Displaying items by tag: stocks

Monday, 01 October 2018 10:51

Most Economists Say a Recession Looms

(New York)

The big question on every investor’s mind (and Wall Street’s) is when the US recession will arrive. With the economy doing so well, and certain indicators flashing negative, a recession in the next few years looks all but certain. But how soon? Some say it will be by the end of 2019, others think that is too aggressive. Well, a survey of US business economists has just been published that shows a majority of them believe the recession will arrive before the end of 2020. Most precisely, 66% believe a recession will occur before the end of that year.


FINSUM: This seems like a fair representation to us, but predicting the timing of recessions is notoriously difficult, so there may be little value in this survey.

Published in Eq: Total Market
Monday, 01 October 2018 10:50

A New Way to Bet Against Stocks

(New York)

Looking at the market’s performance, it is probably a good time to short some shares. The majority of gains for the sector are being driven by a handful of high-flying tech shares, but the majority of stocks are doing much. Therefore, it seems like a good bet to short certain under-performing sectors. However, the options for doing so aren’t great, as the majority of short ETFs cover the whole market or are heavily leveraged. Now there is a new option though, the AdvisorShares Dorsey Wright Short ETF. The ETF shorts only the market’s 80 to 100 weakest mid and large caps, and it is one of only four short ETFs that don’t seek to replicate an index’s return.


FINSUM: This seems like a very good application of the smart beta concept.

Published in Eq: Total Market
Monday, 01 October 2018 10:48

Tesla and Musk’s Big Shift

(Los Angeles)

Another tumultuous week for Tesla is in the books, but for the first time in a while, it looks the company may be headed in a positive direction. Last week, the SEC sued Elon Musk for fraud based on his tweets about taking the company private, which sent the stock plunging. However, on Saturday, it was announced that Musk had reached a settlement with the regulator, agreeing to give up his chairmanship of the board, in addition to a $20m fine, but remaining CEO. This news sent the stock soaring in pre-market trading.


FINSUM: This seems like a better operational and governance structure for Tesla and we hope it will prove a positive development.

Published in Eq: Tech
Monday, 01 October 2018 10:46

How to Adjust Your Portfolio for Rising Rates

(New York)

Rates are rising and new statements out of the Fed make it seem like the central bank could become more aggressive with its hike. With that in mind, the Wall Street Journal thinks it is time to adjust portfolios to account for a hawkish Fed. The biggest recommendation that the WSJ makes is that investors in retirement should keep a healthy allocation to stocks. Even though rates are rising, yields may not get high enough quickly enough to provide good returns. Accordingly, keeping a solid portion of capital in equity seems smart, but don’t swing for the fences. Next, make sure to stay very diversified to mitigate risks, and particularly, beware rate sensitive sectors like utilities or REITs.


FINSUM: This is sound advice, though nothing that would not be second nature for an advisor.

Published in Bonds: Total Market
Friday, 28 September 2018 10:35

How the Bull Market Could Ruin Retirement

(New York)

That is quite a counterintuitive headline, but in an odd way, it could not be more true. Bloomberg has put out a piece, which echoes many advisors, that the current bull market could actually end up hurting many retirees. The reason why is that many have experienced hefty gains in the last decade and feel comfortable retiring. However, after such a sharp run higher, the market is likely to experience a steep correction. For retirees seeking to steadily withdraw money from their accounts, this could pose a major problem, as a drop in the market could cause such significant damage to portfolio value that even outperformance in subsequent years may not make up for it.


FINSUM: This is a valuable point that all retirees and their advisors need to bear in mind. Portfolio construction and planning definitely need to take this threat into account.

Published in Eq: Large Cap

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