Investment Insights Podcast: A quick review of June markets

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Leigh LowmanInvestment Manager

On this week’s podcast (recorded July 7, 2017), Leigh provides a quick review of June markets.

 

Quick hits:

  • Synchronized global expansion was evident during the second quarter with markets across the globe experiencing positive economic growth.
  • Overall economic data leans positive.
  • We expect markets will continue to trend upward for the remainder of year.
  • The onset of new policies under the Trump administration and actions of central banks may lead to higher volatility, but our view on risk assets remains positive over the intermediate term.

For Leigh’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: Should investors fear the FANG stocks?

Holland_Podcast_150x126Tim Holland, CFA, Senior Vice President, Global Investment Strategist

On this week’s podcast (recorded June 30, 2017), Tim addresses the phenomena that is the FANG stocks.

 

Quick hits:

  • The FANG stocks have outdistanced the index in 2017; however, on an equal weighted basis, the S&P 500 is up approximately 7.4%, near what the cap weighted index has returned and a sign that market gains have been broad based
  • While the FANG phenomena may make for good TV content and market chatter, we don’t think it represents a risk to the recent rally
  • So, should investors fear the FANG stocks? At Brinker Capital, we believe the answer is no.

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

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This is not a recommendation for Facebook, Amazon, Apple, Netflix and Google. These securities are shown for illustrative purposes only.

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: Amazon announcement sending shockwaves across a few industries

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Andrew Goins
, Investment Manager

On this week’s podcast (recorded June 26, 2017), Andrew discusses the impact of Amazon’s acquisition of Whole Foods.

 

Quick hits:

  • The announcement of Amazon’s $13.7B acquisition of Whole Foods last Friday resulted in significant declines across most of the grocery retailers, as investors grapple with how this merger will impact the grocery industry.
  • Although the money managers we work with don’t make investments based on a thesis that the company will likely be acquired, Amazon’s recent purchase of Whole Foods has resulted in speculation around who their next target will be.
  • While Amazon is just one company and won’t take over the entire world, it is clearly a disruptor and shouldn’t be ignored.

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

This is not a recommendation for Amazon or Whole Foods, these securities are shown for illustrative purposes only.

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: Does Brexit still mean Brexit? The UK election result and what it means for the markets.

Holland_Podcast_150x126Tim Holland, CFA, Senior Vice President, Global Investment Strategist

On this week’s podcast (recorded June 16, 2017), Tim addresses the political dynamic in the UK and the impact the recent election – and its rather surprising outcome – might have on Brexit and global markets.

Quick hits:

  • On June 8, U.K. voters went to the polls and confounded the experts and the pollsters by moving away from the ruling Conservative Party and embracing the Labour Party.
  • Despite all of the political drama, we still see Brexit moving forward and the U.K. exiting the European Union.
  • Near term, we also see the unexpected and unsettling U.K. election results potentially aiding pro EU, pro establishment political parties across Europe.
  • In the U.S., we don’t envision any meaningful economic or market impact from the political upheaval in the U.K.

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.

Machine Learning’s Growing Pains

Solomon_B 150x150Brad Solomon, Junior Investment Analyst

“Machine learning,” on its surface, sounds nothing short of miraculous.  For anyone who has ever felt overwhelmed when working with a large amount of intractable data, it evokes a certain fantasy: press a button, and let the machine learn. Poof, without any further instruction, your computer spits out relationships in the data seemingly untraceable to the human eye.

Yet paradoxically, there is also a competing perception that only a certain breed of mathematics PhDs and programming prodigies are worthy of using machine learning (ML) techniques.  The field of computer science has never been short on patronization; this post recommends first making sure that you have several advanced degrees and then learning the C or C++ languages, both of which are seen as some of the least user-friendly computer languages and neither of which are the language into which most machine learning is actually incorporated.

Now that machine learning has made its way to the top of Gartner’s Hype Cycle for emerging technologies, and has also become pervasively marketed as part of the tool set of quantitative investment strategies, it’s probably a good time to debunk some misconceptions about what machine learning is, and what it isn’t.

Let’s start with a positive.  ML encompasses a wide range of statistical modeling techniques that can be applied toward facial recognition, predicting credit card fraud, and classifying tumors as malignant or benign, to name just a few implementations.  At the heart of machine learning are a number of different models that all serve as means to the same ends: predicting a value or classifying something categorically.  The list of models themselves is an intimidating mouthful: to name a few, there are neural networks, decision trees, Bayesian ridge regression, and support vector machines.

If your head is spinning, you’re not alone.  However, you might be surprised to learn that you likely covered some elements of machine learning in any introductory statistics course: for instance, ordinary least squares regression (linear regression) also falls under the hood of machine learning. Machine learning practitioners also like to throw around a number of fancy terms that go by other names elsewhere in the realm of broader statistics discipline.  For example, training and test data are analogous to the more familiar terms in-sample and out-of-sample; supervised learning simply means that you are starting with an independent and dependent variable and want to establish a relationship between the two and then apply that relationship to a “fresh” (test) variable.

