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.
Investors are likely feeling emboldened by the strength of stocks as we close out the final month of 2016. Bullish enthusiasm can be infectious and now the race is on to determine which sectors or regions will be the top-performing areas of the market in 2017. While there is no way to know where the winner will be ahead of time, there is one noteworthy area that has piqued my interest – emerging markets. Read more
The structural bull market is still intact for large-cap U.S. stocks as several benchmarks hit new all-time highs. In this video, I look at areas of the market that are showing a high degree of momentum and also sluggish price action. Observations of risk and reward are noted throughout. Charts include: large cap stocks, international stocks, defensive indexes, emerging market bonds, interest rates, and more. Recorded on August 11, 2016.
In my experience as an investment advisor, most portfolios that utilize exchange-traded funds have an embedded “home country” bias. This means that the majority of the underlying assets are focused in U.S.-centric stocks and bonds rather than foreign markets.
This trend has been further exacerbated in recent years by the outperformance of U.S. large cap stocks versus their international peers. Many ETF investors have grown weary of the persistent lagging returns and heightened volatility of both developed and emerging markets. As a result, they have underweighted or altogether eliminated these assets from their portfolios.
The concept of value investing is one that has proven its worth over decades of cyclical investment trends. Most often, investors who adhere to this practice are trying to uncover stocks or areas of the globe that are fundamentally mispriced in relation to more expensive alternatives. Buying at a low relative valuation, with a long-term time horizon, can provide fruitful results as mature trends fade and fresh momentum takes shape.
One stunning example of this valuation gap can be seen in the divergence between emerging market stocks and those here in the United States. The iShares MSCI Emerging Market ETF (EEM) has $26 billion dedicated to an index of 842 publicly traded companies in China, South Korea, Taiwan, India, Brazil and many others.