August / September 2020 Market
■ Markets continued their impressive run through August and into early September before pulling back modestly.
■ At its “Jackson Hole” Economic Policy Symposium, the #FederalReserve formalized its shift toward a policy that is more tolerant of overheating markets and inflation levels above 2%.
■ The #election2020 will increasingly take center stage, but fiscal and monetary support will likely continue regardless, which should help mitigate tail risks but may raise the specter of future #inflation.
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We would like to pay our honor and respect to our fellow #Americans that were killed during the terrorist strike against the Twin Towers on 9/11. We thank all the #emergencyresponders that gave so much that day, including their lives. We also thank the brave men and women in our #armedforces that are working so hard to keep our country safe.
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When creating a #startup, many entrepreneurs lean toward forming LLCs or other structures with pass-through tax treatment. A C-corporation can be overlooked because of double taxation. Double taxation can occur when a corporation pays taxes on its profits at the entity level, and then a second layer of tax is paid at the personal level when dividends are distributed to shareholders.
To learn more, read our article “When is Double Taxation Zero Taxation?” attached here: https://bit.ly/Magnus_QSBS
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FORBES.COM
Council Post: When Is Double Taxation Zero Taxation?
Financial planners have many tools at their disposal, but the #DonorAdvisedFund (DAF) is one of the more donor-friendly planned giving vehicles. A DAF is administered by a public charity, but you can think of it as a charitable #savings account.
To learn more, read our article “How To Pull A $91 Million Rabbit Out Of A Hat” attached here: https://bit.ly/Magnus_DAF
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FORBES.COM
Council Post: How To Pull A $91 Million Rabbit Out Of A Hat
The Fed and money markets have allowed the #Treasury to build an enormous cash balance. At nearly $1.8 trillion, it is multiples larger than the average over the last decade plus. This large cash balance means the #government could pass another trillion-dollar relief package and not have to immediately issue additional #debt to fund it.
From Magnus Q3, 2020 Market Outlook: https://lnkd.in/g8hsyyu
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As part of the Fed’s Secondary Market Corporate Credit Facility, the #Fed has purchased $8 billion dollars of fixed income #etfs, such as the #SDPR Bloomberg Barclays High Yield Bond (ticker: #JNK) and the iShares High Yield Corporate Bond (ticker: #HYG), among a dozen others.
From Magnus Q3, 2020 Market Outlook: https://lnkd.in/g8hsyyu
■ COVID-19 remains a critical health issue that is creating an uneven recovery across the U.S. economy and capital markets.
■ The Federal Reserve, Treasury, and federal government are making policy decisions that are dictating crucial capital flows, creating an abundance for some and a dearth for others.
■ Even though equity valuations remain high and bonds yields low, a renewed commitment by monetary and fiscal policymakers will continue to flood the markets and economy with money, which should continue to support markets, but there will be winners and losers.
***Please note, Magnus Financial Group LLC has no political view one way or the other. For this market commentary we relied on statistics provided from third-parties that may have biases one way or the other.
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Risk assets continued to rally in the third quarter of 2020 as global economic data improved and a combination of #fiscalstimulus and monetary stimulus supported the economic and market recoveries, respectively.
U.S. headline and core inflation rose modestly during the quarter. While current #inflation is low, long-term inflation expectations as measured by the 10-year TIPS-implied inflation rate trended higher over the quarter, ending September at 1.6% (up from 1.3% in the prior quarter).
Forward returns will be a function of the trajectory of the #covidー19 crisis as well as the size and scope of fiscal and monetary support, both of which are expected to be vast. Given the magnitude of the expected intervention and the potential for further stimulus to flow directly to consumers, the risk of inflation could increase.
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Certainly, the political climate is unlike any other and a very important #election2020 looms in less than two weeks.
Looking at the U.S. presidential election from an
a-political perspective and through an investment lens, two things become clear:
· The first presidential debate likely played a role in impacting the election, and
· The election outcome on the markets might not matter as much as some people believe given monetary and fiscal policy at this point. We say “might” because the big unknown at this point is a potential change in #tax policy.
