As with last month, I delayed this update a few days to see if we might gain some clarity that would warrant some change in our allocation. Alas, no such clarity has emerged and so, as it has been since August, the risk budget remains unchanged this month. Indeed, as last month, the entire portfolio is unchanged. For the moderate [...]
I've put off this update as long as I can now, waiting for some clarity, a change in our indicators that might suggest a change to the portfolio. Alas, despite a Fed meeting, a BOJ meeting and a plethora of economic data nothing has moved sufficiently to warrant a change. The risk budget is unchanged this month as is the [...]
The risk budget is unchanged this month although the composition of the portfolio does change. For the moderate risk investor, the allocation between bonds, risk assets and cash remains at 50/45/5. There are changes to the allocation but the overall risk budget stays the same. Credit spreads did continue to narrow this month but other indicators did not confirm the [...]
The risk budgets are unchanged again this month. For the moderate risk investor, the allocation between risk assets and bonds remains at 40/60. I struggled more with this decision than any in recent memory but in the end there just isn't sufficient evidence to make a change. Raising or lowering the allocation to risk assets right now would require making [...]
The risk budgets are unchanged again this month. For the moderate risk investor, the allocation between risk assets and bonds remains at 40/60. It was tempting to raise the risk allocation this month and up our allocation to the weak dollar investments we've favored for some time. But the only indicator that really improved was credit spreads and it was not [...]
The risk budgets are again unchanged for this month. For the moderate risk investor, the allocation between risk assets and bonds remains at 40/60. The changes in our indicators this month were not significant enough to warrant a change. Credit spreads stopped narrowing and have recently been widening again, ever so slightly. Valuations, long term momentum and the yield curve [...]
The risk budgets this month are again unchanged. For the moderate risk investor, the allocation between risk assets and bonds remains at 40/60 versus the benchmark of 60/40. The changes in our indicators since last month's update have not been sufficient to warrant a change. Credit spreads did narrow significantly over the last month but the widening trend is still [...]
Major Asset Classes with Positive Total Returns US Reits - 2.62% US Large Caps (SP500) - 2.2% Munis (3yr) - 1.16% Emerging Market Bonds - 1.08% US Bonds - 0.76% Cash - 0.02% Unfortunately, 2015 was not a great year for diversified portfolios. Kudos to those who owned Japan, Europe, US Large Cap Growth, Foreign Small Caps, Preferred Stock and [...]
The risk budget this month is unchanged. For the moderate risk investor, the allocation between risk assets and bonds remains at a defensive 40/60 versus the benchmark of 60/40. However, we are watching credit spreads very carefully because the BofA ML US High Yield Master II OAS is approaching 7.5%. That is a level that we think should trigger a [...]
US monetary policy is the major driver of the global cost of capital. As a Fed rate cycle approaches, we see the effects of raising required returns across the globe. The increased volatility is a reflection of investors' changing return requirements, risk assessments and the associated unwinding of leveraged exposure. As we approach the anticipated Fed rate hike, look for he [...]
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