In this month’s video, I look at the overall trends in global stock markets with emphasis on the complacency and low volatility. Chart review includes analysis of U.S. stocks, international stocks, interest rates, U.S. dollar index, and volatility. Observations of risk and reward are noted throughout, with an emphasis on trend following and sensible portfolio management strategies. Recorded on September 24, 2017.
Most ETF portfolios I look through are heavily weighted towards large-cap stocks as the fundamental building blocks of an equity allocation. Those who might have a higher risk tolerance or seek greater diversification qualities may also own some small cap exposure as a component of their investment strategy as well. Because of this barbell type positioning, the most easily overlooked area is the middle ground known as mid-cap stocks.
Investopedia defines mid-cap stocks as those companies with market capitalizations between $2-$10 billion. While those are fair guidelines, in practice there are many indexes that stretch the bounds of their capitalization requirements to even wider ranges. Much of this is likely due to the extreme range of the large-cap group, which stretch from a lower bound of $10+ billion all the way to upwards of $800 billion at present market conditions.
If there’s one thing investors love, it’s consistency and reliability. Two attributes that deftly describe the trend of exchange-traded funds that track low volatility stocks.
This unique category of the ETF universe has rapidly expanded in recent years through a combination of persistent fund flows and sector momentum. The factors that ultimately shape low volatility indexes have proven to offer attractive characteristics for conservative investors that want equity exposure without the downside risk of a typical broad-based benchmark. Read more
Constructing a well-balanced portfolio is a fine art that can be lost among the shuffle of collecting individual positions. Too often, investors are more concerned about finding the right stock or jumping on a new trend, rather than analyzing how it fits within their accounts.
Jumbling together a random series of stocks or funds without any sense of cohesion makes it more likely that you will abandon them at random (inopportune) moments. That path leads to uncertainty of past decisions, weak correlation with the markets, and streaky performance at best. Instead, matching all the right pieces together to suit your risk tolerance and investment strategy will have a meaningful impact on your behavioral choices through good times and bad. Read more
In this month’s video, I look at key trends developing in global stock and bond markets. Chart review includes analysis of large-cap, small cap, emerging market, high yield, interest rates, and gold prices. Observations of risk and reward are noted throughout with an emphasis on caution for new money at this phase of the rally in stocks. Recorded on March 7, 2017.