The real drivers of economic and market return outcomes are the #federalreserve and Treasury who are flying the plane and determining the course that segments of the markets and economy take.
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We are grateful for those who choose to protect and defend our #freedoms. The life we live in these United States is a gift most appreciated by those who have endured the sacrifice of service. Veterans, we #thankyou!
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These two charts capture the wide performance and valuation differences between growth and #valuestocks.
The rolling 1-year performance differential between growth stocks over their value counterparts in the U.S. and international Ex-U.S. developed markets was 42% and 25%, respectively.
This recent performance punctuates over a decade of excess returns by growth stocks which has contributed to growth stocks in the U.S. being twice as expensive as value based on a forward P/E basis (when looking at the S&P 500 Pure Growth Index vs. the S&P 500 Pure Value Index).
A potential catalyst for a change in leadership from growth to value may be an increase in #inflation and #interestrates.
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As aggressive as the #federalreserve has been, it is still far behind the ECB and BoJ in terms of the amount of intervention it could conceivably do.
Through September 2020, the Fed’s balance sheet represents about 34% of U.S. #gdp2020, significantly less than the ECB at 60% and the BoJ at around 130%.
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If we include the PBoC, the balance sheets of the world’s major central banks have exploded to $27 trillion dollars, more than the combined GDP of the U.S. and Japan.
Liquidity has and should continue to support asset prices (until it stops). Given the #covidー19 #pandemic2020 and the growing acceptance of further government intervention in markets, we don’t see this changing any time soon.
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Despite four weeks of consecutive declines for U.S. #largecap stocks in September, valuations remain elevated. The 12-month forward P/E ratio for the S&P 500 Index reached 22.8 during Q3, its highest level since 2000.
U.S. large cap #stocks rallied over 52% from an intraday low on March 23 through September 30, 2020, generating a year-to-date gain of 5.6%. This occurred despite earnings estimates for the next 12 months being 11% below where they were on January 1.
Expectations for market volatility, as measured by the Cboe Global Markets Volatility Index (#VIX), finished third quarter 2020 at 26.4, down 2.2 points from the start-of-the-quarter reading of 28.6.
A feast or famine theme is also playing out in the dramatic outperformance of the U.S. relative to the rest of the world.
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Regardless of the outcome of the #election2020, we think there is sufficient political will and capacity (via the Fed) to do additional economic stimulus. Higher taxes may be a concern for some, but the Fed’s capacity to take up additional treasury issuance in order to fund deficits is illustrated by the roughly $3 trillion expansion of their balance sheet in just three months from March to May 2020. $3 trillion is 87% of total fiscal 2019 tax receipts.
Further, as younger generations age and play a larger role in driving policy, more government intervention is inevitable. Recent Pew Institute polls suggest Gen Z is almost twice as likely to believe in big government vs. the Silent Generation (70% vs. 39%; Boomers were 49%, Gen X 53%, and Millennials 64%).
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The #federalreserve and money markets have allowed the Treasury to build an enormous cash balance.
At $1.7 trillion, it is multiples larger than the average over the last decade plus. This large cash balance means the government could pass another trillion-dollar #reliefpackage and not have to immediately issue additional debt to fund it.
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Federal Reserve Board Chairman Jerome Powell characterized the programs implemented to stem the route in #capitalmarkets as a result of the economic shutdown as follows, “We crossed a lot of red lines, that had not been crossed before, this is that situation in which you do that, and you figure it out afterward.”
The chart shows one of the red lines they crossed. As part of the Fed’s Secondary Market Corporate Credit Facility, the Fed has purchased #billions of dollars of direct #corporatedebt. Some of the most interesting purchases include; Amazon, Toyota Motor Corporation, Apple, Philip Morris, Microsoft and Berkshire Hathaway.
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Investors face an extremely challenging predicament in #bonds which – as a result of low yields - are priced to deliver returns somewhere between 0.9 and 1.2% over the next 10 years (before taxes, fees and inflation).
Core bonds have historically served as a source of income and risk ballast in a diversified #portfolio; however, as a result of low yields, unless inflation drops even lower, real returns in bonds will be negative.
