Looking Beyond the Valley

The past week has been historic in many ways. The US now has the most cases of Covid-19 among nations and registered the highest number of weekly jobless claims in US history. The US Senate passed the biggest stimulus in history after the Fed reacted in similarly historic measure. The pace of news has contributed to unprecedented […]


Gut Check for Long Term Investors

The uneasy alliance between OPEC and Russia to manage oil output and stabilize prices collapsed in dramatic fashion last Friday, as Russia shocked OPEC meeting attendees by announcing they would not participate in new production cuts. In response, Saudi Arabia announced a steep cut in oil prices and an increase in production. The price cuts […]


Coronavirus Update: Not Out of the Woods

Investors have apparently concluded that the coronavirus epidemic (now called COVID-19) will not do more than modest damage to the global economy. At the latest count, the virus had infected more than 75,000 people and killed more than 2,000. Confident that global growth will experience only a temporary slowdown, equity markets continue to trade around […]


Fast Spreading Coronavirus Sends Investors to Sidelines

Global equity markets are reacting to the alarming spread of a new virus which appears to have originated in an open-air market in Wuhan, China. As of this writing (Monday 1/27), the coronavirus has killed 80 people in China, and has infected approximately 3,000 in various countries across the globe, including the United States, Japan, […]


Emerging Market Equities: A Promise Unfulfilled?

During the nine years ending in 2018, real GDP among emerging developing countries expanded at a 7.0% annual rate, more than three times the growth rate of the United States. In China, the largest country in the MSCI Emerging Markets Index, real GDP grew at an astonishing 8.5% annual rate, and India grew by 7.0%. The strong growth in these emerging market countries has lifted millions of consumers out of poverty and into the ranks of a modest middle-class lifestyle. And this trend is likely to continue: McKinsey estimates that China’s “upper middle class” will grow from 36 million households in 2012 to 193 million by 2022, and private consumption of this group will increase by more than 22 percent annually over this period.


Handicapping the Next Recession

As the US economy extends the longest expansion in its history, investors are increasingly worried about when the music will finally stop, i.e. when the next recession will appear. Recent weakening of several widely-followed US economic indicators, coupled with clear signs of deterioration in important international economies, has ratcheted up investor anxiety.


intersection, traffic

Are Low Interest Rates Good for Investors?

The spectacular decline in global interest rates, both here and abroad, has been viewed as a necessary tonic to reinvigorate the sluggish global economy. Will a sharp reduction in short-term interest rates engineered by the Fed result in a new economic boom and a powerful rally in stock prices? Or will negative yields on sovereign bonds fail to generate a sustainable pickup in economic growth?



Recession Fears Awaken Slumbering Bears

With the exception of a modest pullback in stock prices in May, investors have enjoyed a relatively drama-free rally in stock prices in 2019. Through July 31, the Russell 3000 index of US stocks returned 20.5% in 2019, and the MSCI EAFE of developed international equities gained 12.6%. Even in the face of an escalating trade war with the US, the China-focused MSCI Emerging Markets Index posted a gain of 9.2% in the first seven months of the year.


Geopolitical Tensions on the Rise

The latest escalation in tensions between the US and Iran, caused by an alleged Iranian attack on an oil tanker in the volatile Strait of Hormuz, adds to a growing list of geopolitical hotspots around the world. The uncertain outcome of the Brexit negotiations, the lack of progress on denuclearization of North Korea, the temporary truce between the US and Mexico over immigration policy, and the threat of further escalation in the trade war between the US and China, makes it feel like the world is becoming a more dangerous place. […]


trade war, china, US

Trade War Interrupts Bull Market Party

The global stock market’s steady march upward in 2019 was rather rudely interrupted in the last few days by an apparent breakdown in trade negotiations between the US and China. Until President Trump issued a tweet announcing a renewed interest in raising tariffs on some $200 billion of Chinese imports from 10% to 25%, the S&P 500 had climbed almost 18% since the start of the year. Initially, […]


British flags

Brexit: Should Investors Be Worried?

