Vlog – Quarter End Q&A: 3Q2018

Brinker Capital’s Global Investment Strategist, Tim Holland, asks and answers those questions we think will be top of mind for clients as they open their quarterly statements and think back on the quarter that was:

  1. Can this record bull market continue to run?
  2. Will weakness in emerging market equities spark a bear market here at home?
  3. Will the Fed continue to raise rates and what might that mean for 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.

Making sense of recent market volatility

This past week has been a very unsettling time for markets and investors. To help inform conversations, Jeff Raupp, CFA, Brinker Capital’s CIO, recorded a podcast that examines the recent market correction, including the catalyst for the sell-off and where we see the market heading into 2019.

Additionally, Dr. Daniel Crosby, Executive Director, The Center for Outcomes & Founder, Nocturne Capital, provides information to better understand market volatility and how to best react to the changes:

We hope you find these tools helpful and appreciate your continued confidence in Brinker Capital.

Brinker Capital, Inc., a registered investment advisor.

Investment Insights Podcast: The dreaded yield curve inversion


Andrew Goins
, CFA, Investment Manager

On this week’s podcast (recorded September 24, 2018), Andrew discusses the probability of future Fed rate hikes and the potential impact of the yield curve.

Quick hits:

  • The more highly anticipated event will be the release of the Beige Book following this weeks meetings, which covers everything discussed and includes the widely followed dot plot.
  • We’ve been dealing with a very flat yield curve for much of this year.
  • Everyone is watching closely for the dreaded yield curve inversion, which has been an ominous sign for impending recessions historically.
  • While the curve remains flat, but positively sloped, and with the weight of the evidence leaning positive, our portfolios remain overweight to equities.

For Andrew’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.

Don’t be trapped in the past

Williams 150x150Dan Williams, CFA, CFPInvestment Analyst

Just over 10 years ago on September 15, 2008, Lehman Brothers filed for bankruptcy shocking the global financial markets. In retrospect, the collapse trajectory was there for all to see with the shock being more attributed to people’s reliance on things staying the same than any new data. This clinging to the past was so strong that a postmortem analysis showed that Lehman Brothers employees, the very people who were the insiders to see the company’s problems, were shown to have kept buying stock. Many believed, both insiders and the public, that the stock was a compelling value as they anchored their valuation toward the stock high of $86.18 in February 2007. When the end finally did come for Lehman it was a long time coming based on the data stream but felt abrupt based on our ability to process the new reality. When a character in Ernest Hemingway’s novel “The Sun Also Rises” was asked how he went bankrupt he said, “Two ways, gradually and then suddenly.”

Not all individual stock downturns lead to a rapid collapse or even a permanent lower price range. Still, this anchoring to past prices is prevalent enough for investors to frequently be told to fear “value traps.” A value trap is a stock which looks cheap based on previous stock prices, but an analysis of future prospects show that the underlying stock’s fortunes have significantly and potentially permanently changed for the worse.

The fact that companies’ future prospects are always changing is a sign of a dynamic economy that through creative destruction increasingly improves the products for the consumers of an economy. Much has been made of the disruptive Amazon effect that through making the purchasing of products easier as the one-stop shop for online shopping has crushed traditional brick and mortar businesses and other smaller online retailers. It is bad for those businesses left behind but the consumers win.

This lesson of unreasonably expecting things to remain the same holds meaning outside of just the financial markets. In George Friedman’s 2009 book “The Next 100 Years” he opens by taking a quick survey of the way of things at 20-year intervals starting at 1900. He notes that in 1900, London was the capital of the world and Europe was at peace with great prosperity, in 1920 Europe was torn apart by an agonizing war, in 1940 Germany had reemerged to dominate Europe, in 1960 Germany was crushed and the United States and the Soviet Union were the superpowers, in 1980 the United States had been defeated in war by tiny communist nation North Vietnam showing communism was on the rise, and finally in 2000 the Soviet Union had collapsed with a United States hegemony being the state of the world. If I would take license to write his 2020 view, it would talk of the global uneasiness of a China on the rise to legitimately challenge the United States as an economic and political power.