While there are powerful forces that could drive #deflation, policymakers are intent on generating #inflation. Our advice is don’t fight them. Sooner or later, the debasing effects of trillions of dollars of stimulus funded with printed money will show up in bond prices or, if suppressed via “curve control”, the U.S. dollar.
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Riskier sectors of the credit markets rallied in the third quarter with high yield bonds and bank loans rising 4.6% and 4.1%, respectively.
Over the quarter, high yield bond spreads narrowed by 94 basis points from 6.44% to 5.50% as the Federal Reserve Board continued to support the corporate credit markets through the purchase of bonds and bond ETFs. As of September 30, the #federalreserve has purchased $8.6 billion of #ETFs and $4.4 billion of direct bonds (just over 1% of what was authorized).
While positive, U.S. investment-grade #bonds were the worst performing sector, delivering 0.6% for the quarter
Rates, as proxied by the 10-year Treasury yield, rose 24 basis points over the quarter.
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There is a historical and intuitive relationship between the U.S. dollar and the combined budget balance and current account balance.
Adding the still-high current account #deficit to the exploding budget deficit (now well over 10% of GDP), yields a twin deficit that was -18.7% of U.S. GDP as of September 2020.
The one saving grace for the U.S. dollar is that similar budget shortfalls are being experienced by almost every other major developed and #emergingeconomies. This should stem the decline of the dollar relative to those currencies, but it may not make a difference relative to real assets.
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There are additional risks with closed-end funds, including higher fees and the risk that discounts remain wide, but generally investors have been well-served by buying these assets when they are trading at deep discounts.
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2.8% expected return for a core U.S. 60/40 stock/bond mix is near the lowest in the post-war period.
Investors will need to lower expectations, take on additional risk, and/or consider new allocations and drivers of return.
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The entire #gold thesis is summarized in the two charts on this page. Historically, gold’s lack of yield was a stumbling block, but with the pool of negative yielding debt globally surpassing $16 trillion, gold has become a relatively higher-yielding store of value and potential anchor for an #investmentportfolio.
Further, as the chart on the right shows, gold has an almost perfect inverse correlation with the inflation-adjusted yield on the U.S. 10-Year Treasury Note. As fiscal and monetary policymakers increasingly seek to support the #economy2020 and markets with low nominal rates and QE-funded #stimulus, the risk of higher inflation and therefore lower real yields is increasing.
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Deflation portfolio is an equal-weighted blend of IG #Bonds, #Treasuries, U.S. #LargeCap, #growthstocks, #consumerdiscretionary, and #technology; inflation portfolio is an equal-weighted blend of TIPS, #Commodities, #cashmanagement , #Gold, International Dev. Stocks, #RealEstate, #valuestocks, #Banks, and #Energy.
Through 9/30/2020, the #deflation portfolio (teal line) has significantly outperformed the #inflation portfolio (yellow line) this cycle, but historically these two portfolios have traded back and forth in terms of dominance.
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From all of us at Magnus, we wish you #HappyHolidays and a healthy #NewYear!
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Wishing you and your family health, happiness and abundance in the year to come.
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Magnus Financial Group LLC's Senior Managing Director Ronald Deutsch, CFA®, MBA, believes we are living in difficult times and facing unprecedented realities: #stockmarket, #volatility, economic turmoil, civil unrest, the strain of quarantine and #COVID-19 health challenges. Each can singularly or all can collectively take their toll. While the answers will vary in order to address each person’s unique circumstances, and laws vary by state, times of uncertainty serve as a glaring reminder of the importance of having a well-considered estate plan. There are key estate planning documents that every individual or family should consider having in place.
See the attached article which provides #estateplanning considerations in light of the #pandemic
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A Bubble Without Precedent
In at least a few ways, markets are starting to show all the hallmarks of a speculative mania. Well-known asset manager and market historian Jeremy Grantham penned this note last week summarizing the elements of his "bubble" call...
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Tesla
■ While COVID-19 remains a critical #health issue, positive vaccine developments and abundant liquidity provided in 2020 boosted the prices of risky assets.
