While it is only natural to crave safety after periods of intense volatility, we do not believe investors should respond to recent market declines by panicking, scrapping their policy portfolio, and hunkering down in cash (with the obvious exception of excess cash necessary for near-term capital call, spending, and other liquidity needs).
While the current sell-off is in line with previous major bear markets of the postwar period, it is extreme in its speed and volatility. Precedent would suggest that markets will remain under pressure for the immediate future, but unless you assume we are on the verge of a 1930s’ style bust, equities are poised for…
Due to the recent market volatility, many investors may be facing a liquidity crunch, and some a severe liquidity crisis. This paper is designed to outline a coherent process for assessing the sources and uses of cash, examine the implications of different decisions investors might make about their liquidity needs, and recommend some general guidelines…
This report discusses the upcoming implementation of the new “mark to market” (“fair value”) accounting standard. It provides a brief review of the broader accounting and auditing context and examines the probable effects of FAS 157 on long-only equity and fixed income managers, hedge funds, and non-marketable investment funds (private equity, venture capital, real estate)….
Weighing safe-haven status against fiscal concerns.
While prices have fallen sharply over the past year, the sector still faces stiff headwinds from high valuations, a weakening economy, and tightening credit for buyers.
Some Japan managers have or might be expected to migrate to the small-cap sector because it offers good value, but investors that agree with this strategy need to have staying power.
The near-term outlook for emerging markets equities is not very compelling; should shares continue to fall sharply, investors will need to reassess their desired tactical allocation.
Despite moving into the fair value range, European equities are not attractive at this time.
While many pundits expect the financial sector’s problems to remain “contained,” we not only expect the bear market to spread beyond financials, but believe the economic damage may be greater than that inflicted during the downturn of 2000–03.