Posts Tagged ‘asset allocation’

FUND MANAGER BULLISHNESS COULD BE WARNING SIGN

FUND MANAGER BULLISHNESS COULD BE WARNING SIGN

Courteswy of The Pragmatic Capitalist

The January Merrill Lynch Fund Managers Survey showed very optimistic expectations from the majority of money managers.  This is a sharp change from last months survey when fund managers were entering 2009 with cautious optimism.  The latest survey showed the highest surge in Merrill’s Risk & Liquidity (46%) indicator since May of 2006.   In the past, this indicator has served as a fairly good contrarian indicator.

FMS1 FUND MANAGER BULLISHNESS COULD BE WARNING SIGN

In terms of asset allocation, fund managers have turned substantially more aggressive.  Cash levels are now at their lowest levels since 2007.  Fund managers have aggressively deployed cash into the equity markets:

“Average cash balances have fallen to 3.4 percent, the lowest reading since mid 2007 and down significantly from 4.0 percent in December. Appetite for equities is strong. A net 52 percent of asset allocators are overweight equities, up sharply from a net 37 percent in December.”

FMS2 FUND MANAGER BULLISHNESS COULD BE WARNING SIGN

Much of this cash has poured into commodities:

FMS3 FUND MANAGER BULLISHNESS COULD BE WARNING SIGN

In terms of regions, the U.S. remains an underweight as investors continue to favor emerging markets:

FMS4 FUND MANAGER BULLISHNESS COULD BE WARNING SIGN

This survey is showing some contrarian sell signals.  Just 45% of fund managers are protecting themselves against a downturn versus 52% in December.   The survey also shows a strong appetite for risk and high beta names. According to Merrill’s analysts the survey could be cause for alarm:

“This survey is one of the more bullish we have seen and suggests that investors buy into the idea that this recovery has legs,” said Gary Baker, head of European Equities strategy at BofA Merrill Lynch Global Research. “We are, however, seeing early signs that might alert contrarians looking for a selling opportunity – namely low cash allocations and possible complacency against a sell off in stocks,” said Michael Hartnett, chief Global Equities strategist at BofA Merrill Lynch Global Research.

Source: ML

 


Tags: , , , , ,




Asset Allocation

Asset Allocation

asset allocationCourtesy of Rick Bookstaber

I appeared last Friday on a the PBS program WealthTrack, where the topic was asset allocation, in particular, as host Consuelo Mack put it, how to build an all weather portfolio. I was the skeptic of the group. I don’t think there is some magic asset allocation that protects you from the buffetings of financial storms without it also trimming your sails during fair weather. Here is an encapsulation of my views from the program.

Asset allocation and risk appetite
One of the participants, asset allocation guru David Darst of Morgan Stanley, proposed various portfolios to protect against a 100-year flood, 30 to 70-year flood, a 25-year flood, etc. Those portfolios boiled down to putting less in risky assets and more in bonds; the more severe the flood you anticipate, the less risk you take. Of course, that will do the trick. If by asset allocation you mean determining where to set your risk tolerance dial, we’re all on board.

Asset allocation is like clapping with one hand
But the discussion of risk tolerance highlights that we can only go so far with asset allocation if we only look at assets. What matters is assets versus liabilities, because the liabilities determine our risk tolerance and, related to that, our demand for liquidity. It is impossible to formulate an ideal asset allocation strategy without knowing the liability stream those assets are intended to meet. There is no one-size-fits-all for asset allocation. This reminds me of an FAJ article I did back in the 1980s with pension actuary Jeremy Gold entitled “In Search of the Liability Asset”.

Diversification works well, except when it really matters
We all know the argument from Finance 101: If you hold 16 uncorrelated assets, your risk will drop by a factor of four. Well good luck with that.

During a crisis, when diversification really matters, correlations aren’t near zero (as if they ever are). All that people care about is risk and liquidity. All assets that are highly risky drop, all assets that are less liquid drop. No one cares about the subtlety of earnings streams. It is like high energy physics. When the heat gets turned up high enough, matter is just matter, the distinctions between the elements is blurred away.

This is not to say


continue reading


Tags: , , , , ,




 
 
 

Zero Hedge

Markets Are "On The Cusp" Again

Courtesy of ZeroHedge. View original post here.

Authored by Sven Henrich via NorthmanTrader.com,

For the third month in a row markets are on the cusp of breaking their bull market trends. And once again they need a magic rescue into month end to avoid such a break.

