The last two days in gold have been downright nasty, as it has lost roughly 13% of its value in that time. That is clearly not what one would have expected in a so called “safe haven” asset class. As always in markets, with a huge move comes big media attention when everyone gets to weigh in on why gold has plummeted over the past few days. Some say large hedge funds have been forced to liquidate, some think the safe haven trade is over, and some believe the great rotation might be a commodity rotation into equity.
The way we explain our process for managing portfolios has significantly changed over the past few years. It seems that both retail and institutional investors want to hear more about how ‘the sausage is made’ than they did a decade ago. And why not? The financial markets have been difficult to navigate since the market topped in the year 2000 and good consumers want to know how we might fare if the markets remain challenging in the future. While I appreciate the work that has gone into fine-tuning our message, one aspect of our investment process is just as relevant as it was when we started tactically and actively managing portfolios in October 2002: We try to find investment opportunities that have a great story.
J.C. Parets with Allstarcharts.com does fantastic technical work, and he is telling his readers to watch the Yen/USD exchange. The chart below shows this relationship; a falling line means that the Yen is gaining against the U.S. Dollar. The Yen is rallying hard today on the back of a manufacturing miss here in the U.S., and is pushing below some key technical levels. The short term uptrend marked in white has been broken, the $94 support/resistance level has been broken, and the 50 day Moving Average has been broken. A stronger Yen seems to be the play here.
On March 23, 2013, Pinnacle Advisory Group held its annual “Inside the Investment Committee” event. The members of Pinnacle’s investment team discussed the market, the economy, and their strategies for investing client portfolios.
With the payroll tax in effect and the sequester beginning to slowly phase in, many have worried that the U.S. economy is on thin ice. But those looking for the economy to fold might have been caught off-guard with the economic data starting to surprise on the upside since the beginning of February.
One concept that is common in the investment world is the idea that assets will typically revert to the mean or mean reversion (the average). This may seem a bit contrarian since it essentially means that when an asset price returns in excess of its long term average return profile, over time it will likely reverse course and return to that long term average. Imagine a rubber band that gets stretched…. and then eventually snaps back to its normal size.
Those in Generation X (myself included) were born between 1965 and 1979, which means that our ages range from 33 to 48. This is a tremendously important time period in our lives. Many of us get married, have kids, watch them grow up, and send them off to college.
In a blog post I wrote in June 2012 (“Under the Hood of the New Manufacturing Report”) I wrote about the difference between the New Orders component and the Inventory component of the Manufacturing PMI, and how it tends to lead the overall PMI by about three months. Today, I want to look at how this indicator has performed since then, and what it is signaling for the near future.
For U.S. investors, foreign currency fluctuations can be a critically important – but much overlooked — factor to consider when investing in international stock or bond fund. If a foreign currency is appreciating relative to the U.S. dollar, it can provide a boost to returns, but if the currency is weakening, it can detract from them.
One of the hot investment phrases streaming through the investment media lately is “currency wars.” This refers to the idea that governments around the globe are fostering weak currency policies in order to export their way to prosperity at a time when world aggregate demand is weak. Japan is the latest country to weaken its currency, as new leadership has recently diluted the value of the Yen materially in an attempt to jumpstart their way out of deflation. So with all these countries racing their currencies to the bottom, shouldn’t gold be the store of value that we can all depend on? One look at the chart below tells you that gold has not received the memo.