In Indiana, where I live, we are familiar with weather warnings. A lovely day can instantly turn into a tornado. Similarly, in stock investing this summer, there are two warning signals to heed – lack of breadth and a gap between sector performance.
Even though the predominance of domestic stocks has shrunk as other nations’ equities have grown in value, Americans continue to cling to investments from our own country.
Innovation is becoming an increasingly powerful factor in explaining stock performance. That often means technology or biotechnology companies. An examination of various stock indexes shows just how valuable the innovative spirit is.
Smart beta strategies are hot. These index products seek to outdo traditional passive indexes by using alternative – and presumably wiser – methods of constructing their portfolios. Lately, smart beta ETFs are beating conventional index funds in performance. As smart beta is oriented to small value stocks, odds are this trend should keep going long term.
ETFs are all the rage lately, as most of them follow well-known indexes, cost very little and are easy to trade. But a new variety is making a splash, so called smart-beta ETFs, which use algorithms to concoct asset mixes designed to beat the market. Let’s check out one of the hottest new entries and weigh its advantages (good performance) against its weaknesses (vulnerability to a drooping market).
Reducing your investment fees is the surest way to improve returns. Index funds are cheap, but their prices do vary. Doing your due diligence and comparison shopping pays off.
Investing is Africa has long seemed like a promising, if perilous, bet. But its potential always fizzled, due to its wars, political instability and corruption. Now, though, we may be on the verge of when it makes sense to try out the continent, with a landmass three times the size of the U.S., albeit in a cautious way.
Guess right with men’s college basketball champ Duke Blue Devils? Think the Golden State Warriors will take it all this June in professional hoops? If you’re among the millions of fans who systematically try to pinpoint winners before the big games, similar strategies can also apply to your stock picks.
At some point this year, interest rates should go up. What will happen then to dividend-paying stocks? Because they benefited when fixed-income rates were low, they will dip – and some already have, in anticipation. Over the long pull, however, dividend payers do well.
Some think that diversification calls for simply splitting your holdings between stocks and bonds. A really good asset allocation, however, is a bit more complicated, and involves gauging how much risk you can stomach.