Tag: stocks

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And THAT’s Why We Own Treasuries

What a week it has been culminating with the largest bank failure since 2008 (Silicon Valley Bank). I’ll write a special commentary on that in the coming week as I’m sure there are some questions.

Today, I just wanted to point out why we own Treasuries of varying maturities. They certainly haven’t been the greatest investment for the last few years as the Fed has been raising interest rates, but they are in portfolios to serve a specific purpose over the course of a full market cycle. And, as an aside, now they actually offer some attractive yields that they haven’t offered in about 15 years. Continue reading “And THAT’s Why We Own Treasuries”

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Average Retail Investors Down Over 35% in 2022

Executive Summary

  1. Retail investors were down over 35% on average in 2022 as they chased into overvalued and speculative assets that did well in prior periods.
  2. 2022 was generally difficult for even conservative and balanced portfolios.
  3. Wall Street insists on performing the fool’s errand of making12-month return forecasts and got it very wrong in 2022.
  4. 12-year outlook for stocks and bonds.

Continue reading “Average Retail Investors Down Over 35% in 2022”

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Quarterly Market Update: All That Glitters is Gold…

This has been a strange period in that both traditional bonds AND stocks are down around 7%-8% simultaneously. Historically, if stocks were down like this bonds would at least be holding up, if not appreciating, and vice versa.

A couple months ago I wrote a commentary about why we own treasuries in portfolios referencing the fact that since 1928, treasuries and stocks have only been down simultaneously in the same year three times! Historically, stocks and treasuries have been great complimentary, non-correlated assets. In fact, they have about a negative 0.40% correlation.

At this point, if nothing were to change for the rest of the year, we could have our fourth year in almost a century where both bonds and stocks are down simultaneously. Continue reading “Quarterly Market Update: All That Glitters is Gold…”

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BRIEF: Year End Market Returns Summary

What a year.

The widely followed S&P 500 index ended 2020 over 16% higher (18.4% total return w/ dividends) than it began the year even as it experienced one of the sharpest 34% declines in history (mid-February to mid-March).

The U.S. stock market managed a great year even in the midst of a global pandemic that saw businesses shut down, tens of millions of people lose their jobs, spike in corporate defaults, a steep recession (we’re still in BTW) and S&P 500 earnings that declined 13.6% from the prior year.

This means the entire increase in the S&P 500 was from expansion of the Price/Earnings multiple to over 30x, which is a level ONLY seen throughout history in the Dot-Com Bubble and Great Financial Crisis. The long-term average is about 16x. Continue reading “BRIEF: Year End Market Returns Summary”

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Market Concentration Update and Action Items

About a month ago I commented on the record concentration in the top 5 names of the S&P 500.

I want to briefly follow up on that and also summarize some action items I’m taking within portfolios.

This updated chart from Charles Schwab shows that concentration in the top 5 names has now reached 22% of the entire S&P 500!

top 5 stocks weight of S&P 500

Source: Charles Schwab, Bloomberg, as of 6/30/2020. Past performance is no guarantee of future results. Continue reading “Market Concentration Update and Action Items”