Results for search of category: Commodities

Opportunity in Alternatives

Over the last 25 years, US REITs have provided successful risk-adjusted diversification opportunities when compared with a 50/50 equity bond portfolio. Comparing them with just an equity or fixed income benchmark understates how well they do when compared with a joint benchmark. They perform far better than the other alternatives we look at – hedge funds, commodities and gold. We think the investors underuse the tactical asset allocation opportunity provided by REITs, as opposed to real estate in physical form.  [Read More... ]

Time to Worry About Oil

Energy ETFs may be worth the risk. Crude oil may be breaking out of its trading since 2015, even if we allow for the weakness of the dollar. It’s time to ask how high it can go, and what this would do your portfolio. Beyond an overweight in the global energy sector and exposure to the right part of the US high yield market, it’s time to think about direct investment in the commodity itself.  [Read More... ]

The Anti-Forecast

Investors don’t need to read the outlooks for 2018 to know that they are not being adequately rewarded for holding supposedly safe assets like US Treasuries. They are effectively forced into US and international equities, because the returns generated by traditional fixed income or alternative assets are unattractive in risk-adjusted terms.  [Read More... ]

Prices Move Before News

Newspapers like to argue that events are unforecastable, which is why you need to pay for access to news. We agree that forecasts don’t really work, but we don’t think news does either. We think that prices move before news. Very often the change in price is the news.  [Read More... ]


Lots of clients are asking about gold, which is a sure sign they are nervous. Our models suggest that gold works best as a diversifier whenever the returns of US equities and Treasuries become positively correlated. This happens rarely, but is a plausible scenario if the Fed starts raising rates from June onwards.  [Read More... ]

Difficult Question. Don’t Answer

The tactical view on equities vs bonds quickly resolves into a question about what central banks, particularly the ECB, are going to do. This is hard enough to analyse, but predicting investor reaction is even harder. We prefer to dodge the question by looking at the merits of gold and US real estate, both of which offer better risk-adjusted returns than for some time.  [Read More... ]

Circular Logic

Commodity prices have been falling all year. Most investors understand what this says about China, but US equities are vulnerable to some of the side-effects as well. We also find that investors are reluctant to follow through on the implications for emerging equities and sector strategy in developed markets.  [Read More... ]

Put Away Your Telescope

We start the New Year with a polite request to all our readers. Please stop trying to forecast events which are 12 months away and spend more time trying to understand what financial markets are telling you about today. Investor attitudes to risk, not consensus forecasts, will be the key driver of returns this year.  [Read More... ]

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