WEALTHTRACK

John Rekenthaler, Vice President of Research at Morningstar and author of the twice-weekly “Rekenthaler Report” analyzes the influence of the online investment communities that have driven GameStop’s meteoric rise and stunning declines. Rekenthaler says their influence is here to stay, at least until regulators get involved.  WEALTHTRACK #1736 published on March 05, 2021 More info: https://wealthtrack.com/the-manipulation-of-stocks-by-social-media-investors-is-the-focus-of-morningstars-john-rekenthaler/

The balance sheet of the Federal Reserve continues to surge at an unprecedented rate, up 83% y/y to a historic level, $7.59 trillion at the latest count. According to our WEALTHTRACK podcast guest, financial historian, and long-time market observer James Grant, interest rates, the “central pricing mechanism for financial markets” have been pushed to artificially low levels by the Fed’s policies which have created numerous market bubbles. He cites Bitcoin as one of the most extreme examples. WEALTHTRACK #1735 published on February 26, 2021 More info: https://wealthtrack.com/bitcoin-is-one-of-many-bubbles-of-historic-proportions-today-says-financial-historian-james-grant/ Common Sense: The Investor’s Guide to Equality, Opportunity, and Growth: https://amzn.to/3sxkIJm

Part 2 of 2 Old fashioned asset allocation used to be a fairly simple exercise: 60% individual stocks, usually U.S. large-caps and 40% bonds, mostly investment-grade corporates, some Treasury securities for liquidity, and a smattering of municipal bonds for higher tax bracket individuals.    Today it's a whole different ball game, juggling multiple global asset classes, using complex computer modeling, algorithms, pricing formulas, and intensive analysis.   This is the realm of Sébastien Page, head of T. Rowe Price’s Global Multi-Asset division where he oversees $350 billion in assets. Last week on WEALTHTRACK we discussed the concepts in his new book, Beyond Diversification: What Every Investor Needs to Know About Asset Allocation.   This week we will address the current investment environment and how he and his team are positioning clients’ portfolios. What does Page think of these alternative asset classes? We’ll find out.  WEALTHTRACK Episode #1734 broadcast on February 19, 2021 More info: https://wealthtrack.com/which-investments-are-poised-to-do-well-in-2021-strategy-advice-from-an-asset-allocation-pro/ AGAINST THE GODS: THE REMARKABLE STORY OF RISK: https://amzn.to/3dB4smt Beyond Diversification: What Every Investor Needs to Know About Asset Allocation: https://amzn.to/3u2Syrg

Part 1 of 2:  Talk to most investment professionals and they will tell you that portfolio diversification is the key to successful investing and that asset allocation among multiple asset classes, not individual security selection, accounts for as much as 100% of investment returns. Being broadly diversified among different asset classes is supposed to give you strong exposure to market rallies and protection in down markets as non-correlated assets zig when others zag and soften the downside impact. However, there are times when diversification doesn’t seem to work. Take the huge sell-off in the spring of 2020, the shortest bear market in history when asset classes plunged pretty much across the board, even gold and Treasuries took a hit.  What are the lessons to be learned about the usefulness of diversification from 2020’s experience? Is there a better way?  Our guest today is a financial thought leader in asset allocation at T. Rowe Price. Sébastien Page, Head of Global Multi-Asset at the firm. Page is also the author of a new book titled Beyond Diversification: What Every Investor Needs to Know About Asset Allocation. Page says diversification did fail in 2020’s bear market but that shouldn't surprise us, and yes, there is a better diversification strategy. We’ll find out what it is.  WEALTHTRACK #1733 broadcast on February 12, 2021 More info: https://wealthtrack.com/portfolio-diversifications-failure-to-protect-in-bear-markets-calls-for-a-new-strategy/   Beyond Diversification: What Every Investor Needs to Know About Asset Allocation: https://amzn.to/3u2Syrg

One of the most notable characteristics of the last decade was the wide divergence in market performance. We have reported many times on the narrow group of superstars, mainly large-cap U.S. tech stocks and the much wider universe of laggards, value and small-cap stocks in particular.  In 2020 that divergence blew up.  Small-cap went from worst to first. The year began disastrously.   Small-caps ended the year with their best quarterly gain ever, a stunning 31% advance in the index, handily beating large-caps for the quarter.  When it was all over the Russell 2000 had gained 101.3% from its March 18th low to year-end, although it lagged large-cap and tech for the entire year.   We have a WEALTHTRACK exclusive this week with an investment legend whose specialty is in-depth financial analysis in the small-cap universe. He is Charlie Dreifus, lead portfolio manager of the Royce Special Equity Fund  Before delving into small-caps I asked Dreifus to share his perspective on current market conditions based on his half-century of managing money. A hint: he told me “I've seen this movie before, and it doesn't end well.”      WEALTHTRACK #1732 broadcast on February 05, 2021 More info: https://wealthtrack.com/royce-special-equity-funds-legendary-charlie-dreifus-explains-his-winning-by-losing-less-strategy/

