Analysis shows the inflation hedging benefits of long-term investments in commodities, which have a low correlation over time with equities. Diversification with a broad basket of commodities is best to smooth out the volatilities of individual commodities, such as oil or gold.
Heightened market volatility is emerging as the new framework for investment decisions. Suggestions for succeeding in this environment include focusing on a dual-asset allocation approach, taking into account a greater number of worst-case scenarios, assessing liquidity and leverage carefully, and looking for volatility-related opportunities.
The ongoing trends of urbanization and wealth generation in Asia, and the investment opportunities these trends create, make Asia worth a serious look by investors. Increasing consumption trends are in their infancy and may last 10 to 20 more years.
Despite the natural volatility of the stock market, three themes unfolding over the next decade should benefit equity investors: innovation in technology, healthcare and energy; the rise of developing nations and their demand for consumer goods; and global expansion of trade in goods and services.
Euro area countries need to coordinate their economic policies better to prevent macroeonomic imbalances. The proposed set of policy indicators would identify such imbalances and indicate action to be taken if thresholds are too high or low. But this system has structural problems related to timing, response and proactive planning.
Allowing private debt to rise has been an easy short-term solution, but the countries of Western Europe, the United States and Japan now have to address the internal conflicts hidden by rising debt. Taking corrective action earlier would be easier while creditors are still friendly, but a broader financial crisis may be needed to spur such action.
We believe one of the most important economic developments to monitor is whether the U.S. economy can wean itself off government stimulus before bond vigilantes take the matter into their own hands. In short, we are in the midst of a cyclical recovery that could be overshadowed at some point by the longer term structural challenges.
It is our view that inflation should be moderate over the near term. However, we recognize that portfolios of different investors have different sensitivities to sharp increases in inflation. To that end, the discussion here centers on methods to hedge unexpected inflation in those specific portfolios.
While political upheaval in the region is a legitimate concern for investors, the tumult provides an entry point into what may become an increasingly important market. Economic fundamentals are strong, the regional GDP is improving, and governments are supporting programs and infrastructure to facilitate growth.
We continue to recommend that investors focus on high-quality general obligation and essential services municipal bonds as the core of their bond portfolios. We also continue to recommend that investors maintain shorter-than-benchmark durations in order to dampen the risks of rising interest rates.
Researchers examine the trade, economic and financial linkages between China and the rest of the world and consider the implications of those linkages if growth in Chinese gross domestic product should slow in the future.
Investors and consumers typically adopt a wait and see attitude toward investing and spending in the nascent days of a recovery. That timidity should be history by now, says the author, who explores the reasons behind the ongoing lack of confidence.
The intent of this piece is to communicate the economic indicators that help to monitor in real time whether approaching deflation or accelerating inflation is on the horizon.
Researchers measure differences in wealth across countries and the extent of change during the past decade. They examine patterns of wealth geographically and by gender, as well as differences in household portfolios.
Venture capital shows signs of recovery. Short-term returns have improved and investment volumes have increased to almost pre-crisis levels in the U.S. Analysis supports the notion that a vibrant VC market is conducive to technological progress and, thus, growth.