines stock market performance around recessions and recoveries, finding that stocks typically bottom 1-7 months before the economy and that recoveries are "front loaded" in the first year after a recession low.
- The document advocates diversification and asset allocation as ways to reduce risk and increase returns, citing data showing portfolios with a mix of stocks and bonds experienced higher returns and lower volatility than 100
The document discusses market volatility and the Nifty 100 Low Volatility 30 Index. It notes that volatility measures fluctuations in the market/stocks and higher volatility means higher uncertainty and risk. The index identifies the 30 least volatile large-cap stocks in the Nifty 100 index. Stocks receive weights based inversely on their volatility, so less volatile stocks have higher weights. The ICICI Prudential Nifty Low Vol 30 ETF FOF aims to invest in this index to limit downside risk and generate returns by investing in the underlying ETF.
The document provides an overview of the economic crisis that began in late 2007 and discusses recommendations for investors. It notes that the collapse of subprime lending and the housing bubble led to widespread credit problems and market declines. While the situation remains challenging, following principles like diversification and long-term perspective can help investors navigate volatile markets and find opportunities for future growth as the economy recovers.
The document discusses portfolio diversification and asset allocation. It explains that asset allocation is the process of combining different asset classes like stocks, bonds, and cash to meet investment goals. Diversifying across asset classes can help lower risk and increase returns. The document provides examples showing how diversified portfolios performed better than non-diversified portfolios during market downturns.
This document discusses how managed futures strategies can provide stable, predictable returns during periods of economic and market stress by capturing risk premia priced into various asset classes. It explains that the sources of return for managed futures are the market mechanisms that price risk premia into futures prices for commodities, currencies, fixed income, and equities. Managed futures managers use systematic strategies to identify and capture these risk premia across a diversified portfolio of assets and markets in order to generate uncorrelated returns.
A look at how we got into this mess of a financial meltdown, what to do in the midst of it, and how to capitalize going forward. This presentation illustrates the need of hiring a professional advisor to help you manage your emotions during times of uncertainty.
The document discusses maintaining a long-term perspective during periods of market volatility. It argues that trying to time the market is difficult and investors are better off remaining invested through downturns. While volatility can be unsettling, markets have historically delivered returns over long periods. The document advocates for diversification, rebalancing, and having patience as the best strategies for long-term investors.
Time can be an investor's best friend or worst enemy when investing. While time allows investors to ride out market volatility and participate in recoveries, lack of time can force riskier moves close to retirement. Research showed that between 2002-2016, the worst cumulative return over 3 years in the South African equity market was 0.76%, including the 2008 crash. Returns improve over 5+ years. Short term (1 month, 1 year) returns saw larger variances. The analysis demonstrates that remaining invested long-term in equities, through allocating assets appropriately based on risk tolerance and time horizon, can avoid losses to inflation. Timing the market is difficult and often means buying high and selling low.
Why Global Diversification Matters By Anthony Davidow Ap.docxgauthierleppington
Why Global Diversification Matters
By Anthony Davidow
April 02, 2018
Over the past few years, some investors have begun to question the merits of global asset
allocation. They wonder whether the risks abroad justify investing money outside the United
States—and whether there truly are diversification benefits to doing so. Some have even
challenged Modern Portfolio Theory itself, which emphasizes the long-term benefits of a
diversified portfolio.
In some ways it’s natural. It’s an unpredictable world, and investors worry about market
volatility both at home and abroad. Everything from political questions in the wake of the U.K.’s
“Brexit” vote in the summer of 2016 to the recent U.S. elections to anticipation of the Federal
Reserve raising rates have indeed contributed to market swings.
Moreover, in investing—as in sports and other areas of life—people often exhibit familiarity bias
(“home-country bias” in this case). We’re inclined to believe in and root for the things that we
know best. While this may be human nature, home-country bias limits an investor’s universe of
available opportunities. Worse, it may not be prudent given the nature of today’s global markets:
According to MSCI data, roughly half of all global companies are based outside the United
States, which corresponds to global gross domestic product (GDP) ratios.
Do you really want to limit your investment opportunities by half? How can you overcome
home-country bias?
As the saying goes…
Times like these show why the adage “don’t put all your eggs in one basket” is so vital for
investors. An investment sector that performs well one month or year might be a poor performer
the next. For example, as the chart below shows, emerging market stocks were the worst
performer in 2008—only to rebound back to the top in 2009 and also 2017. More recently,
international developed stocks were among the top performers in 2017, after placing near the
bottom in 2016.
Over the long run, there’s no discernible pattern to the rotation among the top performers, so it
doesn’t make much sense to concentrate all your investments in a particular region or asset class.
