It’s that time of again, when harried finance editors ask reporters to call investment professionals and cobble together top predictions for the coming year. These are fun to write. But for readers, they’re more entertaining a year later.
Take the late 2010 Barclays Capital Global Macro Survey of more than two thousand institutional investors. The pick for the best performing asset class in 2011 was equities (with 40% support), followed by commodities (34%) and bonds (less than 10%).1 The consensus prediction was a 15% gain in the US S&P-500 for the year to around 1,420.
As we now know, the truth turned out to be rather different. To the beginning of December and using broad indices, diversified fixed income was the best performing asset class of the year, followed by government bonds. Returns from commodities and equities were negative. The year-to-date return for the S&P-500 was close to zero. (And remember, these are the forecasts of big institutional investors.) (more…)
Safety first is the name of the game for many investors right now. And with wild day-to-day swings in the markets and hugely divergent performances by securities within the same asset class, who can blame them?
Tolerance for risk is at extremely low ebb, a development reflected in the fact that yields on risk-free assets are at historic lows—in the case of US Treasury bills at levels not seen since World War II.
Yet this risk-averse behaviour masks one of the paradoxes of investment. (more…)
In the middle of the biggest share market downturn in decades, investors were flocking to the tried, the true and the familiar. Small and risky was no longer beautiful. But 12 months is a long time in the financial markets. (more…)
At 6%, Australian house prices didn’t dip nearly as far as those in the USA and UK (32% and 19%, respectively) and already prices are rising again. So what happens now? And how does housing compare with other investments?
Despite fears of the big declines we’ve seen in the USA and UK, Australian house prices did not plunge dramatically - indeed the average drop remained well in single figures.
Yet, after “only” falling 6% from their early 2008 peak to the March quarter (a big enough drop for those trying to sell), house prices have begun to recovering, with Australian Bureau of Statistics’ data showing average gains of 4.2% in the June quarter, confirming rises already seen in private-sector surveys. (more…)
The failure of traditionally active investing approaches is gaining increasing attention in the mainstream media. This comprehensive feature from The Christchurch Press in New Zealand cites the success several local advisors have had by implementing the Fama/French research in their own businesses.
The market downturn has again dispelled the myth that active managers outperform in bear markets, according to updated research by Standard & Poor’s. The S&P study found active funds trailed their benchmarks over the last five years across major equity and fixed interest asset classes.
Read the full article from The Sydney Morning Herald here.
History has shown that dollar-cost averaging as an investment strategy in shares - particularly during bear markets - results in portfolios that are worth more. How? Well, there are a couple of tips you need to follow. (more…)
Although it’s early days – and the financial crisis is certainly continuing – encouragingly, some key signposts to global economic-recovery are showing tentative signs of improvement. So with that in mind, is it too early to bargain hunt for investments? (more…)
Think you approach your investments logically? Research shows investors can sabotage their investment strategy based on several types of behaviour, including a ‘herd mentality’ and emotion. Knowing how and why you can sabotage your investment strategy gives you a stronger understanding of how to avoid it.
A long list of wealthy investors both in the US and abroad have been shocked to learn that Bernard L. Madoff, a prominent and well-respected broker and money manager, has been accused of orchestrating one of the most extensive investment frauds in US history. So what is a Ponzi Scheme and what happened? (more…)
