Tuesday, March 5, 2019

Investment Perspectives: Weakening Dollar, Fixed Income Exposure, and Potential Stock Gains

Key Takeaways
  • A weakening U.S. dollar could be a sign of improving global economic conditions. 
  • Criteria to consider when deciding between fixed income exposure via mutual fund/ETF or individual bonds.
  • The market pushing higher in the first two months could mean potential gains. 
In this month's issue:

"The Dollar Could Weaken, Which Is Good" Mark Luschini
The U.S. dollar posted a handsome return in 2018, but conditions are shifting in a way that could introduce a headwind for further gains. Part of the reason is due to growth outside the U.S., which we believe is poised to turn for the better. The other is a bit more technical, as it relates to the monetary settings of the Federal Reserve.

"Fixed Income Funds, ETFs, and Individual Bonds" Guy LeBas 
One of the most frequent portfolio questions that arises in the context of individuals’ bond market investments has little to do with economics, market themes or risk tolerance. It is not about the “what” of bonds or the “why” of bonds, but rather the “how” of bonds. While there are various formulations, the question is a straightforward one: How should one get exposure to fixed income? The advent of exchange-traded funds (ETFs) and extension of those funds to the fixed income universe has particularly complicated the picture during the last half-decade. Selecting a method of investment in fixed income is more art than science, but a few helpful rules of thumb can simplify the process.

"If Past Is Prologue" Greg Drahuschak 
The predictive value of most seasonal biases often offer no better than a coin-toss probability of accurately forecasting a market outcome. The close of trading in February, however, highlighted a seasonal bias that from 1950 through last year accurately predicted the annual market result in more than 96% of all relevant years.

You can read the full Investment Perspectives here.