As an investor with assets primarily in the United States, you are probably weary of following the trials and tribulations of the Brexit drama in the United Kingdom. As the deadline looms, should we be worried about the economic fallout from a so-called “hard Brexit”? […]


Test answer sheet with several circles filled in with pencil

Elite Colleges, Bribery, and the Gift of Doing Less

By now you’ve seen today’s headlines: wealthy parents and coaches have been indicted on federal charges in a college admissions bribery scheme. Over 50 people, parents and higher ed professionals, were charged with crimes such as “racketeering conspiracy”: cheating to get kids into elite universities.  […]


Closeup of sailboat deck on ocean

The Powell Put

The stock market’s dramatic recovery so far in 2019, after a dismal fourth quarter of 2018, has left many casual market observers wondering “What changed?” US economic data continues to reflect a modest slowdown, Europe struggles with anemic growth and Brexit uncertainty, and China grapples with a slowing growth rate and enormous debt. In sum, […]


A view of a cloud in the sky with the sun hiding behind it.

Is the Gloom About to Lift?

One of the familiar adages to describe the price action in the stock market is “it takes the stairs up and the elevator down.” The dramatic decline in stock prices since mid-September certainly fits this pattern. Since September 20, the S&P 500 has fallen 13.1% (as of December 17) and wiped out all of its 2018 gains. Investors have voted with their feet by withdrawing $46 billion from U.S. equity funds and $13.4 billion from bond funds in the week ending December 12. Sentiment has turned decidedly negative: the American Association of Individual Investors’ latest reading showing bullish sentiment at just 20.9%, a 17-percentage point drop since the last reading. Is this a typical market “correction” or the start of something much more serious? […]


Unfurled roll of "I Voted" stickers

Post-Election Investment Insights from Ballentine Partners

With the final mid-term election results (mostly) decided, we can move onto contemplating the impact of the vote on the outlook for financial markets. In broad terms, the pollsters got it right. The Democrats regained control of the House of Representatives, and the Republicans added to their majority in the Senate. The prospect of a divided Congress, especially in the current hyper-partisan era, is likely to mean very little new legislation enacted in the next two years. Legislative gridlock is generally considered a positive for markets, since it reduces uncertainty. Nonetheless, the Trump administration’s unconventional approach to governing is likely to keep things interesting. […]


Image of a yellow train signal in a city

The Message from the Bond Market

Last week’s extreme turbulence in global stock markets was preceded by a sharp rise in US interest rates. After fluctuating in a narrow range around 3% for most of the year, the bellwether 10 year US Treasury note yield spurted from 2.87% on August 31 to 3.23% on October 5, the highest level since July 2011. The rapid rise in yield was one of the reasons cited for last week’s brutal two-day selloff in stocks, which drove the S&P 500 down by nearly 5% and sent global stocks tumbling. […]


Crowd on boardwalk

Is Indexing Getting Too Popular? (Continued…)

As indexing continues to garner a larger share of investor assets, some observers worry that we are approaching a natural limit in the proportion of common stocks that can be indexed. After all, if indexing means owning stocks without regard to their fundamental outlook or market valuation, what is the incentive to seek out companies with superior characteristics that will cause their stocks to rise faster than the market? […]


A Turkish lira obscuring an image of a graph showing a downtrend

Emerging Markets: Down, Not Out

After a spectacular year in 2017, emerging market equities have badly trailed their developed market counterparts in 2018. As of this writing (August 14, 2018), the S&P 500 has gained 6.8%, the MSCI EAFE Developed International Index is down 3.8% and the MSCI Emerging Market Equity Index has declined 9.9% (all in US dollars). It has certainly been a rough ride. […]


Exterior glass facade of one of Donald Trump's buildings.

Investing in the Age of Trump

Whether you love him or hate him, it is hard to deny that President Trump has an operating style that is unlike any president who came before him. Investors generally dislike uncertainty, and Trump’s unpredictability would seem to be a depressant on investor optimism. Yet the S&P 500 Stock Index has returned about 33% since the 2016 election, confounding the analysts who foresaw doom and gloom in an upcoming Trump administration. While Trump apparently views the stock market as a report card on his performance, he has shown no reluctance to press for policies that have rattled investor confidence. Given these countervailing forces, a number of our clients are asking the question: is Trump good or bad for investors? […]


Boston skyline with sailboats in the foreground

Taxachusetts No More: “Millionaire’s Tax” denied

The Massachusetts Supreme Judicial Court ruled yesterday that a ballot initiative that would have had Bay Staters vote this fall to raise the state income on its wealthiest residents is unconstitutional.  The Fair Share Amendment, dubbed by some the “Millionaires Tax,” would have had voters decide whether to increase the income tax rate from 5.1% to 9.1% on incomes exceeding $1 million.  The proposal will no longer appear on the November ballot. […]


