There’s a lot going on in the world these days that is impacting or has the potential to impact investment portfolio performance and investment decisions. Here’s a quick laundry list in no particular order. Just this week, we could probably say the official trade war has kicked off between the U.S. and China although I’m …
Month: March 2018
It’s Different This Time
Similar to the equity market, we’re seeing quite a bit of asset price inflation in the housing market. Somewhat surprisingly, the 6-month rolling average of new home sales prices as a multiple of average family incomes exceeded last cycle’s peak, as of 12/31/17, and has actually done so for quite some time now. While a chart …
Stocks are Expensive. So What Now?
If you don’t know U.S. stocks are expensive right now then you’ve done a very good job of avoiding the financial news media as well as social media and perhaps your investment savvy friends too. Expensive stock valuation levels don’t necessarily tell us much. For example, they don’t provide us with any sense of when …
Mean Reversion
I recently re-read a letter published by the San Francisco Federal Reserve on valuation ratios. Two charts from the report really stood out to me and I believe are worth sharing here. The first chart (recreated) displays the ratio of household net worth to income historically. Household assets include equity, debt and real estate among …
Looking for Shelter?
Since the Great Financial Crisis in 2008, correlations across asset classes during periods of rapidly rising volatility have moved towards 1 fairly consistently, producing little to no diversification beneft. In examining asset class correlations on 1-,3- and 5-year bases (as of 3/5/2018), we observe a high level of stability, reflecting stable to declining levels of …
Has There Ever Been a Time Like the Present?
Investors and pundits alike often attempt to compare a given point in time (usually the current one) to some historical period to help formulate a strategy or narrative to guide their decision making and commentary. Such behavior makes perfect sense given the human mind’s need for certainty. As homo-sapiens, we generally have a very hard …
Sell Signals
As you’ve surely read by now, February was the first losing month for all asset classes (except cash) in over two years. That’s quite a remarkable run of returns and low volatility for all asset classes. A quick look at longer-term trends for US large cap, small cap and tech stocks shows all three are …
Wage Growth: Fact or Fiction?
Wage growth is something that has been scrutinized and discussed ad nauseum to date. It has in some ways become the holy grail of economic indicators as it has been noticeably absent this cycle. Many have hypothesized why that may be. I’m not sure anyone knows for sure but I came across two very interesting …