We would not seek to position portfolios specifically for tax reform as markets have already priced in some improvement in earnings from tax cuts, and the winners and losers from the proposed tax changes will not be clear until more details are provided. Global cyclical and value stocks offer better risk/reward prospects as they should benefit if tax reforms are passed, but are not reliant on such an outcome.
This quarter’s edition covers key risks to continued economic expansion, including monetary policy and inflation expectations. Also discussed are whether investors are being compensated for taking risk and different strategies for geopolitical risks.
Extreme relative valuations suggest that over the long term, US equities should underperform from a starting point of today and that even in a downturn, relative underperformance of non-US equities would be mitigated by their more attractive starting valuations.
VantagePoint is a quarterly publication from our Chief Investment Strategist summarizing CA’s total portfolio advice.
Investments with the potential to earn returns competitive with equities—without a dependence on economic growth—are especially valuable diversifiers for portfolios.
Advice in Brief The global economic acceleration that began last spring has strengthened, the global profit recession is over, and inflation is increasing, but remains at manageable levels. The environment is generally supportive for risk assets, but diversification is still needed, given myriad economic and geopolitical concerns. Given the sharp rally in global equities, we…
An extended bull market can tempt even the savviest investors into abandoning their long-term discipline. Resisting the impulse to switch horses in the middle of the race is hard, but necessary—the most important trait of successful investors is their ability to maintain discipline in sticking to a long-term strategy during good times and bad. Diversified portfolios—structured to earn returns comparable to their rate of spending at tolerable levels of risk—have benefitted long-term investors and grown their purchasing power for decades, and we have no reason to expect a different outcome when today’s bull market inevitably corrects.
Simple is not so sweet in the current environment. In a world of global uncertainty, investors should place a premium on diversification.
The start of the year is always a good time to focus on personal improvements with resolutions. In this edition of VantagePoint, we share in the spirit of a new year by providing investment resolutions: Ten Temptations to Resist in 2017 Chasing macro and political developments Investing while looking through the rearview mirror Sticking with…
Change is in the air and the prospect for a bit of sunshine to break through the overhang of slow growth and lower-for-longer yields is palpable. Of course, the sun doesn’t shine forever, and overall our views are little changed. The things we have been worried about for some time—high valuations for certain risk assets, record-low interest rates, slow economic growth—have not gone away. The surest call to make for 2017 is that higher growth expectations will be paired with the distinct possibility of negative outcomes, putting a premium on diversification and liquidity management.