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Investors Are Getting Increasingly Worried About A Market Crash (Charles Schwab)
Investment strategist Liz Ann Sonders considers several measures of individual and institutional investor sentiment in her latest market perspective note. Among other things, she considers the Yale School of Management’s Crash Confidence Index.
“It should come as no surprise that the all-time low in this survey was near the crescendo of the financial crisis in late-2008,” Sonders notes. “At that time, confidence among individuals and institutions was nearly equally low that there would be no market crash. Earlier this year, the reading ticked up to its highest level of the current bull market, meaning investors were less worried about a crash. But what’s most interesting lately is that alongside a very strong market rally since October, this survey has dropped noticeably, meaning investors’ worries about a crash have gone up alongside the market’s rally.”
Schorsch Resigned As CEO From At Least 6 Companies He Oversaw (Investment News)
In the latest development of the unravelling of the Schrosch empire, Nicholas Schorsch has resigned as CEO from at least six companies he has been overseeing (three of which are nontraded REITs), reports Bruce Kelly. Schorsch’s investment partner, William Kahane, will be taking over two of them.
“Separating the role of chairman and CEO is regarded as a positive for corporate government in REITs and the corporate world in general, according to Kevin Gannon, president and managing director at Robert A. Stanger & Co. Inc, an investment bank that focuses on nontraded REITs,” reports Kelly.
The Ultrawealthy Population Grew By 6% This Year (Think Advisors)
The ultrawealthy population of the world (defined as those individuals with assets of $US30 million or more) grew by 6% in 2014. Their combined assets grew by 7%, reports Michael S. Fischer.
The Middle East saw the largest increase in the ultrawealthy population, at 12.7%, followed by Africa with an 8.3% increase. Latin America and the Caribbean saw the smallest increase at 4.6%.
Altogether, the ultrawealthy make up 0.0004% of the world’s population, but control 12.8% of the wealth.
“Duration is a less effective measure of interest rate risk for globally diversified bond portfolios,” writes Vanguard’s Brian Scott. The problem with using duration as a metric is that it assumes a uniform rise or fall in interest rates for bonds of all maturities and issuers, he adds. But that’s not how things work in the real world: Bond values are affected unevenly.
Additionally, “the yield for global bonds, similar to duration, isn’t very meaningful when comparing them with domestic bonds,” writes Scott.
Instead, “in a rising-rate environment, hedged global bonds can play a powerful role in diversifying risk and reducing the interest rate exposure of any one government,” writes Scott.”
The Strong Dollar Is Here To Stay (Advisor Perspectives)
“In our view, this summer’s [dollar] rally does not represent a correction or near-term adjustment, but rather the continuation of a broader trend that started in the middle of 2011. Should our analysis prove correct, we believe this period of dollar strength could just be getting started,” writes Bradley Krom.
There are three reasons the dollar strength could stay. First, the US economy is diverging from its developed market peers in relative growth rates, potential changes in monetary policy, and in inflation outlook. Second, EM currencies are “appear less attractive” than the US dollar. And third, the “recent upswing in US economic momentum has caused not just a rebound in US asset prices, but an increase in the strength of the US dollar as well,” writes Krom.
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