Investment Insights Podcast: We are likely in the 7th inning of this game

Chris HartSenior Vice President

On this week’s podcast (recorded June 15, 2018), Chris discusses what we should expect in the later half of the cycle.

 

Quick hits:

  • In a widely anticipated move last week, the Fed raised its policy rate by 25 basis points up to a range of 1.75% to 2.0%.
  • It is important to remember that late in the cycle, by definition, means that there is still room for growth and expansion.
  • The Fed has to walk a tight path as it works to balance the risk of overtightening and choking off economic growth with the risk of overheating the economy.
  • Regardless of whether you tend to lean dovish or hawkish, there are indicators in the fixed income markets to watch for that help assess the potential for recession in the intermediate term.
  • Regardless of one’s opinion on policy and interest rates, we have consistently highlighted a theme of the road to interest rate normalization and the risks of policy uncertainty.

For the rest of Chris’s insight, click here to listen to the audio recording.

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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

Vlog – Where risks reside

Tim Holland, Brinker Capital’s Global Investment Strategists, discusses the near-term risks to the US economy and the market as we approach the halfway point of 2018.

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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a registered investment advisor.

Investment Insights Podcast: June 2018 market and economic outlook

Leigh Lowman, CFA, Investment Manager

On this week’s podcast (recorded June 8, 2018), Leigh provides a brief review of May markets.

 

Quick hits:

  • Political risk dominated headlines with uncertainty escalating around the Trump administration trade policy, increasing tensions between the US and its trading partners.
  • The S&P 500 was up 2.4% for the month and up 2.0% year to date.
  • Developed international equities as measured by the MSCI EAFE Index was down -2.1% in May and is lagging domestic equities year-to-date.
  • The Bloomberg Barclays US Aggregate Index was positive for the month but is down -1.5% year-to-date.
  • Overall, we remain constructive on risk assets over the intermediate-term but recognize more normalized volatility will likely continue throughout the year.

Listen_Icon  Listen to the abbreviated audio recording.

Read_Icon  Read the full June Market and Economic Outlook.

 

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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

 

Investment Insights Podcast: Demography is destiny

Tim Holland, CFA, Senior Vice President, Global Investment Strategist

On this week’s podcast (recorded May 29, 2018),
Tim discusses how population trends play a key role in determining a nation’s fate.

Quick hits:

  • If a nation wants to see its GDP grow year on year, it needs either more people entering the workforce or the workforce increasing its productivity.
  • Fortunately for the US, our nation’s population continues to grow at a rate greater than most developed nations and not that far shy of overall global population growth.
  • The US seems poised to benefit from a meaningful demographic tailwind courtesy of our nation’s Millennials.

For Tim’s full insights, click here to listen to the audio recording.

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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

Memorial Day: In honor of our heroes

beaman 150 x 150Noreen D. BeamanChief Executive Officer

For more than 150 years, our nation has observed the Memorial Day holiday — a day designated to remember the sacrifice made by those who gave their lives defending our freedoms and the safety of our nation. Across the country this weekend, we will honor all our veterans and their commitment to safeguarding our security.

On this Memorial Day, let us be mindful of our heroes — taking a moment to recognize with appreciation and respect our nation’s champions. I ask that you take time to gratefully remember, appreciate, and honor both the service and the ones who provided it.

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Vlog – The yield curve: What is it and why does it matter?

Brinker Capital’s Global Investment Strategist, Tim Holland, discusses what the yield curve is, why investors focus on it and what it might be telling us today about the state of the economy.

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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a registered investment advisor.

Investment Insights Podcast: May 2018 market and economic outlook

Leigh Lowman, CFA, Investment Manager

On this week’s podcast (recorded May 11, 2018), Leigh provides a brief review of April markets.

 

Quick hits:

  • Higher market volatility persisted throughout April with risk asset performance mixed
  • The S&P 500 Index was up 0.4% for the month and down -0.4% year-to-date
  • Developed international equities as measured by the MSCI EAFE Index was up 2.4% in April and is outperforming domestic equities year-to-date
  • The Bloomberg Barclays US Aggregate Index was down -0.7% as fears of inflation and rising interest rates created headwinds for traditional fixed income securities
  • Overall we remain positive on risk assets over the intermediate-term as macroeconomic data continues to lean positive

Listen_Icon  Listen to the abbreviated audio recording.

Read_Icon  Read the full May Market and Economic Outlook.

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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

 

Why outcomes beat fear

Crosby_2015-150x150Dr. Daniel Crosby Executive Director, The Center for Outcomes & Founder, Nocturne Capital

It seems to be human nature to be fascinated by pathology. Sigmund Freud began his study of the human psyche by outlining how it was broken (hint: your Mom) and the discipline continued down that path for over a century. It was roughly 150 years before the study of clinical psychology was offset at all by the study of what we now call “positive psychology” – the study of what makes us happy, strong, and exceptional. Perhaps it is no surprise then that behavioral finance too began with the study of the anomalous and is only now coming around to a more solution-focused ideal. While a thorough review of the transition from efficient to behavioral approaches isn’t why we are here, it’s worth considering the rudiments of these ideas and how we can improve upon them.

