Once a tried-and-true approach to investing, market observers have begun to cast doubt on the 60/40 portfolio approach, and with inflation and interest rates both on the rise, investors making changes are doing so with good reason.
2022 seems to be setting the stage for the 2020’s to be a lost decade–a decade where an asset class generates negative returns–for both stocks and bonds. A lost decade can derail an investor’s long-term financial goals. But today we’ll explain why not all hope should be lost on investors.
2022 seems to be setting the stage for the 2020’s to be a lost decade–a decade where an asset class generates negative returns–for both stocks and bonds. A lost decade can derail an investor’s long-term financial goals. But today we’ll explain why not all hope should be lost on investors.
The second quarter of 2022 continues with intense volatility. Both equity markets and bond markets continue to unravel the complexities of supply constraints, stagflation, hawkish Fed policy (and the velocity of rate hikes), slower domestic and global economic growth, geopolitical headwinds (i.e., the Russia-Ukraine war), the commodity "Supercycle," persistent COVID-19 demand woes (i.e., China lockdowns), and potential Gray Rhino events (spurred by fears of the current environment). Recessionary fears and a flight to safety remain investors' top priorities.
Buying stocks is easy; the hard part is knowing when to sell. I read an excellent article recently by Michael Batnick on his trials and tribulations in owning a stock. To wit:
Buying stocks is easy; the hard part is knowing when to sell. I read an excellent article recently by Michael Batnick on his trials and tribulations in owning a stock. To wit:
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.
October was marked by continued volatility across fixed income and equity markets as investors faced various challenges, including persistent inflation concerns, rising yields, tightening monetary policy, and the backdrop of a U.S. Presidential election.
As an investor, it’s nice to know what we should expect from President Trump, because we have seen the movie before in 2017 – 2021. Apart from the early part of the Pandemic period, the economy and stock markets generally performed well.
Remember, our investment in stocks is a De facto vote of confidence on the economies in which we invest. Earnings, revenue, margins, free cash flow, and the growth of these important metrics is what drives stocks up or down over time.
The discretionary sector struggled as did all growth and quality-oriented areas of the market in 2022. That was a classic re-set and a raging opportunity to add exposure.
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