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Rather than trying to seasonally time the market, most investors would be better served by staying fully invested unless there are fundamental reasons to reduce stock exposures. Volatility is likely, as investors weigh the ongoing debt crisis in Europe, the slowdown in China, the strength of the U.S. economy, and the resolution of the "fiscal cliff". But looking out longer term, stocks currently look relatively well-positioned, especially compared to alternatives such as cash and bonds.

This paper addresses how inefficiencies may be exploited to help generate alpha. This viewpoint is developed from our assertion that outperformance requires strong fundamental research and insight by skilled managers, and looks at the methods by which alpha may be extracted under the umbrella topics of Concentration, Opacity (or lack of public information), Illiquidity, Leverage, and Skill (COILS).

A long-term perspective is difficult to maintain through the roller coaster of the past 10 years. It is reasonable to wonder when we will revisit the much preferred bull market of the 1980s and 1990s. While we think world equity markets should earn positive real rates of return over the next five to 10 years, we are less certain there will be a multi-year, low-volatility run-up.

Credit Suisse believes that directional strategies will likely continue to add value toward the end of the year. On the other hand, while the short-term event risk of the coming weeks is expected to set a challenging environment for the majority of hedge funds, it should be supportive or at least not harmful for global macro managers.

The European Central Bank’s new policy direction has helped reduce volatility to more normal levels for this phase of the business cycle. Lower volatility could eventually reduce equity risk premiums and allow for higher stock prices. In fact, it already has. Strong U.S. economic data, record corporate profits, and falling unemployment should help equities as well.

There are many reasons to seek non-correlated investments, even if, like fastastical creatures, they are hard to find. These investments can be highly beneficial to sophisticated investment portfolios, as they provide a great deal of diversification for the dollar.

The extended slump in the U.S. housing market has created a significant opportunity for patient investors. Given the imbalance between prices (weak) and rents (strong), investors willing to participate in a buy-hold-lease strategy have the opportunity to garner attractive current income on stabilized net capitalization rates exceeding 6%, with the potential for significant capital appreciation as the housing market ultimately recovers.