This quarter’s newsletter outlines our views on "chasing yield" (i.e., investing in securities primarily based on their income yield) and the risks inherent in this strategy. We highlight some notable instances in the past decade when reaching for yield has hurt investors, as well as some common misconceptions about high-yielding investments.
According to the advance GDP estimate released by the Bureau of Economic Analysis (BEA) on April 28, annualized real US GDP growth was 0.5% in the first quarter of 2016—below the historical average of 3.2%.1 This might prompt some investors to ask whether below-average quarterly GDP growth has implications for their portfolios.
Following a strong finish to 2015, financial markets took investors on a harrowing ride during the first quarter of 2016. After losing 11% of its value in the first six weeks of the year (through February 11th), the S&P 500 Index reversed course and finished the quarter in positive territory. This volatility, which began affecting markets in the second half of 2015, can be attributed to numerous economic and geopolitical developments across both domestic and foreign markets. China's currency devaluation, falling oil prices, and uncertainty over the Federal Reserve's plan t
While many market participants were waiting for the “inevitable” rise in short-term interest rates expected when the Federal Reserve tightened its monetary policy, some investors may have missed the increase in short-term rates already underway as a result of market forces.