A globally diversified portfolio—one that puts its eggs in many baskets, so to speak—tends to be
better positioned to weather large year-over-year market gyrations and provide a more stable set
of returns over time.
How key asset classes compare to a diversified portfolio
Source: Morningstar Direct and the Schwab Center for Financial Research. Data is from January 1, 2008, to December 31, 2017. Asset class
performance represented by annual total returns for the following indexes: S&P 500® Index (U.S. Lg Cap), Russell 2000® Index (U.S. Sm Cap),
MSCI EAFE® net of taxes (Int’l Dev), MSCI Emerging Markets IndexSM (EM), S&P United States REIT Index and S&P Global Ex-U.S. REIT
Index (REITs), S&P GSCI® (Commodities), Bloomberg Barclays U.S. Treasury Inflation-Protection Securities (TIPS) Index, Bloo.
The document discusses the benefits of diversification through multi-asset allocation. It provides evidence that combining different asset classes like equity, debt and gold in a portfolio can help reduce drawdowns during market crises compared to investing only in equities. Diversification is best achieved between different asset classes rather than within the same asset class. A multi-asset allocation approach incorporating global diversification can also help safeguard portfolios during economic or political crises in individual countries. Historical data on countries like India, US, UK and others demonstrates that a multi-asset strategy may provide superior risk-adjusted returns over the long term compared to investing only in domestic equities or debt.
The economic data this week showed signs that the U.S. and global economies have stabilized and possibly bottomed out. Retail sales are expected to rise significantly due to the "Cash for Clunkers" program. Upcoming reports on retail sales, consumer prices, and other economic indicators next week could generate market reactions. Financial markets continued higher despite thin economic data, perhaps waiting for stronger confirmation of recovery.
A Target Retirement Income Plan is a nonqualified, supplemental, after-tax executive retirement benefit program that changes the focus from return on investment to certainty of predictable income in retirement.
The unemployment rate fell slightly to 9.7% in May, though many of the new jobs were temporary census positions. Manufacturing and non-manufacturing activity continued to expand according to surveys. Pending home sales rose significantly in April due to the homebuyer tax credit deadline. Stocks closed lower for the week despite some positive economic news as investors remained concerned about government debt issues in Europe.
1. market volatility and your finances:
navigating your finances during uncertain times
GE-46524 (10/08) AXA Advisors, LLC
GE-45624 (10/08)
2. market volatility and your finances:
navigating your finances during tough times
GE-46524 (10/08) AXA Advisors, LLC
GE-45624 (10/08)
3. market volatility and your finances:
navigating your finances during tough times
GE-46524 (10/08) AXA Advisors, LLC
GE-45624 (10/08)
4. market volatility and your finances:
navigating your finances during tough times
GE-46524 (10/08) AXA Advisors, LLC
GE-45624 (10/08)
5. important notes
Information provided should not be construed as investment advice and you should seek professional advice
based on your specific personal circumstances.
Please be advised that this document is not intended as legal or tax advice. Accordingly, any information
provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the
purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support
the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on
your particular circumstances from an independent tax advisor.
Please consider the charges, risks, expenses, and investment objectives carefully before purchasing a
mutual fund or variable annuity. For a prospectus containing this and other information, please
contact a financial professional. Read it carefully before you invest or send money. Investing in mutual
funds and variable annuities involves risks, including possible loss of principal.
Life insurance and annuities are issued by AXA Equitable Life Insurance Company (New York, NY) and
co-distributed by affiliates AXA Advisors, LLC and AXA Distributors, LLC
5
GE-45624 (10/08)
6. agenda
Market volatility and risk
Smart strategies in any market
Addressing risk
Steps to consider now
6
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8. the U.S. in no stranger
to turbulence, yet each
time we’ve recovered,
and even grown.1
1 Past performance is not a guarantee or indicator of future performance
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9. turbulent times in U.S. history
U.S. history turbulent times:
Great Depression
World War II
Black Monday — October 19, 1987
Dot.com Crash
9/11/2001
… 2008 Market Turmoil?
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10. market downturn
Up close, market downturns look dire…
Black Monday
October 19, 1987 ––
Dow loses 508 points
or 22.6%
Dow Jones Industrial Average
October 87–November 87
Source: Dow Jones, http://averages.dowjones.com/mdsidx/index.cfm?even=showavgIndexData.
This graph is for illustrative purposes only and is not indicative of any investment. An investment
cannot be made directly in an index. Past performance is no guarantee of future results.
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11. the big picture
…but when seen as part of the big picture, they’re less
significant
Dow Jones Industrial Average
October 87–November 87
Source: SunGard PowerData (Tradeline).
