Topical perspectives from Optimal Capital’s Chief Investment Officer Jay Batcha
Another fine article that supports why we believe in Alternatives as Diversifiers to manage risk! **JB**
by Leo M. Zerilli, Asset Manager John Hancock Investments, CIMA
The S&P 500 Index lost 37% in 2008, an experience most market participants found hard to forget. Alternative investments—many of which are designed to manage risk—enjoyed an extensive post-crisis period of net inflows, as many investors remained wary of equities.
There have been many references to the FED shrinking its balance sheet recently. This is a good explanation of what it means and why authorities are being so careful not to surprise markets. **JB**
Federal Reserve officials grappling with the legacy of expansive stimulus would find it difficult to return to the central bank’s precrisis role on the sidelines of financial markets, analysts and central-bank watchers say.
This chart watcher says a classic market theory could presage a 15-20% drop in stocks: Ralph Acampora, also known as the godfather of technical analysis, explains to CNBC why a pause in the rally is coming. *JB*
The godfather of technical analysis says one classic theory is predicting a sell-off before another market rally will take place.
This indicator was on the money until people recognized it and then stopped working. Yet it has validity and may be due for big win. *JB*
• The "Hindenburg Omen" correctly called stock market crashes in 1987 and 2008, but has only been correct at predicting plunges about 30 percent of the time.
• The signal is still watched by traders and chart analysts for indicating signs of weakness ahead, but not necessarily a crash.
The "Hindenburg Omen," an obscure indicator that pops up every few years and gets Wall Street traders chattering about a possible market crash, was triggered this week. To be sure, the Hindenburg has missed the mark more times than it's been correct, but some analysts are concerned that the omen, when paired with other indicators flashing sell right now, could portend that at least a pullback is ahead this time.
This article aligns with our academic / institutional investing process: select managers focused on risk-adjusted returns and diversifying traditional portfolio strategies! *JB*
Institutional investors remain interested in alternative investments for 2017, with the sector holding their attention for a second year in a row, according to a survey by Context Summits.
Advisors who embrace new ways to free up their time and deliver client value stand at the vanguard of a new era of client engagement! *JB*
As I travel the country and spend time with advisors, partners and industry colleagues, there is a lot of dialogue about how the advisor industry is evolving. All the chatter about evolution got me thinking about lessons from Charles Darwin, the famous naturalist who taught us that, “it is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” The strong and cunning may win the short-term battles but, over the long term, Darwin’s lessons foreshadow that those who are not able to adapt may end up on the endangered species list.
Active has the opportunity to surprise a lot of investors who have given it up for dead, but fiduciary/fee-based comp drives demand for low cost passive. Active does better but $$$ flows into passive unabated…. until an accident happens due to illiquidity when everyone heads to the exits owning the same stuff. Oops. *JB*
The rise of passive indexing plus the Fed's monetary policies show all the signs of a bubble.
The intense focus on passive versus active is setting investors up for another "tulip bulb" market mania event that could destroy more investor wealth and capital than the Financial Crisis.
This is a concise explanation of what institutions look for in Hedge Fund allocations and why they use them as part of core strategic process. *JB*
Even in times of pressure, research shows that investors — particularly institutional investors such as pensions, foundations and endowments — continue to use hedge funds as tools to help meet their unique financial and risk management needs.
This is especially true in the U.S. According to independent data from Preqin, total industry assets are at record levels. Almost two-thirds of investors plan to maintain or increase their hedge fund allocations over the near term; over the longer term, nearly 70% of investors report the same.
So, why do these sophisticated investors continue to use hedge funds in the face of recent headwinds?
Imagine the following scenario: You run a successful business with your business partner of 20 years. Your business partner dies unexpectedly. After the funeral, your deceased partner’s spouse shows up at your office with her two grown children. They ask for the key to your partner’s office – not to clean it out, but to move in.