The macro (rising rates and inflation) and market (rising equity prices) backdrop has people compare the current situation with 1987… right before the equity market plummeted. Are we in the same situation and does it mean the worst has yet to happen. Maybe not.
Markets have been unnerved by rising interest rates in the US, with ripple effects around the world. The most staggering event has happened on the VIX market with a number of funds/ETNs making the headlines after having lost tons of money. What should investors take from these events ? A couple of reflections and interesting comments seen here and there. Continuer la lecture de « Putting Recent Market Sell-off in Perspective »
Rule of thumb: the more expensive a financial asset is, the lower its prospective return. That’s simple. But sentiment and markets can become and stay irrational longer than investors can stay solvant, they say. So if you cannot predict when the markets will turn, it’s probably better to check where the risks are and monitor them the best you can. And invest with a margin of safety. Always…
Over the last 8-9 years, financial assets have had a good run, but now valuations look stretch and expected real returns are low. Continuer la lecture de « Where is the Cycle? What Should My Asset Allocation Look Like? »
For a Monday morning, Kepler Cheuvreux’s strategist Christopher Potts had a nice wake-up call for investors, recommending them to Underweight Europe and EM and go Overweight US and Japan… Continuer la lecture de « Sell When You Can – Kepler Cheuvreux »
Bear markets (BM) are painful. Since the 50s, US bear markets have resulted in an average loss of 31% (most painful were Oct-07 at 57%, Mar-00 at 49% and Jan-73 at 48%).
Of course, timing the market is futile and doesn’t help the investor over the long run. It’s more important to have a clear view on the value of any financial asset and seize it when it trades with a margin of safety.
But understanding the market dynamics and the financial environment might be helpful, especially if you want to be able to take advantage of the next downturn.
Goldman Sachs published an in-depth report on the characteristics of bear markets and what signals investors should track to try and anticipate them.
The S&P 500 has gone 10 months without a 3%+ selloff. It’s the third longest since world war II. But the conditions for such a pullback are getting in place.
According to Deutsche Bank’s strategists, a number of facts should have investors worried about potential market correction in the coming weeks/months.
Short answer: lower returns.
Currently, the proba is about 20% according to Morgan Stanley…