The first few weeks of 2016 have produced the worst start to a year for US equity markets ever recorded.
The US Federal Reserve recently began the process of unwinding its extraordinary support measures for the markets, which had been in place since the financial crisis in 2008. The Fed raised the target federal funds rate by 25 basis points (bps) and now world markets are in a tizzy. Japan, China, and Europe are struggling and it's not clear that the United States has the economic strength to emerge unscathed.
It's only natural to be worried. But what's an investor to do? Has the game changed? Will my portfolio get crushed? Am I doing right by my clients? So many questions.
In response, we have assembled a list of articles, presentations. and observations that we hope are timely and helpful in light of the present market turmoil.
- "Tips on How to Manage Money in a Bear Market": Jason Voss, CFA, gives seasoned advice on what to look for and what to do in a falling market.
- "Historical Perspective: How Today's US Stock Market Stacks Up against Past Bull Markets": David Larrabee, CFA, reviews the length and magnitude of past bull markets and compares then to the post-2008 bull market.
- "The Ruble Crisis: Where Oil Goes, the Ruble Follows": In this piece, I demonstrate the similarities and differences between the Russia of 1998 and the Russia of today.
- "Diverging Markets and Shades of 2007": James A. Bianco makes the case that the economy is not ready for a rate hike. (CFA Institute Conference Proceedings Quarterly)
- "Global Economic Outlook: Opportunities and Challenges for MENA Investors": Nouriel Roubini shares his perspective on the global economy. (CFA Institute Conference Proceedings Quarterly)
- "Financial Market History Roundtable, Boston": CFA Institute convened a blue-ribbon panel to examine the lessons of financial history and how investors might make money from those lessons. Here is a synopsis of the various insights. (CFA Institute Conference Proceedings Quarterly)
- "House of Debt": The venerable Amir Sufi explains the underlying structural problems in the US economy. (CFA Institute Conference Proceedings Quarterly)
- "Enduring Principles of Value Investing": Legendary value investor Charles Brandes, CFA, describes his chance encounter with Ben Graham and the lessons he accrued over a lifetime of investing. (CFA Institute Conference Proceedings Quarterly)
- "Asset Allocation Implications of the Global Volatility Premium": Authors William Fallon, James Park, and Danny Yu demonstrate that shorting volatility can be a lucrative enterprise. (Financial Analysts Journal)
- "The Crash Risks of Style Investing: Can They Be Internationally Diversified": The authors demonstrate that international diversification can reduce the crash risks of size and value, but not momentum. (Financial Analysts Journal)
- "The G-Zero World": Ian Bremmer says that investors must brace for dramatic geopolitical disorder. (CFA Institute Magazine)
- "The Effects of FX!": Ronald G. Layard-Liesching spells out his thesis that quantitative easing (QE) has distorted the risk premia for risk assets globally and that foreign exchange (FX) markets have become the world's most important market.
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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
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