Rich Insights

The 60/40 portfolio (60% S&P 500 / 40% Bonds) is up nearly 2% year-to-date, while the S&P 500 is down more than 3%.  The passive 60/40 investment strategy is effective this year, just like it has been for most of the last the 20 years.

Why does the 60/40 #assetallocation work so well?  The 40% bond allocation is large enough to serve as a buffer, during dislocations, to preserve wealth.  The 60% equity allocation is large enough to build wealth, during economic expansions.

Performance, however, isn’t the whole story.  The 60/40 has had roughly 40% less risk than the all-equity #portfolio !!!

In other words, it is effective and a much smoother road to building wealth…maybe it is sexy.

The importance of retail traders has unquestionably increased during this era of social distancing.

In today’s daily Rich Insights, we provide a guide through Sherwood forest.  We explore/ponder whether this is a structural shift in investor positioning or transitory.

The #US continues to operate with twin deficits (fiscal/budget and #trade) and that has historically resulted in a #currency collapse. In the short run, however, the U.S. maintains its safe-haven status.

Will the equity pullback from last week continue?  We review the technical conditions, the valuations, and the positioning information to determine the most likely next move.

Does Post Crisis = Craziness?

As of last Friday (Jun-05-2020), the Nasdaq and S&P 500 have each rallied over 43% from the March lows.  Yet, there has been a change of leadership in the last two weeks.

Nasdaq and S&P 500 have re-attained their pre-crisis levels.  Can we expect this pattern to continue, for the new leadership categories?

The non-farm payroll report for May SIGNIFICANTLY surprised to the upside.  Why was the consensus so wrong?  What are the other labor market indicators saying?

Today’s daily Rich Insights, Dr. Don Rich attempts to answer these questions, and more importantly, assess the overall state of the U.S. labor market.

The markets are challenging the central banks' attempts to repress interest rates. Yield curves in the U.S. and Europe are steepening. The 2s-10s yield curve slope for the U.S. is the steepest in three years.  This could be due to one of three reasons:

2.) Increased inflation risk,

3.) Increased credit/default risk.

The ECB just announced a large expansion of its bond buying program.  In effect, the ECB just refilled the liquidity “punch bowl”.

The significance of this liquidity infusion is explored in today’s daily Rich Insights episode!

Brazil is dealing with political and structural issues.  These have not gone away.

Yet, Brazilian equities have bounced up over 30% in the last 2-3 weeks, in U.S. dollar terms.  Why?

My gut tells me this is a dead cat bounce, but what do the numbers say?  Can this trend continue?  Are there any other BRICs that might follow suit?

In today’s Rich Insights video we examine earnings from a number of different equity markets, size and style markets, and sectors.

Some areas have positive trending earnings, many are negative.