The late John Bogle formulated a long-term market return forecast based on “Occam’s Razor.” Although Bogle had mixed results, the approach is interesting, instructive and provides a glimpse into what we might expect for the U.S. market over the coming 10 years. The model suggests Base Case, Pessimistic and Optimistic annual returns ranging from 1.0% […]
My December 2019 Seeking Alpha article, “Mean Reversion + Valuation = Opportunity” identified underperforming asset classes that were attractively valued and poised to generate above average returns in the future. Here we revisit how those assets have performed since the beginning of 2020. There is strong evidence of a sector rotation underway. Nine of 13 […]
In “International Small-Cap Equities: Poised to Outperform” I described the upside opportunity due to mean reversion, favorable valuations, the prospects for a declining dollar, and a worldwide economic recovery. The small cap sector is the cheapest since 2000. Historically, this has resulted in an annual return size premium of seven percentage points over subsequent three-year […]
Although they’ve performed well for decades, international small caps have been out of favor for at least 10 years. Mean reversion and valuations present opportunity for long-term outperformance. The prospects for a worldwide economic recovery and declining dollar act as potential catalysts. Price action since the selloff in March and in recent months might signal […]
In “Why Investors Are Underweight China Equities, But Should Reconsider,” I described why China is the rising power vying to overtake the U.S. on the world stage. The article made the case for investors to consider allocating 10-15% of their equities to China. After reviewing the leading ETFs in this space, the Wisdom Tree China […]
Investors are underinvested in China equities relative to its economic and overall global stature. China carries unfavorable attributes and risks that have suppressed its equity market. There are seven key reasons to boost allocations to China equities, including the potential to outperform the U.S. by five percentage points per year for the next ten years. […]
The FAANGs have evolved to FANTAZIAM: Facebook, Alphabet, Netflix, Tesla, Amazon, Zoom, Internet stocks, Apple and Microsoft. This whimsical investment world is aptly described by the classic Disney movie, Fantasia. Insider sales are overwhelming buys among these stocks while the overall market insider buy/sell ratio sits at a 12 year low. Valuations also scream sell […]
Investing based on expected political outcomes is a crapshoot at best. What really matters is the destruction of the dollar. The Presidential candidates and both major political parties will follow the same script. History shows that currency destruction also devastates equity markets. Smart investors will position their portfolios with assets that do well in this […]
Many factors have weighed on natural resources equities, and the sector has been beaten down for a long time. There is significant likelihood of reflation and a dollar decline due to massive fiscal and monetary stimuli. Natural resources equities are a proven vehicle for portfolio diversification and positive upside under these scenarios. The FlexShares Morningstar […]
These are unreal times. There is substantial risk of reflation and significant dollar devaluation due to recent and anticipated additional fiscal and monetary stimulus. Natural resources equities represent ownership in longstanding, successful businesses that produce real assets that are essential to our life. This article explores key reasons investors might consider natural resources equities as […]