Volatility returned in February, but not the kind of volatility we have been used to for much of the period since the financial crisis.
In the midst of February’s volatility most of the reasons given to explain equity market declines centred on the role of rising US bond yields and, perhaps, the exaggerating role played by exchange-traded volatility products.
Since then, equities have seen another (modest) bout of weakness (as… Read the article
It is always worrying to hear investors ask how managers performed over very short time horizons. It seems very unlikely that a couple of weeks’ performance can tell you much about a fund manager’s skill as opposed to luck.
But short time frames might be able to tell you… Read the article
After performance weakness in the immediate aftermath of the Brexit referendum, UK property delivered a strong return in 2017. In the first of two guest posts looking at the property environment in different parts of the world, Tony Brown, CIO of M&G Real Estate, discusses where this leaves us in… Read the article
This latest ‘flash crash’ is a notable event. There have been only three phases in last 25 years when the S&P500 has moved this rapidly in this short a period of time, a fact drawn to my attention by my perceptive colleague, Marc Beckenstrater (see figure 1). Similar moves in… Read the article
Stuart wrote last year on some of the challenges associated with relying solely upon the Shiller P/E as a measure of equity valuation. This debate has been widely covered and is somewhat moot at any rate, given that the US market is looking expensive relative to history… Read the article
Real interest rates are an anchor for the valuation of all assets. The classical theory of interest holds that as a ‘discount rate,’ they embed the market’s relative preference for cash today over cash in the future.
The US cash rate is arguably the best sense we… Read the article
Is it true that “the easy money has been made?”
This is something that it has been common to hear over the last couple of years and, it seems, is even more common today.
But, as Morgan Housel pointed out in 2015:
One of the most common clichés of the last couple of years is the idea that we have been in ‘the most hated bull market in history.” Today attitudes are shifting.
Despite the fact that interest rates determine all asset valuations, there is nothing close to a general theory of interest rate determination. In 2016, I wrote about the flaws of a belief in an equilibrium rate of interest (typically known as R* in the academic literature) and the overemphasis… Read the article