Now, to debunk one of several myths: ML is not new; the term was coined in 1959 and has been used pervasively in the tech industry for decades.  However, growth in the popularity of the Python programming language, which is open-source, free, and offers a number of user-friendly machine learning packages, has fueled interest in the concept.

One result has been the proliferation of machine learning techniques and their (purported) use in quantitative investment applications.  At Brinker, we’ve come across more than a handful of managers using machine learning: the use of random forest classification to identify the likelihood that a company will cut its dividend, or forecasting of market volatility regimes through Markov chain Monte Carlo methods.  However, we would be remiss to mention that for every manager that usefully employs machine learning, there are a half-dozen others that simply like being able to include it in a slide in their strategy’s pitch-book.  Bloomberg bluntly articulated this recently: “Hedge Funds Beware: Most Machine Learning Talk Is Really ‘Hokum’.”  A healthy dose of skepticism is warranted.

That engenders a second key point: when interacting with managers who profess to use ML in their everyday process, ask as many “dumb” questions as possible.  In layman’s terms, can you describe what’s going on “under the hood”?  Why did you select this model in particular?  While the mathematics behind certain models can be quite hairy, the high-level intuition should not be.  And lastly, while machine learning hasn’t yet been fully commoditized, that doesn’t mean you should be paying a 2 & 20 fee to access its capabilities.

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: Will the drama in Washington, DC upend the economic recovery and market rally?

Holland_Podcast_150x126Tim Holland, CFA, Senior Vice President, Global Investment Strategist

On this week’s podcast (recorded June 2, 2017), Tim addresses a question top of mind for many investors.

Quick hits:

  • When it comes to politics, Brinker Capital is agnostic. Our focus is on understanding the economic and political environment we are operating in, while best positioning our portfolios regardless of the party in power.
  • We see the Trump Administration’s agenda as largely supportive of an optimistic outlook on the U.S. economy and market.
  • If Republicans fail in advancing their legislative agenda, risk assets should still benefit from two significant political tail winds:
    1. A more benign regulatory environment
    2. Certainty around federal tax rates
  • While the economic recovery and bull market are both long lived, we continue to see the weight of the evidence as supporting further expansion and price gains.

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: One market has made some major headlines in recent days: Bitcoin

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Andrew Rosenberger, CFA, Senior Investment Manager

On this week’s podcast (recorded May 30, 2017), Andy discusses how Bitcoin isn’t necessarily something that we consider a long-term investable asset for our client portfolios, but it’s certainly been an attention grabber as of late.

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Quick hits:

  • After crossing the $2,200 per bitcoin mark on Monday, I had no less than 3 separate conversations after an article was released on how if you had purchased $100 dollars worth of bitcoin in 2010, it would be worth $72.9 million dollars today.
  • Bitcoin is a digital currency, not backed by any central government or entity, and it relies on a community of supporters to maintain the infrastructure.
  • The underlying technology behind bitcoin is getting the attention of many major players including banks, credit card companies, and technology giants.

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

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: A time to remember

Noreen D. BeamanNoreen D. Beaman, Chief Executive Officer

Did you know? The original meaning behind Memorial Day, which was officially proclaimed on May 5, 1868 by General John Logan, was to set aside time to remember the brave men and women who gave the ultimate sacrifice while serving the United States of America. We encourage all of you to take a moment over the weekend to remember the true meaning of the holiday and honor the men and women who sacrificed their lives for our freedom.

In observance of Memorial Day, Brinker Capital will be closed on Monday, May 29.

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

 

Investment Insights Podcast: A quick review of April markets

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Leigh Lowman, Investment Manager

On this week’s podcast (recorded May 5, 2017), Leigh provides a quick review of April markets.

Quick hits:

  • After drifting lower for most of the month, risk assets rallied at the end of April and finished in positive territory.
  • The French election spurred a rebound in markets when both Republican and Socialist candidates were edged out in favor of a Centralist candidate.
  • On the domestic side, markets were relatively quiet.
  • We currently find a number of factors currently supportive of the economy and markets.

For Leigh’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: The rally in risk assets continues

Chris HartHart_Podcast_338x284, Senior Vice President

On this week’s podcast (recorded April 28, 2017), Chris discusses what has been the driving force behind the rally in April.

 

Quick hits:

  • The rally in April, despite a brief pause to begin the month, has been driven by positive macroeconomic data, better S&P earnings, and the potential for corporate tax reform.
  • From an equity perspective, stocks have moved higher despite increasing geopolitical risk both domestically and abroad.
  • We remain constructive on risk assets given good enough underlying macroeconomic data but also take notice of rising geopolitical tensions and continued lofty valuations across the equity markets.
  • Looking abroad, developed markets and emerging markets equities have rebounded solidly and now lead the U.S. thus far in 2017.
  • Within fixed income, the aggregate bond index has surprisingly moved higher along with equity markets, while high yield continues to lead.
  • We are keeping a watchful eye on rising global geopolitical tensions, but also note good breadth in the domestic equity markets and stronger corporate earnings.

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.