S&P 500 Earnings: Gazing Across the Abyss
The collapse in S&P earnings over the past year and the range of future possible earnings estimates create high uncertainty around U.S. equity valuations.
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Distressed Investing
The financial and economic crisis continues to create a broad and deep range of investment opportunities, many of which remain attractively valued, even after taking the recent rally into account. Given the risk that cheap assets will end up worthless, we emphasize the importance of careful manager selection across the board. Further, we caution that…
Can Municipal Bonds Get Up From the Canvas?
Muni bondholders were left in the cold in 2008 as liquidity premia soared and Treasury bonds became hot properties. Issuers are making their case in Washington for federal backing of their securities, but we believe defaults among upper-tier muni credits should remain low regardless.
The Trouble With Treasuries
With U.S. Treasury yields at their lowest levels in over 50 years, the effectiveness of Treasuries as a “deflation hedge” has been greatly diminished. While the current environment still demands that investors maintain deflation protection, investors should take advantage of the recent rally in Treasuries to rebalance allocations back to target and actively seek to…
Taking the Measure of Continuing Credit Market Stresses
Short-term borrowing spreads, corporate issuance, and implied volatility have improved, but remain at stressed levels.
Who Will Be First Out of the Bunker?
Attractive opportunities abound (in equities and especially in credit), but the pervasive economic gloom will get worse before it gets better. Download PDF
U.S. Venture Capital Investing
While the recent uncertainty and volatility in economic and financial markets have made it difficult to ascertain the outlook for the venture capital market, these conditions may also serve to create a better supply/demand balance down the road. We continue to regard select high-quality venture capital managers as an effective means to capture returns from…
The Case for Investment-Grade Corporate Bonds
Today’s economic environment and current yields and spreads make investment-grade bonds an asset class worthy of consideration, but this would be a tactical bet with potentially significant downside if the exit is poorly timed.
U.S. Equity Style Performance – It’s All Relative
Market leadership shifted abruptly toward high-quality mega-cap stocks over October and November, yet despite the sharp recent improvement in relative valuations of small caps and value stocks, we still think it is too early to switch from a defensive high-quality portfolio in the current environment.
High-Yield Bonds – Toxic or Tasty?
The default outlook for high-yield bonds is dreadful, but with more than two-in-three issues trading at distressed levels, today’s yields already price in depressionary conditions.