In this month’s video, I look at the technical trends developing in growth versus value stocks. Chart review includes analysis of large-cap, small cap, international, Treasury bonds, and high yield bond ETF prices. Observations of risk and reward are noted throughout, with an emphasis on trend following and sensible portfolio management. Recorded on May 31, 2017.
The ETF world is full of articles touting the advantages of mega-firms like Vanguard, BlackRock, and State Street. These companies have set the bar high for delivering exceptionally transparent, diversified, low-cost, and liquid vehicles to every American investor. Read more
The concept of investing in European stocks seems difficult to stomach considering the decade of lost returns versus their U.S. counterparts. A new post by Michael Batnick, Director of Research for Ritholtz Wealth Management, details the difficult 10-year journey for this foreign investment class. The U.S. has simply been the star outperformer on the global stage for so many consistent years that the home-bias phenomenon has been taken to a new level.
According to their research, U.S. stocks now make up 80% of the average U.S. investor’s equity portfolio. The remaining 20% is likely split among a variety of European, Asian, and emerging market exposure. This overweight exposure towards a high-flying asset class ultimately leaves many investors susceptible to being caught off guard as the pendulum swings in the opposite direction.
The first 100 days of Donald Trump’s presidency has been good for the stock market. Whether you agree with his policies or not, there is optimism for the future of the global economy that is being reflected in the recent price action.
Now, of course, that doesn’t mean we are going to see a straight path of gains for the next four years. There are going to be a myriad of stumbling blocks, uncertainty, and possibly even a bear market that will creep up when we least expect it. Those declines will be opportunities for those who are ready to take advantage with cash on the sidelines and a well-tuned watch list of solid funds to buy. Read more
Investors who have held onto their U.S.-focused dividend ETFs have been rewarded in both income and capital appreciation during the breadth of this bull market. The combination of relative momentum, low volatility, and steady accumulation of quarterly distributions have been the hallmarks of this steady trade.
Yet, those who study market history know that price performance that outstrips company fundamentals comes at a cost. Namely higher statistical valuation measures, alongside slowly decreasing yield for new investors. As a result, dividend stocks that looked attractive several years ago are now starting to rise into the expensive zone relative to other global opportunities.