Inflation’s Effects on Asset Returns

The results of a study on asset performance during periods of both low and high inflation are presented in this month’s issue of AAII Journal¬†by¬†Craig Israelsen Ph.D and developer of the 7Twelve Portfolio The median level of inflation used was 3.29%, as it allowed researchers to divide the 46-year period between 1970 and 2015 in half: 23 years with below-median inflation and 23 years with above-median inflation. Findings showed that during the period of low inflation, large-cap U.S. stocks returned 10.5% (inflation-adjusted) while the same class gained only 4.4% during a high-inflation period. The performance of all seven asset classes […]

Markets Moving in Tandem is Unusual

Major markets are moving together more than usual which, given this period of high valuations, is raising concerns that even a slight pullback could cause significant, negative repercussions, according to a Wall Street Journal article from earlier this month. The article explains that investors have been “backing away in recent weeks from some of the year’s hottest trades” as gains in stocks, bonds, gold and low-volatility funds have started to reverse. The worry is that such a shift in sentiment could “trigger a cascade of losses.” “The way to think about it is as a coiled spring,” said Vadim Zlotnikov, […]