What is clear is that things change and failing to try to at least look around the next corner is akin to walking backward. Just because you have not walked into a wall yet is a poor reason to expect an unending clear path. Our role as the investors of capital attributes special importance to forward thinking but it is a lesson for all to learn.

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.

Vlog – The markets vs. the mid-terms

Tim Holland, Brinker Capital’s Global Investment Strategist, discusses the upcoming Congressional mid-term elections, specifically what party will win the House and the Senate, and how markets might respond once the votes are counted.

 

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: September 2018 market and economic outlook

Leigh Lowman, CFA, Investment Manager

On this week’s podcast (recorded September 7, 2018), Leigh provides a brief review of August markets.

 

Quick hits:

  • Despite what historically is a difficult month for markets, US equities finished in strong positive territory and a new record was set for the longest bull market in history.
  • The S&P 500 Index was up 3.3% for the month and has gained 9.9% year to date.
  • Developed international equities as measured by the MSCI EAFE Index were down -1.9% for the month and -1.9% year to date.
  • Emerging Markets Index was down -2.7% for the month and -6.9% year to date.
  • The Bloomberg Barclays US Aggregate Index was up 0.6% for the month with all sectors posting positive returns.
  • The 10-year Treasury yield declined 12 basis points, ending the month at 2.85%, and led to further flattening of the yield curve.

Listen_Icon  Listen to the abbreviated audio recording.

Read_Icon  Read the full August Market and Economic Outlook.

 

market outlook Sept 2018

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.

 

