"The trend is your friend" is an old market adage known by traders old and new alike. Other sayings like "take what the market gives you" and "don't fight the tape" share a similar underlying principle that forms the basis for investing approaches like "momentum" and "trend-following" strategies. The principal is simple, markets typically move … Continue reading When Trend is Your Friend
Market divergence I've written a few times about the divergence in equity markets this year, and that divergence continues. In the U.S. the S&P 500 gave back a chunk of its YTD gains since July but is still up +9.35% as of October 31st. Meanwhile, an equal weight index of the S&P 500 has turned … Continue reading Divergence Continues
Uncertainty loves complexity Uncertainty remains high with respect to the economy and the markets. On the one hand, we have a steeply inverted yield curve and a deteriorating housing market. But on the other, we have improving sentiment and a strong jobs market. The truth is nobody really knows what happens next and we can … Continue reading KISSing with Stocks
OVERVIEW The third quarter began with a broad rebound in risk assets. The global equity market regained +13% from its June lows by mid-August. However, sentiment turned again and markets have been volatile since. Year-to-date the global stock market is down near-26%. Emerging markets fared worse, down close to -28%. The losses are broad even … Continue reading Q4 2022 Update
MARKET OVERVIEW The global sell-off in financial markets accelerated during Q2. Global equities officially entered a bear market, breaching the technical definition of a -20% decline. US stocks were down most, but all major equity regions were down double digits year-to-date. Even the US bond market was off by -10% for the year. Figure 1: … Continue reading Q3 2022 Update
The NASDAQ is down almost -30% from its November 2021 highs. Unlike the pandemic drawdown, this sell-off doesn't have a clear catalyst. It's unfolding in fits and starts and has investors pointing at a growing list of potential causes - rising rates, a tightening Fed, inflation, slowing growth, high valuations, disappointing guidance, etc. Whatever the … Continue reading A Matter of Perspective
QUARTER IN REVIEW Q1 was a bumpy ride for investors. Global equity market prices (MSCI ACWI) swung from being down almost -13% to only down about -6% for the quarter. However, the negative returns were broad. All major equity regions and even the US bond market were down YTD. Figure 1: Global Markets YTD MACRO … Continue reading Q2 2022 Update
In January, I wrote BCM was entering 2022 with a reduction in our tactical risk allocation, moving to neutral weight from last year's overweight position. That was a fortunate and timely call given the weak start to this year for risk assets. The rationale was the tailwinds that supported equity markets in 2020 and 2021 … Continue reading Are We There Yet?
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QUARTER IN REVIEW Q3 was decisively less risk-on for markets. The global equity market (MSCI ACWI) gave back some gains but is still up +11% ytd. There was wide divergence between markets, notably emerging markets are down. Safe havens like US bonds and gold are also down for the year. Figure 1 Global Markets MACRO … Continue reading Q4 2021 Update
NOTE ON UPDATES Starting with Q1 2021, BCM is consolidating its various update notes into a single "Quarter Update," labelled as "Quarter Update" under Categories. This reduces redundancy and makes updates easier to follow. QUARTER REVIEW Q1 started with a rally in risk assets, but equity markets are still off their all-time-highs notched in February. … Continue reading Q2 2021 Update
QUARTER REVIEW The fourth quarter capped what can only be described as a breath-taking year for the markets (and the world). The global equity market rose +15.15% in 2020, as measured by the MSCI ACWI. While that doesn't look outstanding by itself, keep it mind that was after clawing back a -34% decline from Q1 … Continue reading Tactical Allocation Update, Q4 2020
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