Investment Strategy Insights

In the "return generation business", institutional investors have a big edge over retail investors. The WHY is what's most important: institutional investors have access to the smartest asset managers in the world, have the time, experience, and resources to assess all potential investment ideas, have a long-term time horizon (wide lens investing), and act opportunistically when asset prices get weak.

The difficulties of navigating markets in 2022 are well chronicled. Very difficult years tend to create investor PTSD, which often holds them back from uncovering opportunities. In my conversations with advisors and analyzing money flow data, there appears to be lingering apprehension for risk-taking initiatives.

When it comes to investing, risk is an inevitable part of the equation. But while taking risks can lead to significant rewards, it’s important to remember that every investment carries with it the potential for loss. That’s where risk management comes in – and why it’s a crucial part of any successful investment strategy.

As a reminder, each December our team at Accuvest goes through a rigorous process to update the investment universe for the Dynamic Brands equity strategy. The result is a 200-company list called the Alpha Brands Consumer Spending Index. 90% of the 200 brands are domiciled in the U.S. and 10% are international brands. The majority of the 200 leading brands have sales that come from outside their local borders. That is the nature of being a global brand. Why do we anchor to a smaller sub-segment of the market for our investment universe? Because we are singularly focused on the massive portion of global GDP that comes from household and business spending. This component accounts for more than 60% of global GDP or roughly $44 trillion each year. If the definition of “core” is: the most important part of something, could there be a better core equity choice than something tethered to the largest portion of global economic activity?

As a reminder, each December our team at Accuvest goes through a rigorous process to update the investment universe for the Dynamic Brands equity strategy. The result is a 200-company list called the Alpha Brands Consumer Spending Index. 90% of the 200 brands are domiciled in the U.S. and 10% are international brands. The majority of the 200 leading brands have sales that come from outside their local borders. That is the nature of being a global brand. Why do we anchor to a smaller sub-segment of the market for our investment universe? Because we are singularly focused on the massive portion of global GDP that comes from household and business spending. This component accounts for more than 60% of global GDP or roughly $44 trillion each year. If the definition of “core” is: the most important part of something, could there be a better core equity choice than something tethered to the largest portion of global economic activity?

The market keeps cooling on the Federal Reserve’s rate hike plans, even though the Fed and inflation aren’t cooling. Like the broken-hearted who with short memories keep returning to their heart breakers, markets are caught in a cycle of denial as to how far the Fed wants to move on and move up, instead discounting the Fed’s plan to jack up our discount rates. What follows, in near scripted fashion, is heartbreak meltdown when Fed officials reiterate they aren’t interested in how we feel. Despite the Fed telegraphing its next move, warning against a false sense of security, and its carefully curated words designed to let the market down gently, gently down it does not go. Lather, rinse, and repeat, before and after each recent FOMC meeting or Jerome Powell speech.

The bear market is over. While that statement fills the mainstream media, it remains a hotly debated question in every media forum. It is an interesting point considering that it was just in June we were answering the question of “when will this bear market end?”

Investors are terrified. Such is what you would assume from recent mainstream media headlines and CNBC’s continuous run of “Markets In Turmoil.” There are also plenty of indicators suggesting that retail investors are terrified about financial markets. For example, the net percentage of bullish responses from the American Association of Individual Investors (AAII) and the Institutional Investors index (INVI) are near previous bear market lows. Such is despite the sharp rally over the last two weeks.