As the S&P continues to hover at record high levels, the question remains as to how long it can continue. In a recent article for Forbes, Jurrien Timmer, Director of Global Macro at Fidelity Investments, outlines what he sees as five potential market scenarios down the road: Secular stagnation: The status quo—”a continuation of the slow-growth, low-inflation regime that has been in place since the global financial crisis ended.” Deglobalization: Post-Brexit, Timmer sees potential for a scenario of “diminished interdependence and integration between the economies of nations.” That is, a reversal of what has emerged over the past few decades […]
Rob Arnott, founder and chairman of Research Affiliates, says that the recent market environment is reminiscent of 1999, just before the tech bubble burst. Writing in Barron’s, Arnott argues that the following four “conditions parallel the extremes of the late 1990s:” “Falling inflation expectations,” which Arnott argues “snap back in reasonably short order.” He observes that “after inflation expectations hit a basement low of 0.9% in December 1998, within six months they had jumped to 2.0%” and “over the past three years, 10-year inflation expectations have plummeted by over 50% . . . to 1.2% in early February 2016” but […]
A recent piece in Forbes offers 4 suggestions for beating inflation. After noting that “the present 0% rate [of inflation] blends an upward march of 2% in the cost of services with a collapse in the price of oil,” the article observes that “if commodities rebound over several years, 4% inflation could surface.” To protect against this risk, the article explores 4 options: Treasury Inflation-Protected Securities (TIPS): These offer real protection for the principal invested, but a very low rate of return. Funds that roll over maturing bonds offer more liquidity, but do not provide the same guaranteed protection. Gold: […]
In an article in Canada’s Financial Post, columnist David Pett offers up some valuable investment insights from James Paulson, chief investment strategist at Wells Capital Management, who has been mostly correct in his stock market and economic calls since early in the bull market. Paulson explains that often, investors weight the consensus opinion in the market too heavily and lose sight about the factors that end up influencing what happens in the future. Paulson recently wrote, “combined, indisputable consensus trends and unrecognized themes can represent potential shocks to the investor mindset”. In Paulson’s view, there are five indisputable consensus themes […]
Billionaire investor Ron Baron has a message for those who are trying to predict how day-to-day news will impact the stock market: Stop.