CAUSATIONAL OR COINCIDENCE?
Bond yields peaked at the same time as demographic ratio (number of 20 to 34-year olds divided by number of 55+ year olds). Both measures have been in secular decline since early 80s.
THE MADNESS OF FIRST HALF OF THE 2021
The capital inflows into equity in first half of 2021 are larger than all the inflows in first halves of the years for the last 20 years combined.
The gain for global stocks in first half of 2021 is 7th largest gain in the past 100 years.
The annualized return for commodities in first half of 2021 is the largest in almost last 50 years and the 5th largest in the past 100 years.
Large retail sales despite jobs still not being fully recovered could be explained by fiscal stimulus
As a result, US inflation was up 8.4% annualized in past 3 month, which is 9th fastest since WW2.
Patient investing is the ability to endure long periods of underperformance — adhering to your well-thought-out plan in the form of an investment policy statement — in hopes of achieving your investment objective.
When it comes to judging the performance of investment strategies involving risk assets, far too many investors believe that three years is a long time, five years a very long time and 10 years an eternity. This is true even of most institutional investors — a State Street survey of senior executives with asset allocation responsibilities at 400 large institutional investors found that just 20% of respondents said they would tolerate underperformance of two years, and just 1% for three years.
Vanguard’s Chris Tidmore and Andrew Hon examined the amount of patience required of investors by quantifying the wide range of frequencies, durations and magnitudes of underperformance that both equity factor tilts and outperforming traditional active managers experience. Here are some of the findings:
• About 70% of outperforming funds underperformed their style benchmarks between 40%and 60%of all one-year periods.
• Almost 100%of outperforming funds had experienced a drawdown relative to their style and median peer benchmarks over one-, three- and five-year periods.
• 8 out of 10 outperforming funds had at least one five-year period when they were in the bottom quartile relative to their peers.