How Much Risk Does Adding Stocks Pose?
Investors have good reasons for their recent net increase in stock fund purchases—and good reasons to remain anxious, in our view. While market volatility has returned to normal, memories of the wild market swings of the past five years loom large. Here’s what we think about the risk of increasing stock exposure now.
read moreEquity Markets Still Have a Lot Left in the Tank
Upbeat headlines alone don’t make the case that US equity markets will continue plowing ahead. But we think there’s plenty of evidence that 2013 could be the fifth consecutive year that equity investors climb the “wall of worry.”
read moreIs It Time to Get Back into Stocks—or Too Late?
After five years of fleeing stocks for the perceived safety of bonds, US mutual fund investors became net buyers of stock funds in January. While some see the return of the retail investor as a negative indicator for stocks, we say, “Better late than never.”
read moreUK Equities Reach Inflation Tipping Point
Jon Ruff and Patrick Rudden As UK inflation surges ahead, equity investors should be concerned. With yields on inflation-linked bonds at extreme lows, we think real assets offer a better way to combat the risk of rising prices.
read moreStability Still Matters as Investors Embrace Risk Again
By Kent Hargis (Pictured) and Chris Marx After years of chasing safety at all costs, investors are now reaching for opportunities in long-spurned riskier stocks. But they will still want to safeguard their portfolios against painful market swings in the future.
read moreAre 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 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 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.
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