Results for risk-parity versions of the GTAA model.
If you have had an overdraft at Bank of America, they probably owe you some $$. (HT: Sea.)
Hussman on the need for debt restructuring. He includes some highlights from the great interview with Ray Dailo in Barron’s this weekend.
Global X has ETFs in the works for Argentina, Egypt, Peru, Nordic, Philippines, and Columbia.
El-Erian interview in Kiplinger’s. Notice that he says diversification is no longer sufficient to temper risk, but he doesn’t state what an investor should do about it. . .
Why are you telling investors they need to diversify differently these days?
The traditional approach to diversification, which served us very well, went like this: Adopt a diversified portfolio, be disciplined about rebalancing the asset mix, own very well-defined types of asset classes and favor the home team because the minute you invest outside the U.S., you take on additional risk. A typical mix would then be 60% stocks and 40% bonds, and most of the stocks would be part of Standard & Poor’s 500-stock index.
This approach is fatigued for several reasons. First of all, diversification alone is no longer sufficient to temper risk. In the past year, we saw virtually every asset class hammered. You need something more to manage risk well. Second, it matters a great deal how you implement the asset allocation, because when the world gets bumpy, different investment types really do behave differently.
Third, consider where we’re headed. We are going toward a world where the U.S. will no longer be the most dynamic part of the global economy. Because of the debt excesses of the past few years, it will be a while before the U.S. economy returns to 3% or 4% annual growth. Therefore, the wise investor asks, "Where else can I tap into sustainable growth?" To do that, you need a more global approach.
The crash in commodity prices makes this a good time to buy, doesn’t it?
This would be a good time.
Anyone want to nominate a title for the new installment of Really with Seth and Amy? How about: "buy and hold stocks for the long run?"
Over the 10 years through January, an investor holding the stocks in the S.& P.’s 500-stock index, and reinvesting the dividends, would have lost about 5.1 percent a year after adjusting for inflation, as is shown in the accompanying chart.