Inflation Watch
The consensus among economists and analysts seems to be that inflation does not pose a threat to the global economy.
Authored by: Robert Lang
Benefits of Global Equity Investing
U.K. investors, although weary of high global equity correlations and the recent outperformance of U.K. equities, should not decrease their non-U.K. equity allocations for the following reasons: correlations have varied widely and could fall again; and U.K.-only mandates sacrifice 90% of the available opportunity set, represent relatively concentrated portfolios unless they take on significant tracking…
Diversification, Returns and Risk- Promise of Global Equity Investing
In recent years, the outperformance of their domestic markets relative to international markets has prompted U.S. and European investors to question the wisdom of global investing. Despite the superior risk-adjusted returns of U.S. equities and high correlations with other developed markets in recent years, investors should resist the urge of purging non-U.S. equities from their…
Household Equity Ownership Trends
Equity ownership remains low in Europe due to undeveloped public equity markets, generous pension plans, and the lack of tax incentives. European bulls cite the following to argue that ownership will rise: (1) the bull market of the late 1990s raised awareness of equities, (2) with falling interest rates, Europeans are looking to equities for…
Japan’s Bank Crisis
As of April 1, 2002, the Japanese government will cease guaranteeing time deposits in excess of ¥10 million ($75,200) against the possibility of bank failure, leaving an estimated ¥200 trillion ($1.5 trillion) in bank deposits unprotected. Proponents of postponement of the deadline are worried that the limit on deposit insurance will prompt bank runs, especially…
Earnings Recovery
Despite the persistent fall in equity prices, analyst expectations of S&P 500 earnings remain quite optimistic. Historical precedent suggests that earnings could well rebound within the time horizon envisaged by analysts, but are unlikely to prove as robust as they expect.
Deflation Watch-Rising Risks?
High-quality, intermediate- to long-duration bonds can hedge against deflation. In the current environment of extremely low short-term interest rates and widespread expectations of higher rates in the future, investors should resist the urge to move into short-term bonds.
Small, but Significant
Small-cap stocks in the United Kingdom and Europe are attractive because they provide added diversification within domestic, not global, markets. In addition, their valuations are more attractive than those of their large-cap brethren.
Exchange-Traded Funds – Versatility at Price
A primer on exchange-traded funds (ETFs), including a comparison of the costs and benefits of ETFs and index funds in terms of trading costs, fees, tracking error, and capital gains.
The Euro
The recent rally has led to speculation that the euro may be embarking on a prolonged bull market and the outlook for the euro/U.S. dollar exchange rate clearly hinges on the relative strength of the U.S. and euro-zone economies, and the outlook for relative capital demand in particular.