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Your 60/40 May Be Broken: But Not for the Reasons You May Think…

by Ryan Giannotto, CFA, Director of Research7 days ago

The mathematical reality is that the venerable 60/40 was a sub-optimal investment in 2019—simply adding gold, and in any quantity, would have immediately improved portfolio efficiency. Even during a historic year for bonds, substituting gold for fixed income exposure in 2019, in any amount, automatically constructed a superior 60/40 portfolio. While sacrilegious to the extreme, these insights merely combine the 70 year old lessons of Modern Portfolio Theory with gold’s ability to buffet market volatility.

Commentary,

See Ya Dimon, Hello Fink: Top 10 XOUT’s for Q1 2020

by Ryan Giannotto, CFA, Director of Research2 weeks ago

The latest XOUT rebalance gives fresh insight into the pulse of disruption, and significantly, the players who are falling behind in the race to innovate effectively. Here we examine the 10 largest companies XOUT eliminates this quarter—the roughly $3 trillion in market cap vulnerable to secular decline. When yesterday’s titans can rapidly become today’s bankruptcies, the XOUT Index continually looks to identify potential market laggards, aiming to leave them out of the portfolio.

Commentary,

Madness in the Metals: What Will 2020 Bring?

by Ryan Giannotto, CFA, Director of Research2 months ago

One of the prime rationales for a gold allocation is introducing an uncorrelated driver of returns to stock and bond exposures, two fundamental building blocks for most standard portfolios. The challenge is, for many investors the search for diversifying assets begins and ends with gold, when there exists an entire ecosystem of precious metals just over the horizon.

Commentary,

How Many Losers Are in the S&P 500?

by Ryan Giannotto, CFA, Director of Research5 months ago

When no company or industry is immune from disruptive challenge, perhaps never has the number of potential losers been so plentiful, nor the disparity between winners and losers been so vast. Rather than succumb to conventional wisdom, perhaps the only thing more important than what you put IN your portfolio is what you XOUT.

Commentary,

Commodities and Precious Metals Update (Week ending February 21, 2020)

by Jeff Klearman4 days ago

Vacillating on coronavirus concerns, U.S. stock markets moved slightly lower through Thursday. A combination of Chinese stimulus measures and statements from China touting a reduced rate in coronavirus infections mostly offset Apple’s lower revenue warning on Tuesday. However, Friday’s much-weaker-than-expected IHS Markit composite output index along with China reporting 800 new coronavirus infections pushed U.S stock markets and the 10-year U.S. Treasury rates to the lows of the week. At week’s end the S&P 500 Index fell 1.3% to 3337.75, the 10-year U.S Treasury rate dropped 11bps to 1.47% and the U.S. dollar strengthened .2% (as measured by the DXY Index).

Commentary,

Commodities and Precious Metals Update (Week ending February 14, 2020)

by Jeff Klearman1 week ago

Amid reduced concern surrounding the coronavirus and supportive statements by Fed Chairman Jerome Powell regarding the strength of the U.S. economy and that the Fed was monitoring the possible effects of the coronavirus, U.S. stock markets moved higher once again last week. Reports on Tuesday the FTC would be investigating tech companies and China’s restatement higher of the number of coronavirus cases on Thursday, only momentarily moved U.S. stock markets lower with the FTC clarifying it was not investigating but only opening a study and as the WHO made clear China’s restatement did not represent a surge in the growth of new coronavirus cases. And despite weaker-than-expected industrial production numbers and so-so retails sales numbers on Friday, U.S. stock markets closed at all time highs on Friday. At week’s end the S&P 500 Index increased 1.6% closing at 3380.16, the 10-year U.S Treasury rate was unchanged at 1.58% and the U.S. dollar strengthened .5% (as measured by the DXY Index).

Commentary,

Commodities and Precious Metals Update (Week ending February 7, 2020)

by Jeff Klearman3 weeks ago

Despite continued concerns and uncertainties surrounding the economic impact of the coronavirus outbreak and as the Shanghai Composite Index tumbled 7.7% on Monday, U.S. stock markets moved sharply higher through Thursday supported, by among other things, reports of the Chinese developing an effective drug against the coronavirus, improved U.S. trade deficit numbers, a very strong ADP payroll report, the Senate’s acquittal of President Trump and the Chinese announcing they would halve tariffs on $75 billion of U.S. imports. Coronavirus fears, however, resurfaced on Friday pushing U.S. stock markets lower for the first time last week despite a much-stronger-than-expected U.S. employment situation report. At week’s end the S&P 500 Index increased 3.2% closing at 3327.71, the 10-year U.S Treasury rate increased 7bps to 1.58% and the U.S. dollar st

Commentary,

Commodities and Precious Metals Update (Week ending January 31, 2020)

by Jeff Klearman4 weeks ago

The coronavirus and its possible deleterious effect on the global economy ruled the markets last week, pushing global stock markets and bond yields lower. Weaker-than-expected durable goods orders, new home sales and an as-expected GDP report combined with the FOMC leaving U.S. interest rates unchanged but expressing concerns about the coronavirus and the low level of inflation also helped to push U.S. stock markets and bond yields lower. At week’s end the S&P 500 fell 2.1% closing at 3225.52, the 10-year U.S Treasury rate fell 17bps to 1.51% and the U.S. dollar weakened 0.5% (as measured by the DXY Index).

Commentary,

Commodities and Precious Metals Update (Week ending January 24, 2020)

by Jeff Klearman1 month ago

U.S. stock markets were mostly unchanged through Thursday last week despite building concerns surrounding the coronavirus, more negative news regarding Boeing and the 737 MAX. 10-year U.S Treasury rates, in contrast, fell 9bps through Thursday moving lower as investor concerns over the coronavirus increased. On Friday, U.S. stock markets capitulated to coronavirus concerns after a second case was reported in the U.S., with the S&P 500 Index decreasing just under 1% and with the 10-year U.S Treasury rate falling another 5bps. At week’s end the S&P 500 lost a little over 1% closing at 3295.45, 10-year U.S Treasury rate dropped 14bps to 1.68% and the U.S. dollar strengthened 0.3% (as measured by the DXY Index).

Commentary,

Climate and Avocado Prices: Chart of the Week

by Ryan Giannotto, CFA, Director of Research1 month ago

Climate intersects with investing on many levels- look no further than to agricultural commodities. Examining seasonal avocado prices is just one example of how changes in climate may be increasingly interconnected with investing: a confluence of science, economics and ethics.

Commentary,

Commodities and Precious Metals Update (Week ending January 17, 2020)

by Jeff Klearman1 month ago

Stronger-than-expected U.S. economic reports (retail sales, housing starts and jobless claims), moderate inflation and good earning releases drove the S&P 500 to another record high. In addition the official signing of the U.S.-China Phase One trade agreement and the removal of the designation of China as a currency manipulator along with a stronger-than-expected Chinese industrial production report, helped move U.S and global stock markets higher while strengthening the U.S. dollar. At week’s end the S&P 500 Index increased 1.6% to 3329.62, the 10-year U.S. Treasury rate was unchanged at 1.82% and the U.S. dollar (as measured by the DXY index) strengthened 0.3%.

Commentary,

A Decade of Stock Returns: Chart of the Week

by Ryan Giannotto, CFA, Director of Research1 month ago

Stock market returns come in all shapes and size—how exactly does 2019’s 30% gain measure up? Breaking down a decade of S&P 500 stocks illustrates how lumpy equity returns can be, and the folly to simply trying pick winners. Just as important as the actual returns is how they are distributed, and this chart serves as a powerful visualization of how the risks we take are always changing.