After the United Kingdom (UK) voted to leave the European Union (EU), the global markets shifted to a “risk-off,” with global stocks, the British pound, and the euro all declining while the U.S. dollar, gold, and high-quality U.S. bonds rallied.
Some investors may think that their investment portfolios aren’t “making the grade” because they started investing at a point in the market cycle that has resulted in meager gains or even short-term losses. In volatile environments, a certain discipline is required to stick to an investment plan and avoid the temptation to exit the market. It can be difficult to resist the flight instinct in the midst of negative headlines and geopolitical uncertainty, but staying invested positions investors to capture the next market upswing.
For anyone who’s been asked, “So, how did we do last year?”, this webinar gives you a benchmark unlike any other in the form of peer perspective. FOX investment expert, Charlie Grace joined us and told us what we learned in the 2016 Global Investment Survey of 80 family offices from around the world.
Much has been documented about the transformation that is occurring around making money while also making a difference. Impact Investing, which was once was a nice idea is now becoming a mandate as approximately $30 trillion of wealth is projected to be inherited by the Millennial and Gen X Generations. These generations of inheritors expect engagement in impact.
A growing number of enterprising families in the US are showing an increased interest in participating in direct investments of all sizes. A segment of this interest is sparked by entrepreneurial family values, and the disappointing correlations between asset classes that occurred during the 2008-2010 timeframe.
The idea that people generally prefer consuming goods and services today rather than at some point in the distant future is a basic tenet of economic theory. Based on this, savers usually require positive real interest rates to forsake current consumption and hand over their money. Of course, borrowers can only pay positive rates if their investments generate real positive earnings, usually on the back of a growing economy. At a real interest rate of zero, however, investments which do not foster growth may look attractive.
Our January 2016 commentary suggested “…we are in a transition period between central bank-induced liquidity and eventual normalization of markets. This transition period has been and will continue to be a bit choppy…”
Architect, designer, thought leader, and author William McDonough practices green architecture on a massive scale. In a 20-year project he is redesigning Ford's city-sized River Rouge truck plant and turning it into the Rust Belt's eco-poster child with the world's largest "living roof" for reclaiming storm runoff. He has created buildings that produce more energy and clean water than they use and as such is building the next generation of design on the site of the future of exploration: the NASA Sustainability Base.
Brought on by concerns about the strength of the global economy and extreme investor pessimism, the volatile start to 2016 drove many equity markets near or into bear market territory. A subsequent rally began mid-February from severely oversold conditions as it became clear that the U.S. was not headed for a recession. As is common during volatile market environments, investors were quick to react to negative headlines, feeding the tendency to panic when things seem at their worst. In investing, however, it is important to avoid making emotional decisions.
The spillover of recent market volatility from China into the rest of the world reflects poor communication by Chinese authorities and a lack of transparency of their ultimate goals. The backdrop of global volatility is also reflective of rising fears of geopolitical risks, especially a Middle Eastern conflict. Economic growth indicators have also been somewhat soft. Despite the market fears and stock market circuit breaker, the global economy is likely to remain on stable footing and that the sharp drop in Chinese equities is due to localized structural, not global economic factors.