Asset Allocation Notes
Asset Allocation Notes
Every week we collate information from sources that we trust regarding investments, asset allocation and the economy to help us form opinions and make decisions regarding where we should be investing. Over the years we have identified sources that offer reliable and well considered ideas and articles; most importantly they are not all the same and often challenge not only the consensus view but also our own thinking.
Here are some of the ideas and concepts that we highlighted in July -
- Bridgewater Associates - Diversification is more important than ever even if it will produce lower returns and concentration in equities or one asset class or country is very dangerous
- The Idea Farm - Market protagonists are making misleading declarations that different asset classes are “broken” and unlikely to generate reasonable returns leading advisors/investors to chase recent winners. Advisors need to educate clients about price variation - a prepared client is confident. Investors use the rear view mirror and react to headlines missing good opportunities, these types of poor investment decisions can be prevented.
- Money Week – Gold is up 25% in 2020 with Royal Mint sales tripling this year and trading apps bringing a new generation to precious metal investment. The price surge is based on inflation concerns and the fact that there is 0% interest rates. Barron's suggests conditions are ideal for Gold.
- Project Syndicate - An overvalued US dollar is ripe for a sharp decline, owing to America’s rapidly worsening macroeconomic imbalances and a government that is abdicating all semblance of global – or even domestic – leadership. The European Union's approval of a joint rescue fund is likely to accelerate the euro's rise.
- The Felder Report - Just three stocks make up more than 16% of the S&P 500 Index and over a third of the Nasdaq 100 Index. I bet you can guess which three. Apple, Amazon and Microsoft together are now valued at nearly $5 trillion. That’s larger than the entire economy of Germany and nearly the size of the Japanese economy.
- Investment Week - Estimated 20% of firms globally pay unsustainable dividends as dividends outstrip profit growth. Dividends are being cut even by those firms with strong balance sheets . There is also a political decision in that firms cannot be seen to reward investors by paying dividends when the taxpayer is meeting wage costs via the furlough scheme.