For decades, the prevailing economic theories espoused a view of Economic Man as rational, utility maximizing, and self-interested. On these simple (if unrealistic) assumptions, economists built mathematical models of exceeding elegance but limited real-world applicability. It all worked beautifully, until it didn’t. Goaded only by a belief in the predictability of Economic Man, The Smartest People in the Room picked up pennies in front of steamrollers – until they got flattened.

On the strength of hedge fund implosions, multiple manias with accompanying crashes and mounting evidence of human irrationality, Economic Man begin to give way to Behavioral Man. Behavioral proponents began to document the flaws of investors with the same righteous zeal with which proponents of market efficiency had previously defended the aggregate wisdom of the crowd. At my last count, psychologists and economists had uncovered 117 documented biases capable of obscuring lucid financial decision-making. One hundred and seventeen different ways for you to get it wrong.

But the problem with all this Ivory Tower philosophizing is that none of it truly helps investors. For a clinical psychologist, a diagnosis is a necessary but far from sufficient part of a treatment plan. No shrink worth his $200 an hour would label you pathological and show you the door, yet that is largely what behavioral finance has given the investing public: a surfeit of pathology and a shortage of outcomes.

To consider firsthand the futility of being told only what not to do, let’s try the following.

“Do not think of a pink elephant.”

What happened as you read the first sentence of this section? Odds are, you did the very thing I asked you not to do – you imagined a pink elephant. How disappointing! You could have imagined any number of things – you had infinity minus one option – and yet you still disobeyed my simple request. Sigh. Oh well, I haven’t given up on you yet, so let’s try one more time.

“Do not, whatever you do, imagine a large purple elephant with a parasol daintily tiptoeing across a highwire connecting two tall buildings in a large metropolitan area.”

You did it again, didn’t you?

All feigned anger aside, what you just experienced was the very natural tendency to imagine and even ruminate on something, even when you know you oughtn’t. Consider the person on a diet who has created a lengthy list of “bad” foods. He may, for instance, repeat the mantra, “I will not eat a cookie. I will not eat a cookie. I will not eat a cookie.” any time he experiences the slightest temptation.

But what is the net effect of all his self-flagellating rumination? Effectively he has thought about cookies all day and is likely to cave at the first sign of an Oreo. The research is unequivocal that a far more effective approach is to reorient that behavior into something desirable rather than repeat messages of self-denial that ironically keep the “evil” object top of mind. Unfortunately for investors in a panic, there are far more histrionic “Don’t do this!” messages than constructive “Do this instead”, which is where The Center for Outcomes comes in. At the Brinker Capital Center for Outcomes, we have taken behavioral finance out of the textbooks and are putting it in the hands of advisors where it belongs. By utilizing our empirically-based, four-step process, advisors are given specific tools for communicating with clients in a persuasive manner. Click here to learn how to say “Yes” to outcomes.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice.  

Brinker Capital, Inc., a registered investment advisor. 

Investment Insights Podcast: The 60/40 portfolio in a world of rising rates, falling bond prices & increasing volatility

Tim Holland, CFA, Senior Vice President, Global Investment Strategist

On this week’s podcast (recorded April 27, 2018),
Tim takes a closer look at the 60/40 portfolio, including how the past few years were particularly conducive to such an approach to portfolio construction and why we have likely just entered a more challenging period for this model.

Quick hits:

  • Over the past few years, both bonds and stocks moved higher in value, really an ideal – and unusual – environment for a 60/40 approach.
  • We think 2018 marks the beginning of a tougher road for the 60/40 portfolio.
  • We also think 2018 marks the beginning of a more favorable environment for Brinker Capital’s approach to portfolio construction and asset allocation.
  • We remain constructive on the outlook for both the economy and risk assets as we move through 2018.

For Tim’s full insights, click here to listen to the audio recording.

 

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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

Investment Insights Podcast: Investing a lump sum of cash

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Jeff Raupp, CFA
Director of Investments

On this week’s podcast (recorded April 20, 2018),
Jeff discusses the pros and cons of investing a lump sum immediately versus systematically investing an equal amount monthly.

Quick hits:

  • Almost 75% of the time an investor did better with the lump sum investment, with an average return after 12 months of about 8%, versus 4.2% for systematic investing.
  • A systematic plan may make sense for some, as it establishes a strategy for getting into the markets and takes emotion out of the equation.

For Jeff’s full insights, click here to listen to the audio recording.

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Performance returns source: Brinker Capital.
The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a registered investment advisor.