The risk budget is unchanged this month although the composition of the portfolio does change. For the moderate risk investor, the allocation between bonds, risk assets and cash remains at 50/45/5. There are changes to the allocation but the overall risk budget stays the same. Credit spreads did continue to narrow this month but other indicators did not confirm the [...]
Even before the Brexit vote, momentum was shifting to defensive sectors. The rally in weak dollar sectors - other than the gold/silver mining industry - was looking very overbought and tired anyway, so Brexit was a good excuse to take some profits. Whether the dollar can retain the strength it has gained on this historic vote is the big question. [...]
The short term leadership is shifting as the dollar comes off its lows. Energy and materials had been leading the market during the recent period of dollar weakness. As the dollar found its footing over the last month, defensive sectors took the lead. Whether this short term shift continues will likely depend on whether the Fed is right about the [...]
The risk budgets are unchanged again this month. For the moderate risk investor, the allocation between risk assets and bonds remains at 40/60. It was tempting to raise the risk allocation this month and up our allocation to the weak dollar investments we've favored for some time. But the only indicator that really improved was credit spreads and it was not [...]
There has been some turnover in the short term leadership but energy and materials are still the leading sectors: The newcomer moving up in the pack is healthcare which was at the bottom of the one month list last month. Defensive sectors had a bad month with utilities and staples bringing up the rear. Recession fears which were still prominent [...]
The risk budgets are again unchanged for this month. For the moderate risk investor, the allocation between risk assets and bonds remains at 40/60. The changes in our indicators this month were not significant enough to warrant a change. Credit spreads stopped narrowing and have recently been widening again, ever so slightly. Valuations, long term momentum and the yield curve [...]
You don't often see a move like this in a bond market. This the long term, high grade corporate bond ETF from SPDR, up 6.6% in the last month. I chose this chart because of what it shows about modern markets, which don't allow for much introspection on the part of investors. We're all traders now and when the momentum [...]
Global stock markets, especially in the US, have made a furious comeback from the lousy start of the year. At its worst level the S&P 500 was down 11% year to date and 15% from its peak late last spring. At that nadir the market was trading at roughly the same level as November of 2013, over two years of [...]
The last month has seen a shift in the fortunes of energy stocks with the sector leading the pack with a return over 11%. Will it last? That probably depends more on the direction of the US dollar than it does any of the alleged production agreements that get so much press and rarely produce anything other than a press [...]
The risk budgets this month are again unchanged. For the moderate risk investor, the allocation between risk assets and bonds remains at 40/60 versus the benchmark of 60/40. The changes in our indicators since last month's update have not been sufficient to warrant a change. Credit spreads did narrow significantly over the last month but the widening trend is still [...]
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