Don’t Worry About the Bull Market; Worry About the Dollar: Richard Bernstein – ThinkAdvisor 06-22-15

Salient to Investors:

Richard Bernstein at Richard Bernstein Advisors writes:

  • The bull market is intact. Markets rise after the Fed starts raising as earnings trump rising rates, and there is no end of cycle behavior, like excessive leverage or a big buildup in inventories except for energy.
  • The MSCI European stock index is up 11% year-to-date, but only 5% in dollar terms.
  • Currency is the most important issue when investing globally: between 2002 and 2008 the decline in the dollar accounted for 80% of the gain in the Euro Stoxx 50 index for US investors.
  • The dollar rise since 2011 will continue so US investors should hedge this risk.
  • Bullish on South Korea, which is where Japan was 2 years ago. South Korea has terrible corporate profits and is slipping into deflation so has no choice but to depreciate the won.
  • China is at a competitive disadvantage because their currency is somewhat pegged to the dollar and their companies have a lot of dollar-denominated debt, so they are unable to depreciate and will lose market share.
  • India is unable to depreciate because of high inflation so will lose market share to Japan and South Korea.

FactSet predicts S&P 500 earnings will fall 4.7% in Q2, rise 2% excluding energy: for all of 2015 rise 1.6%, 8.2% excluding energy.

Bank of America Merrill Lynch says fund investors remain bullish on European stocks.

Read the full article at http://www.thinkadvisor.com/2015/06/22/dont-worry-about-the-bull-market-worry-about-the-d?eNL=55886aae150ba045336e3852&utm_source=earlywire062315&utm_medium=enewsletter&utm_campaign=earlywire&_LID=179068825

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Fidelity Reviewed Which Investors Did Best And What They Found Was Hilarious – Business Insider 09-04-14

Salient to Investors:

James O’Shaughnessy of O’Shaughnessy Asset Mgmt said:

  • Fidelity found that their best performing accounts were those of people who forgot they had an account with them.
  • The shorter you hold a stock, the more likely you are to lose money.

Barry Ritholtz found that when families fought over inherited assets and did not touch those assets for say 10 or 20 years, those years were the best period of performance.

Richard Bernstein of Richard Bernstein Advisors found:

  • Over the period December 31, 1993 to December 31, 2013 the average mutual fund investor underperformed every investment asset class except Asian emerging market and Japanese equities, and even underperformed cash.
  • The average mutual fund investor would have improved performance by simply buying and holding any asset class other than Asian emerging market or Japanese equities.
  • The underperformance suggests the average mutual fund investor consistently bought assets that were overvalued and sold assets that were undervalued.
  • When chaos occurred, the average mutual fund investor ran away.

Read the full article at  http://www.businessinsider.com/forgetful-investors-performed-best-2014-9

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REMINDER: You Are ‘Shockingly’ Terrible At Investing – Business Insider 08-12-14

Salient to Investors:

Richard Bernstein at Richard Bernstein Advisors found:

  • Over the period from December 31, 1993 to December 31,  2013, the average mutual fund investor underperformed every asset class and category, including cash, except Asian emerging market and Japanese equities.
  • The average investor would have improved performance by simply buying and holding any asset class other than Asian emerging market or Japanese equities.
  • Investors consistently bought overvalued assets and sold undervalued assets.
  • In periods of chaos, investors ran away.

Read the full article at  http://www.businessinsider.com/typical-investor-returns-20-years-2014-8

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