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1/ From now on every Sunday — as a weekend summary — I'll focus on a handful of macro "big picture" charts that grabbed my attention.
The focus shall be on global equities, fixed income, forex, precious metals, real estate trusts, and alternative assets.
The focus shall be on global equities, fixed income, forex, precious metals, real estate trusts, and alternative assets.
2/ As I always say, the highest profits can usually be achieved in illiquid, private & alternative asset space — but you got to know what you're doing.
Remember, your goal is to make high returns & compound your wealth. That is best achieved with assets priced correctly.
Remember, your goal is to make high returns & compound your wealth. That is best achieved with assets priced correctly.
3/ US Household equity exposure correlates very closely to the subsequent 10 year US equity total return.
It is clear that US stocks are NOT priced correctly & could struggle for the coming decade or so.
Might want to look elsewhere to achieve 10, 15 or even 18% returns.
It is clear that US stocks are NOT priced correctly & could struggle for the coming decade or so.
Might want to look elsewhere to achieve 10, 15 or even 18% returns.
4/ What about international stocks? How are they priced?
Global stock market valuations matrix using P/B ratio & CAPE.
Global stock market valuations matrix using P/B ratio & CAPE.
5/ While some international equity indices look attractive valuation wise, the group as a whole is NOT displaying any relative strength and outperformance as of yet.
No solid evidence that the US outperformace, which has lasted over a decade, is losing momentum.
No solid evidence that the US outperformace, which has lasted over a decade, is losing momentum.
6/ Where could an investor realize an above average return these days?
According to Research Affiliates, future expected returns look rather disappointing.
Only 3 assets — EM & EAFE equities, & European PE — register potential of 7% or higher over the long term.
According to Research Affiliates, future expected returns look rather disappointing.
Only 3 assets — EM & EAFE equities, & European PE — register potential of 7% or higher over the long term.
7/ What are my equity market expectations?
US equities: not interested (returns could be too low, risks might be too high)
EU equities: not interested (could do better but potential value trap)
EM equities: interested (right timing/country selection could see 10%+ p.a.)
US equities: not interested (returns could be too low, risks might be too high)
EU equities: not interested (could do better but potential value trap)
EM equities: interested (right timing/country selection could see 10%+ p.a.)
8/ What about other asset classes?
Fixed Income: not interested (returns will be dreadful)
Private Credit: very interested (right selection could see 10-25% p.a. in real estate debt)
Real Estate: very interested (equity potential for 20%-100%+ p.a. in value-add / development)
Fixed Income: not interested (returns will be dreadful)
Private Credit: very interested (right selection could see 10-25% p.a. in real estate debt)
Real Estate: very interested (equity potential for 20%-100%+ p.a. in value-add / development)
9/ 2016 & 2017 were wonderful of investors. By early 2018, There was a lot of bulls celebrating. A year later, there was a lot of bears celebrating.
In the end, over the last 15 months, stocks are flat. Unless you're a fantastic trader, chances are you didn't make a dime.
In the end, over the last 15 months, stocks are flat. Unless you're a fantastic trader, chances are you didn't make a dime.
10/ In summary, don't waste time trying to be right like Wall Street. Instead, invest time in finding assets that are priced correctly for a large profit.
Unless you're a mega-millionaire, earning single digits is not going to make a difference (until you get old & retire).
Unless you're a mega-millionaire, earning single digits is not going to make a difference (until you get old & retire).