What if you have a license to rally and stocks sell anyways? Not a g...



more from Tyler

Phil's Favorites

What should the House do? Part 1: Veto-proof actions... then aim for a thousand vetoes

 

Guest author David Brin — scientist, technology consultant, best-selling author, and one of the “World’s Best Futurists” — explores a myriad of topics on his lively and always interesting blog: politics, science, history, science fiction, etc. For more posts by David, visit the CONTRARY BRIN blog...



more from Ilene

Kimble Charting Solutions

Small caps could fall 20% from here, says Joe Friday

Courtesy of Chris Kimble.

This chart looks at the Russell 2000 over the past 30-years, where it has spent the majority of that time, inside of rising channel (A).

This chart reflects that the long-term trend in small caps remains higher. Weakness this year has it testing rising support tied to the 2009 lows at (1).

Joe Friday Just The Facts Ma’am- If the Russell breaks below support at (1), it could work its way over time to channel support at (2), which is currently around 20% below current prices.

Very important support test in play ...



more from Kimble C.S.

Digital Currencies

Cryptogeddon Continues - Bitcoin Plunges To 2018 Lows Amid 'Cash' Chaos

Courtesy of ZeroHedge. View original post here.

Crypto markets have accelerated their losses again overnight with Bitcoin crashing to new 2018 lows, Ethereum back into double-digits, and Bitcoin Cash utterly devastated as lawsuits fly.

Once again a sea of red across the crypto space...

Source

Bitcoin Cash is down 40% this week alone...

...



more from Bitcoin

Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga.

  • Data on nonfarm payrolls and unemployment rate for November will be released at 8:30 a.m. ET.
  • The University of Michigan's consumer sentiment index for December is schedule for release at 10:00 a.m. ET.
  • Data on wholesale inventories for October will be released at 10:00 a.m. ET.
  • The Energy Information Administration’s weekly report on natural gas stocks in underground storage is schedule for release at 10:30 a.m. ET.
  • Federal Reserve Member of the Board of Governors Lael Brainard is set to speak in Washington D.C. at 12:15 p.m. ET.
  • The Baker Hughes North American rig count report for the recent week will be released at 1:00 p.m. ET.
  • Data on consumer credit for October will be released at 3:00 p.m. ET.
  • ...


http://www.insidercow.com/ more from Insider

Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



more from M.T.M.

Chart School

Golds Xmas Gift

Courtesy of Read the Ticker.

Three things have tweaked the fundamentals for gold.

1) Bitcoin is not attracting the hot cash, unlike 2016.

2) Fed's Powell dovish switch, now less expectations for interest rate hikes in 2019.

3) China to import more goods from the USA, hence more US Dollars required.

The question now is will this move gold back to resistance before year end? 

Gann angles look good, cycle looks attractive, now we wait for volume and a price to break into new ground. Profits could be golden for Xmas.

Gann Angles



 

Cycle picture
...



more from Chart School

Biotech

World's first gene-edited babies? Premature, dangerous and irresponsible

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

 

World's first gene-edited babies? Premature, dangerous and irresponsible

Vchal/Shutterstock

By Joyce Harper, UCL

A scientist in China claims to have produced the world’s first genome-edited babies by altering their DNA to increase their resistance to HIV. Aside from the lack of verifiable evidence for this non peer-revie...



more from Biotech

Members' Corner

Cheri Jacobus on Politics with PSW

 

Cheri Jacobus is a widely known political consultant, pundit, writer and outspoken former Republican and frequent guest on CNN, MSNBC, FOX News, CBS.com, CNBC and C-Span. Cheri shared her thoughts about the current political environment with us in our August interview, and now we’re following up. 

Ilene: Is there a take-home message from election results of 2018?

Cheri: Yes. No political party can survive when it appeals to only one demographic. The GOP has ignored all of the lessons of recent elections that showed they needed to appeal to African-Americans, Latinos, and women. 

Ilene: Do you feel the Democrats ...



more from Our Members

ValueWalk

Vilas Fund Up 55% In Q3; 3Q18 Letter: A Bull Market In Bearish Forecasts

By Jacob Wolinsky. Originally published at ValueWalk.

The Vilas Fund, LP letter for the third quarter ended September 30, 2018; titled, “A Bull Market in Bearish Forecasts.”

Ever since the financial crisis, there has been a huge fascination with predictions of the next “big crash” right around the next corner. Whether it is Greece, Italy, Chinese debt, the “overvalued” stock market, the Shiller Ratio, Puerto Rico, underfunded pensions in Illinois and New Jersey, the Fed (both for QE a few years ago and now for removing QE), rising interest rates, Federal budget deficits, peaking profit margins, etc...



more from ValueWalk

OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

more from Promotions





About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>