This graph is for illustrative purposes only and is not indicative of any investment. An investment
cannot be made directly in an index. Past performance is no guarantee of future results.
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12. bear markets
Bear markets are a normal part of investing
Generally defined as a downturn of 20% or more in broad market over
at least a two-month period
Typically occur approximately every six years1
Many caused by corrections to “bubbles” or by unexpected shocks
Often may not affect all sectors of economy at once
May not necessarily lead to recessions
Painful, but may result in healthy compression of economic excess
to realistic levels
1 The New York Times "How This Bear Market Compares,” 10/11/2008;
http://www.nytimes.com/interactive/2008/10/11/business/20081011_BEAR_MARKETS.html
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13. bear markets
investment blunders
Bear markets are a normal part of investing
Letting your emotions rule
Selling out entirely to cash
“Doubling down”
Randomly changing strategies
Ignoring your portfolio
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15. inflation is a risk in
asset accumulation
Decreased purchasing power can deflate your portfolio’s value
Increases in expenses based on
3% annual inflation. Inflation varies
from year to year. It was 13.5% in 1980
but 1.9% in 1986.
$180,000
$155,000
$143,000
$115,000
$99,000
In the past 40 years (1968 – 2007),
$86,000
$74,000
the average was 4.7%.*
Today 5 yrs 10 yrs 15 yrs 20 yrs 25 yrs 30 yrs
Source: U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index,
Consumers – (CPI-U), U.S. City Average, all items, 09/16/2008.
This chart is hypothetical and for illustrative purposes only.
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16. smart
strategies in
ANY market
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17. best practices
Practices that could make a difference, in good times or bad:
A sound financial strategy
Diversification/asset allocation
Rebalancing
Careful investment selection
Dollar-cost averaging
Annual review
Risk-reducing products
information provided should not be construed as investment advice and you should seek professional advice based on your specific
personal circumstances. None of these items independently or combined can protect against investment loss or guarantee a profit.
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18. have a sound financial strategy
The foundation of financial success,
based on your individual goals and situation:
Pursuing growth, income, or both
Your family’s needs
Adequate savings for emergency
and opportunity
Time horizon
Risk tolerance/comfort level
Tax considerations
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19. diversification: because we can’t
always pick each year’s winners
Asset Class Performance, Historic Rate of Return (1998-2007)
Past performance does not guarantee future results.
Diversification does not guarantee a profit or protect against loss
in a declining market. Securities are represented by the following
indices: Investment Grade Bond = Barclays Capital Bond Index;
International Stocks = MSCI EAFE Index; Large Cap Growth =
Russell 1000® Growth Index; Large Cap Value = Russell 1000®
Value Index; Small Cap Growth = Russell 2000® Growth Index;
Small Cap Value = Russell 2000® Value Index; Mid Cap =
Russell MidCap® Index. The Russell MidCap® Index is an
unmanaged index that measures the performance of the 800
smallest companies in the Russell 1000® Index, and is
considered representative of the mid cap segment of the U.S.
equity universe. The North American Real Estate Investment
Trust Equity Index (NAREIT Equity) measures the performance of
REITs listed on the New York Stock Exchange, NASDAQ, and
the American Stock Exchange. The Barclays Capital Aggregate
Bond Index covers the U.S. investment grade, fixed rate, taxable
bond market, including government and credit securities, agency
mortgage pass-through securities, asset-backed securities, and
commercial mortgage-based securities. MSCI EAFE Index is an
unmanaged index deemed by Morgan Stanley Capital
International (“MSCI”) to be representative of the market structure
of the developed equity markets in Europe, Australasia and the
Far East. The Russell 1000® Growth Index is an unmanaged
index of large cap common stocks that measures the
performance of companies with high price-to-book ratios and high
forecasted growth values. The Russell 1000® Value Index is an
unmanaged index of large cap common stocks that measures the
performance of companies with low price-to-book ratios and low
forecasted growth values. The Russell 2000® Growth Index is an
unmanaged index of small cap common stocks that measures the
performance of companies with high price-to-book ratios and high
This table is for illustrative purposes only. The indices represented are unmanaged and cannot be invested in directly, and do not represent any specific investment product. The return values. The Russellof any investment in stocks
forecasted growth and principal value 2000® Value Index is an
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will fluctuate with changes in market conditions. U.S. Treasury Bills and government bonds are guaranteed as to the timely payment of interest and, if held to maturity, provide a index of small cap common stocks that measures are
unmanaged guaranteed return of principal. Bond investments the
subject to interest rate risk so that when interest rates rise, the prices of bonds can decrease and the investor can lose principal value. Small capitalization stocks areperformance higher degree of marketprice-to-book ratios and low
subject to a of companies with low risk than large capitalization
stocks of more established companies. Investments in international securities may mean potentially greater rewards, but also involve greater risk. The focus of non-diversified portfolios on fewer issuers or one market sector (e.g., real
forecasted growth values. The indices represented are
estate sector funds) makes them more susceptible to volatility and certain risks than diversified portfolios. GE 45624 (10/08) unmanaged and cannot be invested in directly, and do not
20. rebalancing:
helping to preserve your asset allocation
A sample portfolio …allocation changes overtime.
