Recency bias is a powerful emotion that leads investors to focus on investing in what is working right now, resulting in the over-allocation to outperforming asset classes and abandonment of recent laggards. This performance chasing leads to poor long-term performance and is counter to our multi‑asset class investing discipline. The past decade has been extremely … Continue reading What Have You Done for Me Lately?
The third quarter was another volatile one for credit markets, with yields across the maturity spectrum falling as markets continue to price in a slowing economic environment. On the short end of the curve, the Federal Reserve cut interest rates twice this quarter, bringing the Fed Funds target range to 1.75-2.00%. The cut in July … Continue reading Yields Continue to Fall
Starting in 2011, the first wave of “baby-boomers” – Americans born between 1946 and 1964 – reached retirement age. The term tsunami may be more apropos than wave, however. According to Health and Human Services (HHS), more than 10,000 Americans will turn age 65 every day for the next decade1. While turning age 65 does … Continue reading Continuing Care Retirement Communities
In life and in economic cycles, there are key milestones. A key one for the economy was hit August 14, 2019: The 10-year U.S. Treasury yield was less than 2-year U.S. Treasury yield. In other words, the yield curve “inverted.” The inversion that day was brief and slight, as the 2-year yield was barely above … Continue reading OPCM’s Thoughts on Yield Curve Inversion
Click here to view a PRINT VERSION of this article. Historically, two sectors with consistently slow earnings growth have been utilities and consumer staples. Over the long-term, these two sectors have posted annualized earnings growth of 3% and 5% respectively, below the S&P 500’s 7% earnings growth. Although earnings growth has been slower, and these … Continue reading Safe Is Not Safe Anymore
Click here to view a PRINT VERSION of this article. We have long known that 2019 held the potential to be somewhat of an IPO extravaganza – a year in which some of the largest private companies, many located in the Bay Area, were set to go public. Some of the most high profile companies … Continue reading IPO: It’s Probably Overpriced?
Click here to view a PRINT VERSION of this article. Picture this: It’s a bright summer day and you decide to take a visit to your local botanical gardens to enjoy the sunny weather. While you are strolling down the path, you spot a patch of lavender flowers and lean down to smell the sweet … Continue reading Psychology and Money: A Primer on Behavioral Finance
Click here to download a PRINT VERSION of this article. At the end of March, the benchmark ten-year U.S. Treasury was yielding 2.41%. The second quarter saw yields on the ten-year Treasury fall by a remarkable 40 basis points (0.40%) to end the quarter at 2.01%. This is a historic drop in interest rates. Many … Continue reading Credit Markets: A Historic Quarter
Click here to download a PRINT VERSION of this article. Since 2006, the only inversions investors studied were inversions involving multi-national companies relocating their headquarters and legal residence to countries with lower tax rates. In January and then again in March, the word inversion meant something else for the first time in 13 years. In … Continue reading Do the Recent Yield Curve Inversions Guarantee a Recession?
Click here to download a PRINT VERSION of this article. In the ten years since the financial crisis, housing markets have recovered, stock markets have eclipsed their prior highs, and the U.S. economy is on the cusp of its longest expansionary period to date. Despite these remarkable gains, the emotional impact of the financial crisis … Continue reading Housing, Homebuilders, and Corrections…
