On the Minds of Investors

Should I be worried about the stock market correction?

As we highlight in our 3Q20 Guide to Alternatives, core real assets like real estate and infrastructure can provide both diversification and income, while certain types of hedge fund strategies can zig when the stock market zags.

Recency Bias: How do current trends impact investment decisions?

After the dramatic market declines in March, many investors expected markets would continue to fall. While the massive amount of uncertainty surely influenced this sentiment, it also reflected in the natural inclination to weigh recent events more heavily. This inclination is called “recency bias”, and simply put, it means that humans favor current events over historic ones when thinking about what may lie ahead. Recency bias is the reason the rapid market recovery after March lows took many investors by surprise. It also suggests that following this most recent period of strong performance, many investors may well expect the equity market to continue to grind higher and reach new highs.

Are equities expensive?

The rebound from the late-March lows was so quick and strong that it capped the shortest bear market in history and marked the fastest round trip back to all-time highs . With such a rapid retracement, investors are left wondering: are equities expensive?

How might the election impact the municipal bond market?

Municipal bonds continue to look attractive for a variety of reasons for bond investors, especially when considering the outlook for higher individual taxes at some stage down the road.

Should I be worried about the market sell-off?

What caught many investors off guard was that technology stocks, which had seemed untouchable in recent months, led this move lower.

Is now the time to consider portfolio adjustments?

As the economy & markets continued to grind higher, investors entered into 2020 with prominent portfolio overweight’s into U.S. and Growth oriented equities.

How would a corporate tax hike impact the recovery?

While markets are likely to experience volatility in the lead up to and the aftermath of the election, ultimately, it’s policy, not politics, that matter most for the economy and markets in the long run.

Loss aversion: How does this impact investors now?

Loss aversion refers is the preference to avoid losing compared to gaining an equivalent amount. Simply put, it is better to not lose $1000 than it is to find $1000.

Should I be positioned for higher yields?

Together, greater duration supply and less Fed buying suggests yields may drift higher through the back half of the year.

Where do we stand in the economic recovery?

Last week, we learned that the unemployment rate fell to 10.2% in July. This week, initial claims for unemployment insurance fell below one million for the first time since March, and retail sales eclipsed the pre-pandemic levels seen earlier this year.