Posted in Bonds, Dividends, Global Investing, Inflation, Market Outlook, Risk, tagged Corporate Bonds, dividend yield, emerging bond market, equities, global money management, inflation risk, Jason Hsu, market forecast, outlook, P/E, predictions, price-to-earnings on January 11, 2013 |
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In general, I ignore the spate of market predictions that experts issue at the start of each year. There are exceptions, and after reading Jason Hsu’s outlook for this year, I am pleased to recommend it to readers. Dr. Hsu is the Chief Investment Officer at global money management firm, Research Affiliates. I found his article both insightful and appropriately skeptical of all forecasts. How can you not appreciate a money manager who starts his prediction for the year ahead with John Galbraith’s quip that “the only function of economic forecasting is to make astrology look respectable”?
I am going to mention a few of the elements of Hsu’s outlooks and add some thoughts. Hsu first examines the drivers for bonds and then equities. I will follow this structure. (more…)
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Posted in Active Investing, Asset Allocation, ETFs, financial planning, Leverage, Long-term investing, Low Cost Investing, Market Outlook, Market Timing, Markets, Retirement, Risk, Stock Investing, Uncategorized, Volatility, Wealth, tagged market forecast, market risk, market swings, market volatility, monte carlo, performance, projected risk, Q3, recession. recession fears, S&P 500 Index, Target Date Folios, Target Date Funds, VIX, volatility on October 13, 2011 |
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The third quarter of 2011 was impressively bad. The S&P 500 Index lost 13.9% for the quarter. The VIX, the standard measure of market volatility, repeatedly closed above 40 during this quarter. To put this in perspective, the average daily closing value of VIX from the start of 1990 through the end of September 2011 was 20.5. The average daily closing value for VIX during Q3 of 2011 was 30.6.
Many critics of Target Date funds felt that these funds lost too much during the bear market in 2008. Special attention was focused on 2010 Target Date funds, funds designed for investors planning to retire in 2010. The poor performance of these funds even got the attention of the SEC, which proposed new disclosure standards. Market observers (including the SEC) noted that 2010 Target Date mutual funds lost an average of 24% in 2008. In light of 2008, many funds redesigned their asset allocations to be more resistant to massive market declines.
Now, let’s flash forward three years. (more…)
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