Results for search of category: Equities

No Case for Emerging Markets Yet

Europe, apart from the UK, is producing better risk-adjusted returns than most emerging markets. These have been flattered by favourable FX movements, but there are good fundamental reasons for this as well. Unless the euro gets too strong, we don’t see why investors would want to change a winning formula, anytime soon.  [Read More... ]

Lucky Dip

We agree with consensus that an equity correction could happen at any time. However, we will not be buying the dip in the US. We much prefer the Eurozone, which has a habit of late-cycle outperformance. We also prefer Japan, which has just hit a new 22-year high, to EM, which keeps failing at resistance just above current levels.  [Read More... ]

The Missing Piece of Chewing Gum

We don’t have the killer chart that says China is going to blow up or shoot the lights out. Our models are curiously inconclusive, which is unusual for China, and the underlying data are trading in a very narrow range. All of which makes us nervous.  [Read More... ]

Systematic Diversification

What’s the best way of allocating an equity portfolio between the equity indices of the US and another country? We use nine different styles to discover the best regime for each individual country over the last 21 years. Sometimes the quest is hopeless; there is no way of beating the US by diversifying into any Eurozone country. But for the rest of the world, there is nearly always a process which has worked.  [Read More... ]


Everybody seems to be increasing their exposure to Eurozone Equities at the same time. We agree with the trade, but are cautious about some of the commentary. Eurozone investors need US equities to construct risk-efficient portfolios, but US investors do not need Eurozone equities in the same way. They do, however, need Emerging Markets.  [Read More... ]

Where To Next?

US Equities look as though they are due a 5-10% correction, so US investors have a chance to look at other opportunities. One option is a Northern Europe group of fiscally responsible countries in and out of the Eurozone. Our preferred option is a diverse group of EMs, including India, Korea, Mexico, South Africa and Turkey, which offer equivalent risk-adjusted returns, but much lower correlation with US Equities.  [Read More... ]

Messy and Inconsistent

The rotation into US defensives has broadened over the last two weeks. There is a potential contradiction with the high exposure to equities recommended by our asset allocation model. We look at the maths underlying our asset allocation decision, historical precedents for US equities being overbought and international equity comparisons. A 5-10% correction followed by renewed strength, just about fits all the evidence.  [Read More... ]

Pick Your Own Narrative

Our US Equity sector model is changing its mind on defensive sectors. The bottom came in early February, but the first material increase was only three weeks ago and was mostly down to Healthcare. Since then, the theme has broadened and it is no longer just a reaction to weakness in the commodity-related sectors.  [Read More... ]

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