Nothing Is Happening (Josh Brown)
Markets have been really boring this year, and that may not be a terrible thing. “How ok are you with a period of time in which nothing much is happening in the markets? Your answer to that question probably says a lot about the way you think about investing. Many market participants have gotten into a mindset lately in which they expect either rallies or sell-offs to be occurring at all times. This year, the broader US stock market is doing absolutely nothing and it seems to be frustrating lots of people I talk to…After a rollicking year like 2013, I’m not so sure that’s such a bad thing.”
Here’s a chart from Bespoke showing how fall momentum stocks, in the form of Internet-based firms, have fallen: They’re almost back to S&P500 levels. “…the Internet group is still outperforming the S&P 500 by roughly 12 percentage points since the start of 2013, but another week like this one where the momentum names tank and the broad market holds up, and the tortoise could catch up to the hare.”
The FT’s Dan McCrum discusses how the guys in Institutional Investor’s Alpha’s new hedge fund rich list got so rich. The answer: Acquiring pension fund accounts. “…Recognise the incentives for the investment banks to push money from those pension funds and endowments towards hedge funds. At its most obvious the parts of banks which lend to hedge funds for trading purposes, prime brokers, offer free capital introduction services to help their customers raise cash. The relationship is deeper, though. Throughout their trading arms banks want customers and counterparties who have plenty of capital to risk, generating the activity that produces fees. Finance thrives on the friction from activity, however socially redundant.”
Yes, the U.S. population is ageing. But not as fast as in other developed countries. From 538’s Ben Casselman: As bad as the U.S. demographics look, things are worse in much of the world. The U.S. has fewer residents over 65, as a share of its population, than most developed countries, and the disparity will only grow in coming decades. In 2050, about 21 per cent of the U.S. population will be 65 or older compared to more than 30 per cent in much of Western Europe and an incredible 40 per cent in Japan. China, as a result of its “one child” policy, faces its own, somewhat different,demographic crisis.
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