■ Government spending was going to be substantial regardless of the composition of the government, but the “blue sweep” by #Democrats increases the odds of further fiscal and monetary accommodation for the foreseeable future.
■ The year is shaping up to be one in which #WallStreet gets continued support from the Federal Reserve in the form of a zero-interest rate policy and #quantitativeeasing, while Main Street is supported with continued checks from the government.
■ With a legitimate path to an end to the COVID-19 crisis, a key to navigating #2021 will be redefining normal – areas that we see as undergoing the most substantial transformation are #inflation and #realestate.
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Pfizer, Bloomberg LP, Amazon.com CBRE
Magnus Financial Group LLC's CEO Michael Schwartz, CFP®, AEP® was selected to offer insight in a Forbes article where 12 industry professionals provided tips on transitioning to a new wealth advisor.
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#equities #socialmedia #marketing
FORBES.COM
Council Post: 12 Pro Tips For Smoothly Transitioning A Financial Client To A New Advisor
"Make no mistake - for the majority of investors today, this could very well be the most important event of your investing lives. Speaking as an old student and historian of markets, it is intellectually exciting and terrifying at the same time. It is a privilege to ride through a market like this one more time."
Jeremy Grantham Co-Founder of GMO, Jan-2021
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Check our latest article on Forbes Finance Council which highlights a record breaking art sale from 2017 of one of Jean-Michel Basquiat's paintings entitled - How To Save On Income Taxes Using An ‘INGenius’ Trust.
The article illustrates the planning utility of incomplete gift non-grantor #trust (ING) planning.
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FORBES.COM
Council Post: How To Save On Income Taxes Using An ‘INGenius’ Trust
To date, fiscal stimulus has been more reactive (replacing lost income) than proactive (stimulus).
We believe policy will start to become more proactive and supportive/ distortive for at least three reasons:
1. Single party control of the U.S. government
2. The de facto merging of the Fed and Treasury
3. The #Covid-19 crisis removing social and political pushback to government spending and bailouts
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
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- Along with positive #COVID-19 cases, net new ICU and hospitalizations are dropping substantially.
- The U.S. is averaging over 1 million tests/day with 5% of those being positive vs. roughly 150,000 tests/day in April and 20% being positive.
- According to the CDC, about 31 million people in the U.S. have received at least one dose, with over 5 million being fully #vaccinated.
- Pfizer has delivered 17 million doses while Moderna has delivered 14 million. Pfizer is committed to providing 200 million doses by the end of July and Moderna is to deliver 200 million by June.
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
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"Neither the president-elect, nor I, propose this relief package without an appreciation for the country's debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big. In the long run, I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time."
Janet Yellen, Treasury Secretary, January 2021
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
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Congratulations to our CEO Michael Schwartz, CFP®, AEP® for receiving recognition for the third consecutive year to Forbes' Best-In-State Wealth Advisor list.
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FORBES.COM
Best-In-State Wealth Advisors 2021
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
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Magnus Financial Group LLC's CEO Michael Schwartz, CFP®, AEP® was selected to offer insight in a new Forbes Finance Council article where 10 industry professionals that touch on the factors to consider during a #divorce.
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https://www.forbes.com/sites/forbesfinancecouncil/2021/02/08/10-important-financial-factors-to-consider-during-a-divorce/?sh=654005c41572
FORBES.COM
Council Post: 10 Important Financial Factors To Consider During A Divorce
We continue to believe that #centralbanks balance sheets are influencing stock prices.
In response to the crisis the #Fed, ECB and BoJ have grown their balance sheets by over $8 trillion. We believe this liquidity has and will continue to support asset prices. Given the pandemic and the growing acceptance of further government intervention in markets, we do not see this changing any time soon.
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
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Public Markets:
U.S. equity valuations are back in the top-quintile, implying muted forward long-term returns substantially below those of the last decade, but the tactical outlook looks less bleak...
Private Markets:
Even net of higher fees, select investments in high quality #venturecaptial and #privateequity can add value for clients that have the capacity for reduced liquidity...
