When investors first familiarize themselves with corporate and municipal bonds, they quickly learn that credit ratings from S&P, Fitch, and Moody’s are of paramount importance when it comes to pricing bonds and assessing risk.
In 2012, Andrew Haldane – currently Chief Economist and the Executive Director of Monetary Analysis and Statistics at the Bank of England – delivered a speech to the Federal Reserve Bank of Kansas City’s annual Jackson Hole, Wyoming meeting titled, “The Dog and the Frisbee.”
The beginning of the 21st century in investing has witnessed two significant market crashes, including the tech bubble crash and the Great Financial Crisis in 2008. It should surprise no one that up until March 2009, managed futures trounced the returns of both stocks and bonds.
Historically, scheduled releases of market-impacting news, such as Federal Reserve meetings, quarterly earnings announcements, and other “known-unknowns” presented pre-determined times where stock market volatility might increase.
Investors have faced a near constant barrage of headlines about the U.S. Treasury curve. The spread between 2-year and 10-year Treasury notes has been negative, and at the time of writing this, it’s only barely positive. This undoubtedly leaves us with questions like: Does this mean a recession is imminent?
What impact will the November 2020 Presidential elections have on the financial markets? When will an economic downturn occur? These are two questions that have been at the forefront of investors’ minds. These concerns will likely continue to grow, reaching a crescendo near next year’s election.
Will Mag 7 stock Nvidia beat estimates? David Miller, Co-Founder and Chief Investment Officer of Catalyst Funds, Rational Funds, and Strategy Shares, provided his insights to CNBC on Nov. 19 on why he believes the company will come out ahead this week despite potentially challenging headlines.
In October, Goldman Sachs strategists cautioned investors to be prepared for stock market returns during the next decade that are toward the lower end of their typical performance distribution.
In my opinion, true active strategies have a very important role in portfolios as complements to passive, cheap beta. Advisors need to understand what they own.