Entries filed under 'Financial Markets'

    U.S. Stocks: A Bad Time for Market Timing

    January 13, 2016 10:32 AM by Joseph M. Graham, CFA

    The impulse to sell during market pullbacks has often resulted in lower long-term returns.

    The year got off to a record start for the U.S. stock market (as represented by the S&P 500® Index); unfortunately, the record (as of January 7) was for the worst performance by the index in the first four trading days of the year. 

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    A Volatile Start to 2016

    January 8, 2016 4:00 PM by Timothy Paulson

    Here are some insights on the January market turmoil—and its implications for investment managers.

    As we pointed out in our year-end U.S. fixed-income market preview, 2016 held the prospect of continued volatility in financial markets, with flare-ups of risk and other uncertainty a likely feature of the post-rate hike world following the U.S. Federal Reserve’s policy tightening on December 16.  

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    U.S. Stocks: Keep Calm and Don't Sweat the Yuan

    January 7, 2016 5:40 PM by Zane Brown

    Investors may be overreacting to economic and currency developments in China. Sound familiar?

    The new year certainly has been less than happy thus far for U.S. equity markets, but it appears that just as investors did in August 2015, they may have overreacted to recent developments in China.

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    The Chinese Correction: The Case for Calm

    August 26, 2015 10:20 AM by Zane Brown

    Investor fear recently reached levels not seen since 2008. That’s not justified by current U.S. economic conditions.

    In an earlier blog post, Milton Ezrati, Lord Abbett Partner, Senior Economist and Market Strategist, addressed current investor fears about China’s slowing economy, and why those fears are overdone. We thought it would be worthwhile to look at recent history to put those fears into context.

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    Equities: A "China Syndrome" Sequel? Not Quite

    August 24, 2015 10:12 AM by Milton Ezrati

    The sell-off in U.S. stocks in response to reports of a weakening Chinese economy shows that investor emotions have gotten ahead of reality.

    The U.S. equity market's recent selloff seems to have its roots in an exaggerated, indeed panicked, response to negative news out of China. A recent Economic Insights on the Lord Abbett website explains in detail why such interpretations are erroneous. The equity rout in China, though severe, is an entirely unsurprising response to the market's previous and unsustainable run-up during the previous year.

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    Trying to Predict the Market? Tune Out the Equity Strategists!

    November 4, 2014 11:50 AM by Brian Foerster

    Even before the recent pullback, the market was lagging the growth in earnings. 

    Volatility has returned to the stock market, causing concern in some quarters. But this seems to be an overreaction, given the relative strength of the U.S. economy and the fact that even at the recent low of 1,862 in mid-October the S&P 500® Index was still slightly up for the year. Since then, it has rebounded to a new high. (Although, due to market volatility, the market may not perform in a similar manner in the future.)

    More important, investors need to view the recent volatility in a longer-term context. Two key statistics are worth noting: 1) annualized return and 2) average earnings growth.

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    Bonds: Geopolitical Risk Rears Its Head

    July 18, 2014 2:30 PM by Zane Brown

    Developments in Ukraine and the Middle East sparked volatility in fixed-income markets on July 17. Here’s a look at the implications for investors. 

    Geopolitical risk, which largely has been brushed aside by the fixed-income market in 2014, seized the spotlight on July 17. News of a downed Malaysian airliner in Ukraine, and military incursion by Israel into Gaza, fueled a “flight to quality” trade that pushed U.S. 10-year Treasury prices higher and yields lower. The yield on the 10-year note touched 2.44% on the session, matching the low for 2014 (all data on bond yields and spreads in this post are from Bloomberg). High-grade corporate bonds also benefited, as investors redirected assets toward higher credit-quality securities. 

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    Stocks: A Stark Reminder of Global Risk

    July 18, 2014 2:25 PM by Milton Ezrati

    Fresh news of geopolitical turmoil spurred selling on July 17. How might markets behave in the aftermath?

    U.S. equity investors appear to have disregarded a growing number of geopolitical threats as they bid major indexes higher in 2014. But the shock of a downed Malaysian airliner in Ukraine, coupled with news of an incursion by Israeli ground forces into Gaza, spurred widespread selling in U.S. stocks on July 17. 

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    Turning the Lights Up on Utilities

    June 11, 2014 3:57 PM by Glenn McIsaac

    If you want to know what has powered the S&P 500, check out utilities, one of the top three performing sectors since 2004, with an average annual return of 10.4%. 

    In their search for total return, many investors have fallen in love with utilities stocks. And who could blame them? Over the past decade, the utilities sector has been one of the top performing components of the Standard & Poor's 500 (See Chart 1) due to solid earnings growth (an average compound annual growth rate of 4%) and declining interest rates.

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    High-Frequency Trading: A Little Less Frenzy, Please

    April 24, 2014 10:05 AM by Ted Oberhaus

    High-frequency trading may be the villain du jour when it comes to selling books, but we’ve had some of our best minds on the subject since 1999. 

    A Trader's Perspective

    Can a trading strategy that involves holding stocks for milliseconds to minutes, or that has no intrinsic interest in the companies behind the stocks, actually be considered investing? Few would argue that it is. In fact, most would say it is pure speculation. Does that make it bad? Actually, high-frequency trading (HFT) is a complex issue that deserves more thoughtful consideration than the recent media frenzy about HFT allows. 

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