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
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"When legislators, after having ruined men by [spending] and taxes, persevere in their idea, they say to themselves, 'If the people suffer it is because there is not enough #money. We must make some.' And as it is not easy to multiply the precious metals, especially when the pretended resources of prohibition have been exhausted, they add, 'We will make fictitious money, nothing is more easy, and then every citizen will have his pocket-full of it, and they will all be rich."
Frederic Bastiat, French Businessman & Economist (1801-1850)
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs'
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Given the lack of progress on a fiscal spending package in the second-half of 2020 and the roughly $1.6 trillion in cash held at the #treasury, fourth-quarter debt issuance was cut by $600 billion and pushed into the first quarter of 2021.
Through its #quantitativeeasing program in which it buys Treasuries and mortgage-backed #securities, the Fed bought $240 billion of Treasuries or 39% of total issuance in the fourth quarter.
At its current pace, the #Fed would only be buying 22% of first-quarter issuance, which suggests the program may need to be increased, especially with longer-term interest rates currently on the rise...
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs'
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Corporate bonds outperformed #Treasuries during the quarter as the risk-on nature of markets buoyed the sector as Treasury yields rose (10-year yield went from 68 basis points to 92 basis points). This kept the yield-to-duration ratio at its lowest levels ever.
The yield-to-duration ratio of the U.S. investment grade corporate #bondmarket is a good proxy for return per unit of risk. The ratio helps contextualize the state of #fixedincome markets relative to history and the challenges of allocating to traditional public fixed income markets.
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs'
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Expected returns for core bonds are at their lowest levels in history, near 1%.
#Fixedincome allocations have provided ballast to riskier parts of the portfolio. However, with investment grade fixed income yielding very little, that protection is as muted as it has ever been.
We continue to spend significant time evaluating other potential areas of the fixed income markets for prudent risk adjusted returns, while being mindful of overall credit and duration risks. These areas include business development corporations and private credit strategies.
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
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Short-term rates will remain low for the foreseeable future.
The #federalreserve's new, somewhat opaque approach to generating #inflation adds insult to injury for fixed income investors with low-risk thresholds, substantially raising the risk of negative real yields.
U.S. Treasury yields may rise as a result of massive government spending, but a structural ceiling on developed market rates from demographics and debt overhang will likely not be overcome until there is persistent MMT-inspired stimulus via some form of ongoing #universalbasicincome (UBI).
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
The commercial #realestate market is a $20 trillion market or about half of the U.S. #stockmarket.
Trends that are emerging include corporations moving from high to low tax states, people are moving out of urban areas and work-from-home appears it will continue in various formats.
Deloitte recently conducted a global survey of real estate companies and found that more than 50% of respondents expect declines in rental revenue and increased vacancies over the next twelve months.
Year-over-year rental revenue growth and occupancy rates for a retail REIT, @Simon Properties Inc, an office #REIT, Boston Properties are still declining through September.
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
While Master Limited Partnerships benefited from the vaccine news during the quarter they finished the year decidedly negative.
As economic stabilization is occurring our view is that exposure to the asset class should be maintained.
The asset class was able to increase free cash flow in the tumultuous year that was 2020, primarily because they aggressively cut capital expenditures. It is expected that these cuts to capital expenditures will continue and free cash flow will continue to expand.
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
Historically, #gold’s lack of yield was a stumbling block, but with the pool of negative yielding #debt globally surpassing $16 trillion, gold has become a relatively higher-yielding store of value and potential anchor for portfolios.
Further, as the chart on the right shows, gold has an almost perfect inverse correlation with the inflation-adjusted yield on the U.S. 10-Year Treasury Note.
As fiscal and monetary policymakers increasingly seek to support the economy and markets with low nominal rates and QE-funded #stimulus, the risk of higher inflation and therefore lower real yields is increasing...
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs'
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
#Commodities have likely bottomed as reduced demand in 2020 was met with supply cuts. Coupled with a potential structural shift higher in #inflation in the coming years, we are likely near/at an attractive entry point.
