Displaying items by tag: equity

(New York)

Expensive stocks are the norm these days as P/E ratios are near all-time highs…see the full story on our partner Magnifi’s site.

(New York)

For those paying attention, ESG has had a great run over the last year. While many may feel that in an intangible way, the real world results are strong too, with ESG investments outperforming the S&P 500 by 1.3% in 2020. ESG investment experienced some solid outperformance early in the pandemic because if its natural defensive. Millennials appear to be driving the trend, which seems likely to only increase. More generally, the environment has become a major focus for both retail investors and major asset managers, like BlackRock, which has helped make the sector mainstream.

FINSUM: Our best call for ESG is that it will do great in 2021. The main reason being that the Biden administration is bringing a strong and renewed focus on the environment, which will both awaken public consciousness but also give ESG some favorable regulatory tailwinds.

(Silicon Valley)

If you dig under the handful of headlines which have driven financial media during the pandemic, you will find a sub-narrative...See the full story on our partner Magnifi’s site.

(New York)

This is a tough market. Stocks are right near all-time highs and bond yields are near all-time lows. So how can an investor find steady current income and keep the door open to capital appreciation? Enter an underappreciated asset class—convertible bonds. Often referred to as “equities with training wheels”, convertible bonds have a lot of the upside of stocks due to their conversion feature, but also the downside protection of bonds because of their income feature. According to a convertible fund manager at Franklin, “You don’t get all the equity upside, but you can only fall so far because you have the downside protection of the bond”. Look to find converts with 7% of the equity upside of stocks, but only 50% of the downside risk.

FINSUM: Converts have actually outperformed a 60/40 balanced portfolio historically (by almost 2% per year with a similar level of volatility!). Some funds to look at include FISCX, PACIX, and AVK.

(New York)

For the last six months, there has been a lot of focus in the media and amongst analysts that a recession will be arriving in 2020. 2019 always seemed to close of a call because of how the economy was trending, but 2020 seems to be a safe bet based on some of the indicators out there. Now, JP Morgan is saying a recession in 2020 is unlikely. The catalyst for the change? The Fed. Strategists at JP Morgan concluded “If the Fed is less spooked by full employment, more tolerant of an inflation overshoot and less anxious to reach restrictive policy, then 2020 might not be a year to think about recession and so late 2019/early 2020 would be premature to position defensively cross-asset”.

FINSUM: This analysis is dead simple, but we would agree. If the Fed is less hawkish, then it will prolong this cycle.