These charts are hypothetical and for illustrative purposes only, and not indicative of any investment.
Rebalancing does not guarantee a profit or protect against loss in a declining market.
Past performance is no guarantee of future results.
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21. careful investment selection
Don’t base selections on “hot tips” or hearsay
For stocks:
Analyze fundamentals including
price/earnings, earnings per share,
dividend payout
For bonds:
Research Moodys/S&P rating,
interest rate trends, call date, etc.
For mutual funds:
Look at manager’s tenure and track record,
current holdings, internal expenses, etc.
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22. dollar-cost averaging
Lets you buy more shares when prices are low and fewer when they rise.
The result is that dollar cost averaging typically provides a lower average
cost per share and therefore the potential for higher profit over time.
Total
Regular Market Shares Accumulated
Schedule Investment
Investment Price/Share Acquired Shares
Value
Month 1 $120 $5.00 24 24 $120
Month 2 $120 $2.50 48 72 $180
Month 3 $120 $4.00 30 102 $408
Month 4 $120 $6.00 20 122 $732
Month 5 $120 $8.00 15 137 $1,096
Investment in 5 months: $600 for 137 shares –– Average cost per share: $4.38
Total Value: $1,096
This table is hypothetical and for illustrative purposes only and is not indicative of any investment. Please note that dollar-cost averaging
does not guarantee a profit or protect against loss in a declining market. Dollar cost averaging involves continuously investing in securities
regardless of fluctuating price levels, an investor should consider his/her ability to continue purchasing through low price periods.
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24. risk is relative
Panic for some is opportunity for others
Determine your risk profile; act accordingly
Based on time horizon, assets, income and personality
Financial risks aren’t limited to the stock market
Inflation, death, disability, currency, loss of job, long-term care
One of the greatest risks may be doing nothing
Need to continually monitor your finances/risks and economy
— or hire someone who will
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25. strategies for your family
Minimize debt
Build an emergency fund
Get full insurance coverage
Life insurance
Health insurance
Auto and homeowners insurance
Disability insurance
Other insurance — liability, long-term care, casualty, business insurance
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26. strategies for your investments
Mutual funds
Asset allocation mutual funds
Please consider the charges,
Target date mutual funds risks, expenses, and investment
objectives carefully before
Bear Market mutual funds purchasing a mutual fund. For a
prospectus containing this and
Products with guarantees other information, please contact
a financial professional. Read it
carefully before you invest or
send money. Investing in mutual
funds involves risks, including
possible loss of principal.
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27. the benefits of annuities
What is an annuity?
Please consider the charges,
Fixed vs. variable annuities risks, expenses, and investment
objectives carefully before
Annuity benefits purchasing a variable annuity.
Can be market-linked For a prospectus containing this
and other information, please
to help outpace inflation contact a financial professional.
Lifetime guarantees Read it carefully before you invest
or send money. Guarantees are
Tax advantages based on the claims-paying ability
of the issuing insurance company.
Death benefit; family protection
Tax deferral is not an additional benefit for the annuity
if purchased to fund a qualified retirement plan.
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29. steps to consider
in turbulent markets
Stay calm and alert
Conduct an immediate financial review
Clean up portfolio
Minimize debt
Build up cash reserve
Think of uncertainty as opportunity
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30. uncertainty as an opportunity
Creates opportunities
Tax benefits
Reveals weaknesses
Opportunity to focus on portfolio
and create better investing habits
and better long-term plans
Sector rotation
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31. benefits of using
a financial professional
Experience
Reassurance — cool head
Resources
Big picture
Time savings for you
Less stress
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32. your financial review:
a health checkup for your portfolio
Confirm your objectives
Factor in any changes in your situation
Determine your risk profile
Examine debt management
Ensure adequate protection
Evaluate individual investments
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33. conclusion:
key points to remember
Volatility and downturns are part of the investment experience/process
Focus upon your long-term objectives and needs
Proper financial management takes time and experience,
either by you or a financial professional
A turbulent period is the time to get serious, reduce debt and recommit
yourself to better results
Uncertainty may be an opportunity; doing nothing is assuredly not
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