Category Archives: Economic trends

The Unintended Consequences of This Century and How Impact Investing Will Change the Next Century

A century ago, it would have been nearly impossible to envision the world as it is today. Who could have imagined our communication and transportation technologies, from supersonic jets to cell phones? Consider the impact of the internet and automation, robots and artificial intelligence. But perhaps most unimaginable of all are the drastic changes to the planet and the massive growth in population over just the last half-century. Who could have foreseen the issues we face trying to provide access to clean water and air, the damage done to our oceans and rivers, the depletion of the topsoil? And most would not have been able to conceive of 7 ½ billion people sharing the globe. Read more »

Is the FAANG Phenomenon Sustainable?

We recently wrote about the FAANG stocks, and the degree to which they currently dominate the stock market. These five companies — Facebook, Apple, Amazon, Netflix, and Google (parent company Alphabet) — represent more than 12% of the S&P 500 Index, and more than 27% of the NASDAQ. This raises two important issues: the first is simply the concentration of the public stock market, which we discussed in our recent post. The second is the growth curve of these behemoths; can they sustain their massive growth, and for how long? Read more »

This has never happened before! There are more job openings than unemployed workers

It’s the first time on record that the number of available jobs has exceeded the number of unemployed workers in the United States. The number of jobs available in April rose to 6.7 million, or one job for every 0.95 jobless workers. Compare this to 2009, during the Great Recession, when there were 6.7 unemployed workers for every available job.  The unemployment rate of 3.8% is the lowest it’s been since December 1969. Read more »

FAANG Stocks: Dominating a Concentrated Market

Facebook, Apple, Amazon, Netflix, and Google (of parent company Alphabet) — ten years ago, we could barely imagine the extent to which these behemoths would dominate our lives and the stock market. Now, these five companies have grown so large and powerful, they are deeply enmeshed in our everyday existence. And, some say this small handful of companies has provided much of the power behind the market over the past few years. Do they exert an outsized force on the stock market, and what does that mean for investors? Read more »

Going Global: The Importance of Global Diversification

For U.S. investors thirty years ago, diversification was as simple as making sure your portfolio combined both stocks and bonds, with some variety in the sizes of the companies in which you invested. But we have all seen how much the world has changed since that time. One of the most significant changes for investors is gaining access to the economic opportunities outside of the United States. Read more »

As Good as it Gets

After strong financial market returns in 2017, many endowments and foundations have continued to increase their effective spending rates since 2015. According to the 2017 National Association of College and University Business Officers (NACUBO) annual study, average spending rates among university and college endowments rose in fiscal 2017 to 4.4% from 4.3% in fiscal year 2016. Institutions with endowment assets of more than $1 billion accounted for the largest increase in spending rates with a spending rate of 4.8% (compared with 4.4% in 2016), with smaller endowments rising slightly.

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Skewed to the Top: How passive investing may be affecting pricing

By Bryan Shipley, CFA, CAIA, Co-CIO

Passive investment management: 
A passively managed fund seeks to match the performance of an index by replicating the index’s holdings. Passive investment management delivers market returns, and typically has lower fees than active management.

Over the past decade, investor preference for passive investing has dramatically altered equity markets. This huge movement toward index investments (inflows to passive investments of more than $200 billion annually in 2016 and 2017) may have repercussions on equities’ pricing and valuation, the implications of which should be considered by investors. While we understand there are valid reasons many investors have shifted their preference to more index-based solutions, it would also be naïve not to be aware of the unintended consequences of this shift. Read more »

What Does the Baby Boom Mean for Your Future?

One of the more frustrating aspects of the political climate in 2018 is that no one seems to be comfortable discussing the elephant in the room: Americans are living longer and having fewer babies. As a result, the commitment the United States has made to healthcare and retirement benefits for baby boomers is likely to lead to substantially higher taxes and/or significant cuts to entitlement programs in the United States over the next few decades. Read more »