Paul Tudor Jones Issues Warning for Fed

The billionaire investor says that “years of low interest rates have bloated stock valuations to a level not seen since 2000,” and the fact that the current market cap-to-GDP ratio is the highest it’s been since 2000 should be “terrifying” to a central banker. This according to a recent Bloomberg article. Jones’ warning echoes that […]

Twitter and the Fed

Research shows that trading strategies built around tweets in the days preceding Fed meetings have been profitable, writes Steve Russolillo in this week’s The Wall Street Journal. As the use of quantitative investment strategies continues to rise, social-media platforms such as Twitter have become popular sources of intel to gauge investor sentiment, says Russolillo, referring […]

“Irrational Exuberance” Revisited

This past Monday marks the twenty-year anniversary of former Fed chairman Alan Greenspan’s famous speech in which he used the phrase in reference to then-stretched equity valuations. In last week’s Wall Street Journal, Steven Russolillo writes, “His call was spectacularly wrong—at first.” Russolillo offers a Greenspan quote from a WSJ interview: “If you rate me […]

“Presidential Cycle” Stunted by the Fed says Grantham

The phenomenon of robust stock market gains during the third year of a president’s term—coined the “presidential cycle” by fund manager Jeremy Grantham—may have been “killed off” by the Fed, according to an article in the Financial Times. Research conducted by Grantham, founder of the GMO fund management group in Boston, analyzed stock gains during […]

DoubleLine’s Gundlach Identifies Downward Pressures, Warns Against Fed Rate Hike

Jeffrey Gundlach, CEO of DoubleLine Capital, delivered a fairly grim assessment in a recent webcast, Financial Advisor reports. Characterizing the recent bump in stocks as a bear-market rally, Gundlach pointed to a combination of factors that will put downward pressure on markets, expressed concern about the impact a Fed rate increase would have, and described […]

GMO’s James Montier on Fed-Induced Bubbles, Alpha, and More

James Montier of Grantham Mayo van Otterloo’s (GMO’s) Asset Allocation team spoke with Advisor Perspectives recently about interest rates, behavioral biases, and other key factors affecting markets. He said that unlike the longest-serving Fed governor William McChesney Martin, who said the central bank’s job is to “take the punch bowl away just when the party […]

Getting Harder to Make Money, Gundlach Says

  “It’s getting harder and harder to make money,” says Jeffrey Gundlach, founder of Doubleline Capital. “There are plenty of markets that are falling apart and freaking out,” he observes. He describes U.S. stocks as “whistling through the graveyard,” says the bond market is in trouble, and notes that emerging markets and commodities are particularly […]

Dan Fuss, the “Four Ps” and the Bond Market

Dan Fuss, vice-chairman of Loomis Sayles and manager of the Loomis Sales Bond Fund, has been in the fixed-income markets more than half a century. Over the last ten years, his fund has outperformed 92% of its peers, although it’s near the bottom for this year. Fuss says, “In the fixed-income markets, we have to […]

Value Stocks Could Start to Outperform Once Fed Starts Increasing Rates

Roger Mortimer, senior vice-president of CI Investments in Toronto, predicts that market sentiment will begin to favor value stocks once the Fed raises rates. He notes historical data suggesting that following a period in which growth investing outperforms value investing, “value comes back strongly.” From 1975 to present, value outperformed growth by a 2.9% compound […]

Bull Markets Dominate Bear Markets in Length & Returns

Putnam Investments put out a chart showing the bull and bear markets since 1949 (hat tip to Barry Ritholtz over at the Big Picture blog). The chart below highlights a few important things all long term investors should realize. On average, bull markets have returned 145% and lasted nearly 4 years. The longest bull market […]