RESOURCES

Commentary: The Elections and the Broken 40% Bond Allocation

Chief Investment Officer Terri Spath provides four takeaways from the recent Presidential election and what it might mean for the future of the markets, as well as offering a potential alternative solution to a traditional, passive 40% bond allocation.

Commentary: Three Ways to Invest for the Rest of 2020

Chief Investment Officer Terri Spath gives an outlook for the rest of 2020, and three potential way to invest during these turbulent times.

Commentary: Three Investment Ideas in Front of the Election

CIO Terri Spath covers the current state of the markets, and gives three possible ways to participate in investment returns while keeping a close eye on risk.

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2020 Q2 Update: Risk Matters. Defense Matters. Discipline Matters.

Sierra Mutual Funds CIO Terri Spath reviews the trends and challenges that happened during the second quarter of 2020, including the impact of COVID-19 on global markets.

Commentary: The Answer to a Widespread Question: FAAANM

Chief Investment Officer Terri Spath discusses how the stock market continues to rise despite economic struggles, the current state of the bond market, and how our rules-based investment disciplines are navigating these unprecedented times.

COMMENTARY: Discipline Matters in Zombie Markets

Chief Investment Officer Terri Spath discusses the current state of the economy, what changes you might expect in the coming months, and some recommendations for navigating the ever changing market environment to help mitigate risk while seeking productive returns.

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2020 Q1 UPDATE: RISK MATTERS. DEFENSE MATTERS. DISCIPLINE MATTERS.

Sierra Mutual Funds CIO Terri Spath reviews the trends and challenges that happened during the first quarter of 2020, including the impact of COVID-19 on global markets.

Commentary: When It Comes Time to Buy, Will You Do It?

CIO Terri Spath's latest market commentary discusses when might be a good time to buy, and the importance of using a time-tested process, like the one used at Sierra.

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Special Edition Market Minute: Got the moving market on your mind...

The markets have been unruly this week. In a matter of days, we've seen months of market gains eliminated right before our eyes. It is times like these that we rely on our truly-tactical rules-based investment process and quantitative trailing stops under each holding. Terri shares her perspectives in this Special Edition of the Market Minute.

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Market Minute: Diversifying with Preferred Stocks

Preferred stocks offer investors the characteristics of both equities and bonds. Though less volatile than their common stock counterpart, they still need to be managed tactically. CIO Terri Spath shares her insights in this week's Market Minute.

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Commentary: Puzzled by Fixed Income? A Tactical Resolution for 2020

Reviewing bond holdings doesn’t make most people’s list of New Year resolutions, but it should. Why? Investors often tell us that fixed-income is confusing and that they have heard now is not a good time to buy bonds. The truth is a bond allocation is critical to your financial health, and a truly tactical approach to the asset class can address a lot of the confusion and misgivings about bonds that investors typically have.

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Market Minute: Risk Measures: Maximum Drawdown

Happy New Year to you all. It's 2020, and we want we want to share some thoughts with you about Maximum Drawdown. This risk measure looks at the largest observed loss from peak to trough. Terri shares her insights into the importance of Maximum Drawdown in this week's Market Minute.

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Market Minute: Interest rates and the yield curve

The yield curve inverts when consumers are able to borrow money at a lower interest rate for a longer period of time. It's unusual when it occurs, and it has investors a bit nervous. What affect does it have on the way we manage money for our clients? Terri provides her perspectives.

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Market Minute: Understanding emerging markets investments

When considering investments in emerging markets for your clients, the opportunity for growth is tremendous; but if you are seeking to increase diversification, you may want to look deeper into emerging markets debt. Terri shares her perspective in this week's Market Minute.

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Market Minute: Three popular methods for managing municipal bond

Municipal bonds, often a staple component of the fixed income sleeve of a client's portfolio, aren't exempt from periods of extreme volatility. We've found that financial advisors prefer one of three different methods for managing them. This week, Terri breaks down the features and benefits of each, and shares her personal preference.

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Market Minute: How we manage the interest rate environment

2019's theme seems to be interest rates. They've been up, they've been down, and each move has been at a different velocity. With so much fluctuation, we're often asked how we are able to manage through the challenging environment. Terri explains in this week's Market Minute.

