Tapering Begins, Met With Big Yawn
Finally the balance of data leaned toward signs of a sustained recovery, persuading the Federal Reserve (Fed) to begin “tapering” monetary policy. This very preliminary step toward a neutral monetary stance still leaves us well away from “tight” credit conditions, which will only occur after the Fed starts to actually raise short-term rates. As we anticipated, this action did not materially impact markets because it is occurring simultaneously with – in fact, driven by – a gain in economic strength.Download PDF
Will Good News Be Bad News?
There is really only one word for the market’s performance in 2013 – stellar. Well, two words for many investors – surprisingly stellar. Staying fully invested, which many failed to do, was the key achievement. But now, consistent with the perpetually skeptical mood of investors, the question on everyone’s mind is, “Now what?”
Ironically, we think there’s a growing risk that we could see a mirror image of recent years, when tepid economic growth coexisted with strong equity markets.Download PDF
Fixed Income Portfolios
Fed Started To Scale Back. Now What?
We’ve been saying for some time that many investors are about to be confused with their bond portfolios.
After years of associating bonds with “low risk,” many sensed that, by holding bonds, they would sacrifice high returns for steady and positive returns. The fact is that most advisers think of risk in terms of the volatility of an asset, not its direction. In 2013, investment-grade bond markets not only had their worst return in well over a decade, but actually produced a negative return, which will be a shock to many.Download PDF