Mind Over Market

The big risk ahead over the next five years is deflation, not inflation, and it will benefit investments in innovation strategies, according to Cathie Wood, founder and chief executive officer of Ark Invest. Robert England Innovator companies, who share prices have tumbled 30-35% from their heights earlier this year, are likely to return 25-30% in each of the next five years from their current levels, Wood is predicting. “In terms of the recent behavior of value stocks, especially those we believe are in harm’s way, compared to the severe draw down of innovation stocks, I like the set up very much,” Wood said.   While the current situation is reminiscent of the runup in prices from 2006 to 2008, the bond market is signaling that may not be the case, Wood said.    Instead of 10-year Treasury yields rising sharply higher as it did during the 2008 financial crisis, the bond market “has settled down” following a sharply higher move in yields earlier in the year on inflation fears and the p

A shortage of truck drivers and flat-bed trucks is delaying steel shipments at critical points in the supply chain and further driving up shipping costs and lead times, Fastmarkets has learned.   Fastmarkets AMM April 7, 2021 By Robert England In March, there were 84 loads that need to be shipped for every available truck, up from 22 loads for every truck in March 2020, according to DAT Freight & Analytics.   "Demand for the entire flat-bed market, of which steel is a huge piece, has been surging for six weeks and is approaching record highs," Avery Vise, vice president of trucking at FTR Transportation Intelligence, told Fastmarkets.   Steel products, such as beams and coils, are shipped via flat-bed trucks due to their heavy weight, as well as their size and shape, which require special handling precautions, according to R+L Global Logistics.   "It's terrible right now. A lot of shipping guys say it's the worst they've ever seen," a southern distri

W e tend to remember and apply best those life-changing lessons that were painfully learned. For Stephen A. Schwarzman, chairman, CEO and co-founder of The Blackstone Group, one of those early painful lessons was the importance of establishing and following a rigorous process for assessing all the risks before making an investment. By Robert Stowe England “We go from the premise that our first job, sort of like a doctor, is do no harm – and in the financial business that means don’t lose money,” Schwarzman said November 6 at a Reuters Newsmaker event for his new book  What It Takes: Lessons in the Pursuit of Excellence . He was interviewed at the Thomson Reuters building in New York before invited guests by Reuters editor-at-large Sir Harold Evans. Schwarzman in his book cited “don’t lose money” as the number one rule at Blackstone, acknowledging that saying that out loud sometimes prompts smirks.  Since before the September 17 release of the book, Schwarzman has granted a number

Hunter Horsley, chief executive officer of Bitwise Entrepreneurs believe that crypto index funds will greatly expand the crypto investor base just as the S&P 500 and the Russell 2000 indexes have done for stocks.   By Robert Stowe England As entrepreneurs look to take cryptocurrency mainstream, they’re copying a tried-and-trusted approach from traditional investing: indexing. Index investing is designed to generate returns that are similar to a broad market index. This approach can reduce the risk of picking individual assets which might underperform the broad market. So, in the case of an equity index,  instead of picking say Exxon, Apple, Johnson & Johnson, and Ford, for example, you invest in the broad market.  Several new crypto index products have launched recently, offering investors new avenues into the market without some of the risks associated with putting money into single blockchain projects.  Crypto indexers take their cues from broad stock

A turnaround in the outlook for value would mark a stark change from the recent past. Rob Arnott explains why this is likely in an extended Q&A. By Robert Stowe England Value stocks have been underperforming the market for most of the last 12 years. Their recent performance relative to large market cap benchmarks is well below historic norms. This might lead investors to think they should avoid this sector.  Think again, suggests Rob Arnott, chairman and founder of Research Affiliates of Newport Beach, California.  “When value gets as cheap as it is now in the U.S., historically it has beat growth by 4% a year over the next four to five years,” Arnott says.  This projection comes with roughly a 5% uncertainty factor, which means it could be 5 percentage points higher or lower. That would mean “somewhere between zero and 10%,” Arnott says. “Oh, I’ll take that bet. The low end of the spectrum of the range is zero.”  Emerging market value is even cheaper