Robot playing piano

I Married a Robot: How Artificial Intelligence Will Change Our Lives

Without our really noticing it, artificial intelligence (AI) is creeping ever more closely into our daily lives. From the Amazon Echo to self-driving vehicles to currencies that you can’t touch, AI is gradually transforming developed societies in ways we have yet to fully grasp. As artificial intelligence gets more sophisticated and weaves further into the fabric of human existence, what are the implications for work and society as we know it? […]


Two rows of different nations' flags

Trade Policy: A Slippery Slope

The Trump administration’s recent effort to impose tariffs on steel and aluminum imports into the United States has provoked a significant backlash among free-market economists, business leaders, and Republicans in Congress, among others. They worry that the imposition of protectionist measures designed to insulate domestic manufacturers from lower-cost foreign competitors could result in retaliation from foreign governments on other products that could expand into a full-blown trade war. As financial market investors dependent upon economic growth, how worried should we be? […]


Market Correction: Passing Squall or Tsunami Warning?

Investors awoke from their multi-year slumber in late January to a nasty reminder that stock prices are volatile. After a period of calm in the stock markets that rivals the longest in recorded history, a jump in average hourly earnings and the recent backup in bond yields refocused investor concern on the prospect of higher […]


Roller Coaster Silhouette at Sunset

Surviving the Next Downturn: A Mental Primer

As of this writing (January 10), the broadest index of global stock market performance (MSCI ACWI) has gone more than 400 days without a pullback of 5% or more, the longest such streak in 30 years. It is no surprise, then, that experienced investors are riding the rally with one foot on the gas and a hand on the parking brake. The only thing we can say with certainty is that this streak will end, but the question is when. In the meantime, enjoy the ride. […]


Close up of tax forms with pencil and calculator

What Tax Reform Means for Investors

At more than one thousand pages, the new tax reform package has plenty of both carrots and sticks for US taxpayers. Both the short- and long-term effects of the new legislation on economic growth in the US are uncertain at this point, but changes in the tax code will undoubtedly confer both benefits and penalties on certain segments of the US economy. Until the tax accountants ferret out every new wrinkle, let’s examine the most likely impacts that the new law will have on the investment landscape in the coming years. […]


directional signpost

The Biggest Issue Facing Investors is Not Tax Reform

US equity investors have been laser-focused on the tax reform debate occurring in Washington over the last few weeks. With economic data remaining firm and few economists forecasting a downturn in coming quarters, investor attention has been centered on the potential for meaningful earnings improvement as a result of lower corporate taxes […]


Image of a person signing a document at a table.

The Tax Proposal & You

On Thursday, the House Ways and Means Chairman, Kevin Brady, ended months of speculation by releasing H.R. 1, the “Tax Cuts and Jobs Act,” detailed tax legislation that is the first step in possibly reshaping the country’s tax code.  The bill is all-inclusive, including changes to everything from individual and business tax rates to the tax benefits of home ownership to 529 plans to the future of the estate tax […]


The White House and the South Lawn

Much Ado About Taxes

The Trump Administration today released its “Unified Framework for Fixing our Broken Tax Code” to flush out its tax reform priorities for individuals and businesses.  The nine-page document is similar to the single-page bulleted outline the Administration rolled out in April and which we commented on then.  Frankly, not much has changed in five months as the details of what will ultimately be a bill debated and voted on by Congress remain elusive. 


NASA image of a hurricane from space

Harvey’s Path of Destruction

As the residents of southeast Texas return to their homes and assess the damage caused by Hurricane Harvey, our thoughts and prayers are with them. Harvey’s torrential rains are likely to make this storm one of the worst natural disasters in our nation’s history. […]


View of a London street, close to the ground, looking at part of Tower Bridge.

Is the European Recovery for Real?

One of the legends in the investment business (Byron Wien, long time chief strategist at Morgan Stanley, now at Blackstone, and a former mentor of mine) once described Europe as “a vast open-air museum”. Beyond its unique history and architecture, I believe he was referring to the continent’s antiquated labor rules, sclerotic decision-making processes[…]


Picture of a skyscraper being built.