Blast off! Stock markets are setting records, with tech stocks leading the charge once again. “Don’t fight the Fed” should now encompass “don’t fight the Treasury, fiscal stimulus, vaccinations and investor demand for ‘real’ (after inflation) returns.” The Wall Street Journal reports that the “S&P 500 rose 14.3% from Election Day through Inauguration Day, its best performance on record for that period.” (The Wall Street Journal “Stocks Climb To Records, Led By Tech Sector” 1/21/21)    In retrospect, 2020 was an entire year for the record books:  - A once in a century global pandemic; - Unprecedented, massive monetary and fiscal stimulus; - A brief deep recession and the shortest bear market in U.S. history; - A record-breaking stock market rally; - The continuation of near record-low interest rates - And the election of a new president with a very different policy agenda.  Portfolio rebalancing is just one of the actions on Christine Benz’ financial to-do list this year. In part 2 of our interview with Morningstar's Director of Personal Finance, she helps us get in personal financial shape for the year ahead.   WEALTHTRACK #1730 broadcast on January 22, 2021 More info: https://wealthtrack.com/2021s-financial-to-do-list-with-morningstars-personal-finance-guru-christine-benz/ Books mentioned in  the episode: 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances: https://amzn.to/3ig0cZE Morningstar Guide to Mutual Funds: Five-Star Strategies for Success: https://amzn.to/3ifVVp8

COVID-19 has affected just about every aspect of our professional and personal lives, including the state of our finances. Whether you or a loved one are among the more than 20 million Americans who lost their jobs in the spring of 2020 in the depths of the lockdowns, or one of the millions of Americans who saw their retirement portfolios plunge in the shortest bear market on record in February and March, (and if you stayed invested have benefitted from the markets rebound), or if you or a loved one are among the 20 million Americans who have been stricken by COVID your finances have been affected. Financial services firm Morningstar has also been paying attention. In a recent article, “What the Coronavirus Means for the Future of Financial Planning,” its Director of Personal Finance, Christine Benz addressed the issue and we have asked her to enlighten us. WEALTHTRACK # 1729 broadcast on January 15, 2021 More info: Books mentioned in  the episode: https://wealthtrack.com/the-pandemic-era-requires-rethinking-financial-plans-says-personal-finance-guru-christine-benz/ 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances : https://amzn.to/3ig0cZE Morningstar Guide to Mutual Funds: Five-Star Strategies for Success: https://amzn.to/3ifVVp8

We have a special treat for you. Robert Shiller, a Nobel Prize-winning economist, a pioneer in the field of behavioral finance, long-time Yale professor, financial innovator, and prolific author. Shiller is also the co-creator of the widely cited gauge of U.S. housing prices, the Case-Shiller Home Price Index, and creator of the cyclically adjusted PE ratio known as the Cape Ratio which is a price-earnings ratio for the S&P 500 based on average inflation-adjusted earnings from the previous ten years. Because it includes ten years of earnings many consider it to be a more reliable gauge of market value. His presence could not be more timely. He is known for identifying the tech and housing bubbles long before anyone else did, and here we are in the midst of an economy crushing pandemic with home prices booming and stock prices hitting new records.  We started with the stock market, his analysis of the record-setting performance. WEALTHTRACK # 1728 broadcast on January 08,2021 More info: https://wealthtrack.com/nobel-laureate-economist-robert-shiller-explains-the-narratives-driving-stock-and-real-estate-prices/ Links to Books mentioned: Narrative Economics: How Stories Go Viral and Drive Major Economic Events:  https://amzn.to/3byPtbJ Irrational Exuberance: https://amzn.to/38wq9RL Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism: https://amzn.to/2JWdGNu

This week, in part 2 he will share his fifty years of economic perspective on the extraordinary events of 2020 and how the pandemic has changed the economy and markets. It will be a fascinating conversation with one of the best business cycle analysts of our era.      Every year at around this time we sit down for an in-depth interview with legendary economist Ed Hyman.  Hyman has been voted Wall Street’s number one economist in Institutional Investor magazine’s prestigious annual survey of institutional investors for an unprecedented forty years.     WEALTHTRACK #1726 originally broadcast on December 18, 2020 More Info: https://wealthtrack.com/covids-extraordinary-economic-impact-from-wall-streets-1-economist-ed-hyman/ Part 1: https://wealthtrack.com/ed-hyman-expects-record-monetary-stimulus-plus-vaccines-will-speed-up-economic-growth-in-2021/ Suggested Reading:  CREATORS: FROM CHAUCER TO WALT DISNEY, by Paul Johnson  https://amzn.to/3r9NvDU

It's an annual tradition on WEALTHTRACK to sit down for a rare in-depth interview with Ed Hyman, Wall Street’s number one-ranked economist for an unrivaled forty years!  Hyman is a Wall Street legend. His ability to gather reams of economic data, including proprietary information from many sources including his weekly company surveys of industries ranging from retailers to restaurants, to homebuilders, truckers, and even Christmas tree vendors gives him an ability to take the current pulse of the many players in our huge and diverse economy.   This year we have even more to discuss than usual. We have extended our conversation into an exclusive two-part series. This week Hyman will share his outlook for the economy in 2021. He’ll explain why he expects a “blowout” in the second half but also why there are considerable challenges to get from here to there. Next week we’ll get his perspective on the extraordinary events of 2020 and what he learned from the experience.  This week we start with the present: the state of the economy and the markets now.  I asked him to bring us up to speed on the economy’s rebound from its freefall in the spring.  How solid is the recovery?  More Info: https://wealthtrack.com/ed-hyman-expects-record-monetary-stimulus-plus-vaccines-will-speed-up-economic-growth-in-2021/