#gold will continue to benefit if the pool of negative-yielding sovereign #debt (>$16 trillion now) grows or fiscal spending/quantitative easing programs persist...
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs'
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
#Cash has had the highest tactical portfolio value only after periods of rate hikes, which raise its expected return while also having the dual effect of slowing the rest of the economy via higher debt service costs and resulting deleveraging.
While we still believe in (and allocate to) cash to reduce #volatility and as a source of liquidity for potential future opportunities, we believe investors should avoid the urge to over allocate to cash given our views of future inflation.
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
"The one reality that you can never change is that a higher-priced asset will produce a lower return than a lower-priced asset. You can't have your cake and eat it. You can enjoy it now, or you can enjoy it steadily in the distant future, but not both - and the price we pay for having this market go higher and higher is a lower 10-year return from the peak."
Jeremy Grantham, GMO, January 2021
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
"If the financial system has a defect, it is that it reflects and magnifies what we human beings are like. Money amplifies our tendency to overreact, to swing from exuberance when things are going well to deep depression when they go wrong. Booms and busts are products, at root, of our emotional #volatility."
Niall Ferguson, Historian and Fellow at The Hoover Institution, Stanford University
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
The commercial #realestate market is a $20 trillion market or about half of the U.S. #stockmarket.
Trends that are emerging include corporations moving from high to low tax states, people are moving out of urban areas and work-from-home appears it will continue in various formats.
Deloitte recently conducted a global survey of real estate companies and found that more than 50% of respondents expect declines in rental revenue and increased vacancies over the next twelve months.
Year-over-year rental revenue growth and occupancy rates for a retail REIT, @Simon Properties Inc, an office #REIT, Boston Properties are still declining through September.
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
Treasury Indigestion
The topic du jour is the recent rise in both inflation expectations and long-term Treasury yields, which have hurt long-term bond prices (bond prices and yields move inversely) and have started to suck the air out of the most overvalued portions of the #stockmarket. Just as low #interestrates and #inflation have increased the perceived present value of long-duration assets (i.e., unprofitable "story stocks"), higher interest rates are having the opposite effect.
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
Michael Schwartz, CFP®, AEP®, Ronald Deutsch, CFA, MBA, Paul F. Hoerrner Jr., CFP®, Michael Tanney
#Cash has had the highest tactical portfolio value only after periods of rate hikes, which raise its expected return while also having the dual effect of slowing the rest of the economy via higher debt service costs and resulting deleveraging.
While we still believe in (and allocate to) cash to reduce #volatility and as a source of liquidity for potential future opportunities, we believe investors should avoid the urge to over allocate to cash given our views of future inflation.
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
"The one reality that you can never change is that a higher-priced asset will produce a lower return than a lower-priced asset. You can't have your cake and eat it. You can enjoy it now, or you can enjoy it steadily in the distant future, but not both - and the price we pay for having this market go higher and higher is a lower 10-year return from the peak."
Jeremy Grantham, GMO, January 2021
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
"If the financial system has a defect, it is that it reflects and magnifies what we human beings are like. Money amplifies our tendency to overreact, to swing from exuberance when things are going well to deep depression when they go wrong. Booms and busts are products, at root, of our emotional #volatility."
Niall Ferguson, Historian and Fellow at The Hoover Institution, Stanford University
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
Treasury Indigestion
The topic du jour is the recent rise in both inflation expectations and long-term Treasury yields, which have hurt long-term bond prices (bond prices and yields move inversely) and have started to suck the air out of the most overvalued portions of the #stockmarket. Just as low #interestrates and #inflation have increased the perceived present value of long-duration assets (i.e., unprofitable "story stocks"), higher interest rates are having the opposite effect.
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
Michael Schwartz, CFP®, AEP®, Ronald Deutsch, CFA, MBA, Paul F. Hoerrner Jr., CFP®, Michael Tanney
#Cash has had the highest tactical portfolio value only after periods of rate hikes, which raise its expected return while also having the dual effect of slowing the rest of the economy via higher debt service costs and resulting deleveraging.