When Will the Expansion End?

The United States is now in its ninth year of economic expansion and third longest since the Civil War. If the expansion lasts another year, it will be the longest on record. With the 2008-09 recession a distant but still painful memory, investors are rightly wondering when it will all end.


Crowd on boardwalk

Is Indexing Getting Too Popular?

Market watchers have noted the stunning growth of indexed vehicles over the last few years. Coupled with the ease of trading and transparency of exchange-traded funds (ETFs), the low cost and tax efficiency of indexing have led to a boom in the growth of these vehicles to the detriment of actively-managed mutual funds. With indexing […]


People waiting in a line on a city street

Hurry Up…and Wait

A much anticipated and, perhaps, over-hyped news conference rolling out the Trump Administration’s tax reform plan generated very little “new news” yesterday. Treasury Secretary Steven Mnuchin and National Economic Director Gary Cohn presented an outline of a plan that is very similar to the talking points the President promoted on the campaign trail. […]


Black and white ink drawing of a castle being attacked.

Active Management Under Siege

As data continues to accumulate that reinforces the growing consensus of the superiority of passive indexing strategies over active management, the defenders of the old guard are fighting back. They are cutting fees, shuttering underperforming strategies, and merging businesses in order to reduce costs. The pressure is severe: according to Morningstar Inc., some $1.2 trillion has been withdrawn from actively managed U.S. stock funds since the start of 2007, while nearly the same amount has moved into passive U.S. stock funds over the same period. […]


City billboards

What’s in a Phrase

The stock market abounds with colorful sayings that reflect the collective wisdom of decades of investment experience. For professional investors, these time-worn adages are reminders of sometimes-painful past market episodes and the unending challenge of getting the future right. But at the end of the day, can these slogans actually be useful in making investment decisions?


A weathervane with blue sky in the background.

The Only Certainty is Uncertainty

Irrespective of your political views, one must acknowledge that big changes are afoot in Washington. Trump supporters applaud the aggressive style of the new administration’s take-no-prisoners approach, while liberals cringe at the thought of the damage that might be wreaked on their fundamental beliefs over a four-year presidential term.


Tower of balancing stones.

The Trump Rally – Impressive, but selective

Since Donald Trump’s upset victory in the 2016 Presidential election, financial markets have been on a tear. Or have they? A casual observer of the business press would probably conclude that stocks and bonds around the world are rallying around President-elect Trump’s pro-growth, business-friendly, tax reform policies designed to “make America great again.” The reality, however, is somewhat different.


Gloved hand holding up a spyglass in the night

Markets Struggle for Post-Election Clarity

With last week’s historic election now behind us, investors are feverishly recalibrating their plans in light of its stunning outcome. The despair registered in the early hours after the polls closed on November 8 turned sharply into euphoria as investors focused on the “pro-growth” agenda of a Republican president and control of both congressional chambers.  […]


Shock and Awe in Financial Markets

The stunning upset in yesterday’s US presidential election has left many people in a state of shock. Although the polls indicated a tightening race over the last two weeks, very few observers predicted or believed in the possibility of a President-elect Trump. Yet here we are. If President-elect Trump fulfills many of his campaign promises, […]


Volatility Returns, With a Vengeance

After an exceptionally quiet summer in the financial markets, when the Dow Jones Industrial Average failed to move more than 1% for more than forty days, the calm was broken rather dramatically on September 9. The Dow shed nearly 400 points that day, and the following week has been a roller-coaster ride of big ups […]


Games That Managers Play

In evaluating a money manager, informed investors naturally want to evaluate the manager’s track record. Has the manager delivered returns above the chosen benchmark? Have they assumed excessive risk in order to achieve those returns? What about the impact of fees and taxes? How reliable is the performance data provided by less-regulated private fund managers? These are just a sample of questions that investors should answer in order to validate a manager’s competence, and the answers are rarely clear-cut.


The Siren Song of Active Management

At Lake Wobegon, “all the women are strong, all the men are good looking, and all the children are above average.”

Despite being an obvious fiction, many people seem to apply a similar logic to managing their money. They believe that through their own superior insight, or by hiring investment professionals with many years of experience, they can “beat the market”. Their confidence is an inherent part of human nature, and is responsible for creating so much wealth in our society over time.