Are E&Fs Jeopardizing Their Missions?
Many US endowments and foundations (E&Fs) still plan to spend 5% of their assets each year, despite unusually low expected returns. We think few understand how likely it is that this will limit their ability to fulfill their missions in perpetuity.
read moreHow Can Balanced Investors Mitigate Their Equity Risk?
Over the past three decades, bonds have provided balanced investors with the best of both worlds. As 10-year Treasury yields fell from a high of 13.7% in 1980 to less than 2% today, bonds provided both strong returns and a great cushion in times when equities were weak. Bonds are still important, but investors shouldn’t [...]
read moreStocks and Bonds: Comparing the Range of Potential Outcomes
Investors fleeing stocks have mostly sought shelter in bonds. That’s understandable, given their relative stability and reliable income. But it’s important to compare long-term expected returns, too.
read moreThe Fundamental Case for the 20,000 Dow
While some people deem stocks expensive relative to 10-year trailing earnings, we take a forward-looking approach. It starts with the premise that the stock market is not a casino and stock prices are not pulled out of thin air: they reflect the intrinsic value of companies’ future earnings.
read moreNote to Bond King: Check Your Math
The Wall Street Journal published an article on August 1 headlined: “Bill Gross: Equities are Dead.” In fairness to Gross, what he actually wrote in his August “Investment Outlook” was, “the cult of equities is dying.” We agree with most of Gross’s argument—but not with his unsupported forecast of extremely low stock returns.
read moreAre Stocks Too Expensive Now?
Not in our view. Although we recognize that the US and global economies continue to be scarred by the credit crunch that began in 2008, we think stock prices already discount the risks.
read moreEmerging Market Investors Don’t Have to Take Volatility Lying Down
We believe that emerging markets often offer better growth prospects than most developed markets. But, as my colleague Morgan Harting argues, many investors are not exploiting the full potential—often because they are afraid of volatility.
read moreWhat History Suggests About the Future of Stocks
Some experts today argue that the world has entered a “New Normal” condition in which stocks have permanently lost their return edge. We’ve heard this before. It was wrong then, and we think it’s wrong now, too.
read moreAre Investors Worried About the Right Risk?
Individual and institutional investors alike have been shifting their capital from stocks to cash and bonds at a rapid rate in recent years, despite extraordinarily low interest rates. But if investors stop to weigh the importance of two different types of risk, they’ll see they still need stocks.
read moreA Survival Guide for Today’s Market
Risk is unusually high these days. Investors can either be paralyzed by uncertainty…or seize the long-term opportunities that volatility creates. We believe the key to choosing the latter path is updating five long-standing investing precepts for today’s tough times.
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