While we still believe in (and allocate to) cash to reduce #volatility and as a source of liquidity for potential future opportunities, we believe investors should avoid the urge to over allocate to cash given our views of future inflation.
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
"The one reality that you can never change is that a higher-priced asset will produce a lower return than a lower-priced asset. You can't have your cake and eat it. You can enjoy it now, or you can enjoy it steadily in the distant future, but not both - and the price we pay for having this market go higher and higher is a lower 10-year return from the peak."
Jeremy Grantham, GMO, January 2021
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
Treasury Indigestion
The topic du jour is the recent rise in both inflation expectations and long-term Treasury yields, which have hurt long-term bond prices (bond prices and yields move inversely) and have started to suck the air out of the most overvalued portions of the #stockmarket. Just as low #interestrates and #inflation have increased the perceived present value of long-duration assets (i.e., unprofitable "story stocks"), higher interest rates are having the opposite effect.
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
Michael Schwartz, CFP®, AEP®, Ronald Deutsch, CFA, MBA, Paul F. Hoerrner Jr., CFP®, Michael Tanney
#Cash has had the highest tactical portfolio value only after periods of rate hikes, which raise its expected return while also having the dual effect of slowing the rest of the economy via higher debt service costs and resulting deleveraging.
While we still believe in (and allocate to) cash to reduce #volatility and as a source of liquidity for potential future opportunities, we believe investors should avoid the urge to over allocate to cash given our views of future inflation.
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
"The one reality that you can never change is that a higher-priced asset will produce a lower return than a lower-priced asset. You can't have your cake and eat it. You can enjoy it now, or you can enjoy it steadily in the distant future, but not both - and the price we pay for having this market go higher and higher is a lower 10-year return from the peak."
Jeremy Grantham, GMO, January 2021
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
Magnus Financial Group LLC's CEO Michael Schwartz, CFP®, AEP® moderated a panel yesterday for Portfolio Summits entitled - Looking Beyond the U.S.: The Case for Investing Globally
The guest speakers included Josh Rowe, CFA of WMS Partners, Stephen D Corr, CFA of Baillie Gifford and Malcolm Dorson of Mirae Asset Global Investments
Thank you Chris Clements and Sara Katrenich for the opportunity, a well-executed event and to all the speakers for their insights.
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #commerce #investmentplanning #investmentadvice #investmentmanagement #equities #socialmedia #marketing #money #financialservices #investment #finance
Treasury Indigestion
The topic du jour is the recent rise in both inflation expectations and long-term Treasury yields, which have hurt long-term bond prices (bond prices and yields move inversely) and have started to suck the air out of the most overvalued portions of the #stockmarket. Just as low #interestrates and #inflation have increased the perceived present value of long-duration assets (i.e., unprofitable "story stocks"), higher interest rates are having the opposite effect.
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
Michael Schwartz, CFP®, AEP®, Ronald Deutsch, CFA, MBA, Paul F. Hoerrner Jr., CFP®, Michael Tanney
#Cash has had the highest tactical portfolio value only after periods of rate hikes, which raise its expected return while also having the dual effect of slowing the rest of the economy via higher debt service costs and resulting deleveraging.
While we still believe in (and allocate to) cash to reduce #volatility and as a source of liquidity for potential future opportunities, we believe investors should avoid the urge to over allocate to cash given our views of future inflation.
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
"The one reality that you can never change is that a higher-priced asset will produce a lower return than a lower-priced asset. You can't have your cake and eat it. You can enjoy it now, or you can enjoy it steadily in the distant future, but not both - and the price we pay for having this market go higher and higher is a lower 10-year return from the peak."
Jeremy Grantham, GMO, January 2021
From the Magnus Q1 2021 Market Outlook: https://lnkd.in/gMfjYMs
#magnus #magnusfinancialgroup #ria #wealthmanagement #investments #financialplanning #investing #markets #economy #economics #future #commerce #finance #recovery #gdp #growth #investment #investmentplanning #investmentadvice #investmentmanagement #socialmedia #marketing #education #data #bigdata #data #money #bonds #privateequity #insurance #stockmarket
