Archive | March 2015

Negative Yields


One of the (many) perplexing phenomena facing investors is the persistent (and falling) low yields on government bonds. Most of the time, we look to real yields to determine the impact of interest rates on an economy: negative real yields is generally highly stimulative (as it encourages excess borrowing) whereas positive real yields may discourage borrowing. In the aftermath of the financial collapse in 2008, monetary policies became quite aggressive in trying to engineer low (negative) real yields. The US and the UK, in particular, were successful in maintaining negative real rates, thus enabling their economies to grow ahead of Read More

Erin Go Bragh!


In honor of St. Patrick, I thought I’d share this (mostly) green chart with you, showing the DJIA over the past 115 years, delineated by bull and bear markets (courtesy of Ned Davis Research). US stocks are at all-time highs in both nominal and real terms, and you can see we are in the midst of a secular bull market. My own two punts (or cents) is that valuations in US equities are a bit stretched, but not extreme, meaning a correction of 5% or 10% should be expected. But that this would devolve into a bear market seems unlikely Read More



Apologies for slipping on the blogs, but I’ve been traveling around the continent, from Alaska to DC. One of the more common questions/comments we’ve heard from clients this quarter relates to the alleged benefit of global investing. Of course, this follows a year in which US equities gained 13% and non-US stocks fell about 5% (in USD terms), the widest performance gap since the 1990s. As usual, there were many valid reasons for this gap: the stronger economic growth and higher interest rates in the US favored dollar-based investors. And economic prospects, if anything, reinforced these trends: the gaps only Read More