Are 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.
read moreDon’t Paint Yourself into a Corner with Overly Defensive Strategies
Popular strategies for hedging against deflation and hyperinflation are likely to be disastrous if the economic outlook grows more benign as we expect.
read moreUS Economic Gains Fail to Dent “Safety First” Market Mindset
Risk-taking is an important component of an economic recovery, as it unlocks spending and investment power that is pent up during a downturn. But two and a half years since the US recession ended, individual investors are still playing it safe.
read moreA “Go” Signal for Equity Outperformance
Given the skimpy yields on bonds, the opportunity in equities has rarely been more provocative, at least according to one fairly reliable indicator, as my colleague Gerry Paul ably argues below.
read moreHigh-Yield Bonds: Equity-Like Returns with Lower Risk
On the surface, high-yield bonds look a lot like their relatives in the fixed income world. But in some key respects, high-yield debt acts a lot more like equities than like other bonds. This has some often unappreciated implications for portfolio construction.
read moreThe Risk in De-Risking Now
The extraordinary market volatility and poor equity returns of recent years—as well as fears about the macroeconomic outlook—have prompted many investors to contemplate de-risking their overall portfolios. Perhaps they should—but first, they should contemplate the return side of the equation.
read moreMaking Forecasts Reliable—and Useful
If there’s one thing you know about capital-market forecasts, it’s that they’re usually wrong. So why bother forecasting—or paying attention to forecasts?
read moreDealing with Pension Plan Deficits
In January, it emerged that Shell UK had become the latest—and probably the last—company in the UK’s FTSE 100 Index to announce it was closing its defined benefit (DB) pension scheme to new members. The news points up a dilemma facing the trustees of many large corporate pension providers.
read moreDo “Risk-Free Assets” Still Exist?
The current sovereign-debt crisis in Europe is raising long-term questions about some of the bedrocks of finance and investment theory. Namely, are the concepts of a “risk-free rate” and “risk-free assets” still meaningful when the creditworthiness of so many developed countries is under threat?
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