Monday, January 18

Tag: Investing

Gold $3,000?
Commodities

Gold $3,000?

Gold is perhaps the world’s oldest store of value still in widespread use. Yet it is impossible to determine its intrinsic value. Why? Since gold doesn’t generate any income, it has no cash-flow stream to discount. In this respect, it is similar to sovereign debt in developed countries today. And just as gold was used to create money in earlier eras, sovereign debt serves the same purpose today.The price of gold (XAU) and the US dollar index (DXY) tend to have a negative correlation while the price of gold and the money supply (M2/GDP) have a positive one. This largely held true from 2000 to 2020 and reflects how US dollars and gold have served as central banks’ official reserves and how in the Bretton Woods system, gold was denominated in US dollars.When US monetary policy loosens and...
When Should You Buy an Option to Make a Profit
Trading Tips

When Should You Buy an Option to Make a Profit

Options are powerful tools for generating income, hedging risk, and speculating on future market behavior. However, no matter your strategy or financial objectives, options come in only two types: buy (call) and sell (put). Let’s take a look at a few instances when buy options may provide potentially lucrative trading opportunities.Options 101: The Buy-Sell DichotomyAn option contract gives the holder a right, but not a duty, to buy or sell a quantity of an asset at a specified price by a forthcoming date in time. In reality, sell and buy options serve very different purposes. Here’s a quick breakdown of essential functionality.BuyWhen you buy an option, you pay a premium for the right to buy or sell an asset quantity at the contract’s strike price by an expiration date. Buying a c...
2021 US outlook: The recovery takes hold
Investing

2021 US outlook: The recovery takes hold

As we say good riddance to 2020, we enter 2021 with a confidence that new market and business cycles have arisen. We believe the economy, out of the depths of the COVID-induced recession, has entered what will be a protracted recovery, complete with the inevitable fits and starts, as experienced at the end of 2020. It may be years before the US returns to its full productive capabilities and full employment has been restored. Nonetheless, we believe the markets will be focused on the improvements in economic activity in the coming years.In the following outlook we articulate our views for the next 12 months by answering three main questions that we believe all investors need to assess:In which direction is the economy trending? What will be the policy response? What will b...
Growth vs. Value: Why not both?
Investing

Growth vs. Value: Why not both?

The outperformance of growth stocks over value stocks since the Great Recession1 has been widely discussed, and many investors are questioning if it is now value’s turn to finally re-take leadership. Fuel has been added to this fire with the recent positive news flow for COVID-19 vaccines, which would support the eventual return to normalcy and economic recovery.We agree that some of the more economically sensitive value stocks should be some of the key beneficiaries during the early stages of an economic recovery, based on what we’ve seen through history. However, we also believe that this is as good an environment as we’ve ever seen for equities in general — one that is favorable for broad participation for both value and growth stocks (Figure 1).To us, the question isn’t “growth vs....
Fixed income: Is it time to pivot toward emerging markets?
Investing

Fixed income: Is it time to pivot toward emerging markets?

The longer-term growth outlook for the global economy continues to improve.  Most recently, the news that a number of vaccines are proving effective at preventing COVID-19 has bolstered the case for a strong year of growth in 2021.  Given these developments, Invesco Fixed Income is looking at opportunities in emerging markets (EM).  EM has been held back by COVID-19, limited policy flexibility and weak capital flows.  As these factors change, EM has room to move higher, in our view, and we favor a pivot from developed markets.The macro view: Supportive policy and tight valuationsBetter treatment protocols and better understanding of how to prevent the spread of COVID-19 mean that lockdowns and the associated collapse in growth are unlikely in the near future.  Instead, we believe targe...
SteelPath December MLP updates and news
Investing

SteelPath December MLP updates and news

Midstream equities outperformed the broader markets in November as third-quarter earnings season demonstrated better-than-expected sector results and as demand sentiment was bolstered by encouraging vaccine results. LNG exports have recovered are now setting new record levels not seen since 2018.MLP market overviewMidstream MLPs, as measured by the Alerian MLP Index (AMZ), ended November up 21.7% on a price basis and up 23.8% once distributions are considered. The AMZ outperformed the S&P 500 Index’s 10.9% total return for the month. The best performing midstream subsector for November was the Gathering and Processing group, while the Propane subsector underperformed, on average.For the year through November, the AMZ is down 38.0% on a price basis, resulting in a 30.6% total retu...
Could we soon see the start of a new value cycle?
Investing

Could we soon see the start of a new value cycle?

Over the past two weeks, my team has gotten many questions about the impact that a Biden administration could have on various areas of the stock market — and whether we might soon see a new era of value outperformance. We’re not ready to declare the start of a value cycle just yet. But we believe that a US fiscal stimulus package and, more importantly, a globally available COVID-19 vaccine would both be very positive developments for value stocks.While we watch the Senate runoff races in Georgia, which will decide which party controls the Senate, there is increasing talk about a fiscal stimulus package during the lame-duck session of Congress.  Even if a stimulus deal is not reached prior to the new administration taking office, we believe it would be in the best interest of Congress to ...
Three potential paths for markets in 2021
Investing

Three potential paths for markets in 2021

Every year at this time, we issue our global market outlook for the coming year. That exercise is especially complex at this moment — the shape of economic growth in 2021 is dependent on a wide variety of factors, including infection rates, fiscal policy, monetary policy, public health policy (including the severity — or “stringency” — of lockdowns), progress toward the development of COVID-19 therapies and vaccines, and consumer and business confidence. To address the breadth of possibilities that lie ahead in this environment, our global outlook for 2021 includes a base case, an upside scenario, and a downside scenario.To create these scenarios, we at Invesco brought some of our experienced investment professionals and thought leaders together to talk through the range of possibilities...
Three reasons to consider investing in family-owned companies
Investing

Three reasons to consider investing in family-owned companies

It’s Thanksgiving season in the US, and our thoughts turn to family — which makes this a great time to explore the topic of family-owned businesses and some of the misperceptions that seem to surround them.Some investors fear that family-owned businesses, especially those without an independent board of directors, may not prioritize their shareholders’ interests and, by extension, may produce less reliable or inferior investor outcomes. That perception, however, doesn’t bear up under scrutiny.Family-owned companies are more prevalent internationallyThis is particularly important for investors in international small- and mid-cap stocks (or “smid caps”) — which is our team’s focus. Family businesses are more common abroad, especially among smid-caps.For example, consider the CS Famil...
Dow 30,000: We made it! Now what?
Investing

Dow 30,000: We made it! Now what?

It seems like only yesterday that the Dow Jones Industrial Average (Dow) first pierced the psychologically-important 10,000 mark. I remember gathering around the office televisions on March 29, 1999, to watch the Big Board move into five-digit territory. The traders on Wall Street erupted in cheers and paid homage to the old ticker-tape days by throwing confetti into the air. Investors donned “Dow 10,000” hats while the analysts and pundits prophesized about a prolonged era of stock market gains and mounting prosperity.At the time, Dow 10,000 seemed destined to one day be as outdated as Y2K fears or “La Vida Loca” or tiny backpacks. Alas, time flew but the market didn’t — it fell back below the 10,000 level and didn’t top it again until 2009 (to much less excitement this time — we’d land...