Given the backdrop of easy money and what appears to be a race to the bottom in the fiat currencies, some investment analysts are convinced that the risk of hyper-inflation is building. In their world, you gotta load up the truck with gold, since it should be treated as an alternative currency.
As we move through the last days of December, with its cold nights and warm family cheer, we should take a moment to think about what New Year’s resolutions we might make to improve our financial lives in 2012. Here are three items you may not have considered.
Santa Claus has come and gone, and so far seasonal tendencies have worked a little magic on domestic equity markets, which have been drifting up. But while U.S. equities appear to be reflecting the goodwill of men and holiday cheer, certain markets are behaving more like Mr. Scrooge.
Meet Jeff Troll, one of the expert wealth managers at Pinnacle Advisory Group.
Meet Dwight Mikulis, Chief Financial Officer and Senior Partner at Pinnacle Advisory Group.
The S&P 500 is up more than 3% this week, leading the talking heads on TV to once again declare that a “Santa Clause Rally” is unfolding. It may seem kind of silly to hear professional investors talk in such terms, but December has historically been the best month for stocks.
Chief Investment Officer Ken Solow and Chief Investment Strategist Rick Vollaro explain why Pinnacle Advisory Group’s investment approach is so unique, and how it benefits our clients.
In the December Journal of Financial Planning, Michael Kitces, Sauro Locatelli, and I published a study entitled, “Improving Risk-Adjusted Returns Using Tactical Asset Allocation Strategies.” The title is a mouthful, but we were basically asking if changing the asset allocation of a portfolio can increase your returns relative to the amount of risk that you take, compared to just buying and holding stocks in your portfolio. Around here we call changing the asset allocation “tactical asset allocation.”
Readers who visit the Pinnacle Advisory Group website (pagmain.wpengine.com) will note that a paper by Solow, Kitces, and Locatelli, entitled “Improving Risk Adjusted Returns Using Market-Valuation-Based Tactical Asset Allocation Strategies,” was published in the December issue of the Journal of Financial Planning (JFP) – the most distinguished journal in the profession. The paper itself is a technical study that may be difficult to read, so this summary is intended for those who might not care to wade through the academic and statistical details. The basic conclusion of the paper was this: By reducing exposure to stocks when their prices are excessive relative to the profits they produce and increasing exposure to stocks when prices are low relative to their earnings, it is possible to systematically improve long-term returns.
Recently U.S. data has taken a more positive tone as international data continues to get softer. Thursday’s U.S. data brought a very strong number on jobless claims, along with two regional manufacturing surveys that were better than expected. Industrial production numbers were weak, but on balance more data beat estimates than missed, and that’s been the pattern for the last few months. Meanwhile Europe continues to deteriorate and the numerical trends are worrisome. At this point it would seem a European recession is a foregone conclusion, and the only question left to argue about is whether the recession will be mild, average or severe. In Asia things are cooling fast as well, and many leading indices are falling. The positive spin is that the emerging world is now cutting rates; on the other hand, they are not cutting them fast enough, nor with sufficient magnitude. Overall the international data is far weaker than that of the U.S., which makes for a mixed and confusing landscape.