45 things smart investors never say

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

1. Fear of political strife – “I don’t like the President”

2. Concentrated position – “My grandfather gave me this stock”

3. Impersonal benchmarks – “Why am I down versus the S&P 500?”

4. Market timing – “Is now a good time to invest?”

5. Home bias – “Europe? I prefer the Red, White, and Blue!”

6. Tangibility bias – “I like to invest in things that I can hold”

7. Friendship bias – “I like to invest in people I know”

8. Anchoring/ “breakevenitis” – “I’ll sell when it gets back to what I paid for it”

9. Selling winners too quickly – “You never go broke taking a profit”

10. Mere exposure effect – “Buy what you know”

11. Zero risk bias – “I’ll keep this dry powder for a rainy day”

12. Performance chasing – “This has been hot…”

13. IPO investing – “Have you heard of this new company…?”

14. Shifting risk tolerance – “I’m a high-risk high-reward person”

15. Ostrich effect – “Why mess with a good thing?” (complacency)

16. Confirmation bias – “All of my friends say…”

17. Overconfidence – “It won’t happen to me…”

18. Hindsight bias – “How did you do in 2008?”

19. Restraint bias – “I’ll jump on the next March 2009”

20. Self-serving bias – “Why aren’t my returns higher?” (two-way street)

21. Affect heuristic – “I’m going with my gut on this one…”

22. Appeal to authority – “But Jim Cramer said…”

23. Status quo bias – “Rebalance? Why bother?”

24. Hyperbolic discounting – “I’ll start saving later…”

25. Gambler’s fallacy – “I’m on a roll!”

26. Herding – “My friend told me to check out…”

27. New era thinking – “Yeah, but this time is different…”

28. Representativeness – “This will be the Great Depression all over again”

29. Bias blind spot – “But I would never do that!”

30. Ambiguity aversion – “Why can’t you just give me a straight answer?”

31. Babe Ruth Effect – “Why did you have me in last year’s big winner?”

32. Dread risk – “I’m gonna buy gold”/ “What about the zombie apocalypse?”

33. Fundamental attribution error – “Why aren’t you beating the market? I could do better myself!”

34. Illusory pattern recognition – “This chart looks just like 1929!”

35. Money illusion – “I’m a millionaire! What do you mean keep working?”

36. Myopic loss aversion – “Excuse me, I have to make some hedging trades.”

37. Sunk cost fallacy – “Well, we’ve already gone this far so…”

38. Turkey illusion – “Recession? Never heard of it.”

39. Fetish for complexity – “I need hedge fund exposure! What am I paying you for?”

40. Declinism – “The way I see it, the world is just going to hell”

41. Framing – “Save 10%? Impossible.”

42. Illusory truth effect (believing a market myth frequently repeat) – “Sell in May and go away”

43. Information bias – “Let me just turn on CNBC”

44. Outcome bias – “You told me not to buy individual stocks and it went up. Ha!”

45. Post-purchase rationalization – “I mean, I NEEDED that.”

The Center for Outcomes, powered by Brinker Capital, has prepared a system to help advisors employ the value of behavioral alpha across all aspects of their work – from business development to client service and retention. To learn more about The Center for Outcomes and Brinker Capital, call us at 800.333.4573.

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: Markets climbing a wall of worry

Chris HartSenior Vice President

On this week’s podcast (recorded August 30, 2018), Chris discusses the seven bricks that Strategas considers to be the largest in their “wall of worry”.

 

Quick hits:

  • Many believe we are witness to one of the most unloved bull markets of all time.
  • It is important to try and set aside emotion and gut feeling, and instead focus on fundamentals to help guide your decision-making process.
  • Are there plenty of bricks in the wall to worry about? Yes, but fundamentals remain strong and reinforce our belief that markets still have room to move higher.

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.

Investment Insights Podcast: Will Turkey topple the global economy?

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

On this week’s podcast (recorded August 24, 2018),
Tim discusses if the economic and market issues in Turkey might serve as catalysts for a global recession and bear market.

Quick hits:

  • The country’s Borsa Instanbul 100 Index is off 22% year to date and its currency, the Lira, has lost half its value against the US dollar.
  • Turkey accounts for 1.5% of the world’s GDP, so the country is a nominal contributor to global growth.

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


investment podcast
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.

Password potato chips

Jim O’Hara, CISM, CISSP, CEH, Information Security Officer

Passwords are like potato chips.  You can’t (and shouldn’t) have just one.

A new trend is developing in phishing and email extortion tactics. Attackers are including the potential victims’ passwords in the messages sent. Why would they do this?

If you’re the target of this attack, you’ll typically receive a message from someone claiming they’ve compromised your computer and have obtained a list of your website usernames and passwords.  The message will contain a set of credentials to a site you’ve used, which were valid at some point. You’ll also be threatened with some sort of undesirable consequence unless an online payment is made. By including valid credentials in the extortion message, the attacker is hoping to instill fear and doubt in your mind, prompting you to take immediate action.

But how did the attacker obtain your credentials?

When a website is compromised, the attacker typically mines the site for useful information, including the login credentials of the site’s users. The attacker knows that people tend to be lazy when it comes to passwords, and there’s a good chance one site’s credentials will work for other sites the user visits. These collections of stolen usernames and passwords are constantly being bought and sold online, and eventually, make their way into the hands of an extortionist. It’s likely the credentials in the email you receive will have been stolen quite some time ago, and in many cases are no longer valid. If you use the same password for more than one website, it will be impossible for you to determine which of the sites you visit was compromised.

This is why it’s so important to maintain unique passwords for each account you have. Yes, it takes a bit more effort to maintain separate passwords, but the additional protection is well worth the effort.

Tips to protect yourself: 

  • Never use the same password for more than one website. To keep track of multiple passwords, consider storing them in a password-protected spreadsheet.
  • Change your passwords from time to time. Especially for email accounts, or other accounts which don’t employ multi-factor authentication.
  • Never use public computers to access sensitive accounts. Even if you direct the browser to not save your credentials, the machine could be compromised in other ways designed to capture your credentials regardless.

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