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Market Minute: Sequence of returns risk

Unlike other investing risks, sequence of returns risk isn't a statistical figure that can be found or screened out in Morningstar. It's a risk that is unique to each individual investors experience. Terri explains how we're able to mitigate this overlooked risk in this week's Market Minute.

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Commentary: Airbags for Your Investments

Investment Commentary: Chief Investment Office Terri Spath discusses some potential hidden risks in the current markets, and how to seek to mitigate those risks.

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Market Minute: A look at global stock valuations

With stocks reaching record highs, we continue to be asked about global opportunities and the risks associated with them. Valuation metrics are a great way of measuring value. Terri discusses the subject in this week's Market Minute.

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Market Minute: The impact of global negative interest rates

Bond market investing has been made more difficult than ever thanks to global negative interest rate debt. It's putting a crimp on investors who are looking to create income. Our tactical, rule-based process follows a myriad of asset classes, and it helps us identify areas of the market they may provide positive outcomes. Terri discusses in this week's Market Minute.

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Commentary: Plug Your Portfolio

Investment Commentary: Chief Investment Officer Terri Spath talks about potential ways to guard against drawdowns and market risk in the current environment.

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Market Minute: Distancing investing from gambling

Have you ever spent a day at the horse races? Choosing one horse before the race has begun and hoping for the best result is gambling. The same mentality can creep into investing. Terri Spath shares her investing insights in this week's Market Minute.

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Commentary: Winning at the Horse Races

For most people the end of summer means one last dash to the beach, back-to-school shopping, and some final wagering at the horse track. At least this has been the case for me. The last bet on the last race at the Del Mar Racetrack in Southern California comes at Labor Day. Betting on a horse means putting money on a hopeful winner before the announcer shouts “go” and either picking up a gain or losing it all several minutes later.

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Market Minute: Using actively managed funds to tap into munis

Actively managed mutual funds are great vehicles to tap into unusual bond markets. We prefer using mutual funds to tap into the municipal bond market for many reasons. In this week's Market Minute, Terri shares three reasons why it makes sense.

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Market Minute: Recapping a busy October

October has been a wild, volatile month in the domestic and global stock and bond markets. Terri talks about the pain the recent volatility has brought investors, and shares some high-level tactical sells that were made as a result.

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Market Minute: A new year with new risks

The new year brings with it new risks. CIO Terri Spath shares her perspectives.

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Market Minute: How well do you know your fixed income benchmark?

How are bond benchmarks constructed? The largest issuers of bonds will generally make up the most significant portions of a benchmark, which may expose your clients to some unintentional risks.

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Market Minute: Using investment rules to create favorable outcomes

Ever hear of the "Santa Clause Rally" or "Sell in May then Go Away?" These are commonly understood rules that seem quirky and subjective, but have some historic proof behind them. Terri shares her perspectives in this week's Market Minute.

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Market Minute: Three D's to enhance your clients' portfolio

We seek to provide your client's the Diversification and Defense they seek in the accumulation phase to set them up for future success when they enter the Distribution phase.

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Market Minute: The truths about left tail risk

Volatility is unpredictable and is a component of the capital markets that must be accounted for. Left tail risk is low probability events that can dramatically affect a client's portfolio.

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Commentary: State of Confusion

Financial markets don’t know if they are coming or going, telegraphing that investors are in a state of confusion. The U.S. stock market is tapping out historic highs, but as we write this, the reality is that the S&P 500 is a scant 2% higher than levels established 9 months ago. Along the way to that meager gain, buy and hold investors endured an agonizing and unrelenting free-fall at the end of 2018 and a sharp 7% loss in value in May.

Commentary: The Stealth Bull Market in Bonds of the Past Year

For many, summer means days at the beach and, ideally, nights at the ice cream parlor. Picking a flavor of ice cream is never an easy decision. The same can be said for bonds. Like ice cream, bonds come in 31 flavors (or so). U.S. government bonds are really different flavors of vanilla, from just plain vanilla to French to New York. Interest rates are the driver of the prices of government bonds; a rise in rates pressures prices down and vice-versa. A risk of default is virtually nil so credit risk does not influence the price.

Commentary: A Tactical Strategy for Current Volatility

From basketball to tennis or chess to tic-tac-toe, winning a game involves strategic decisions, probability analysis and math. The best teams and players are not passive, generating the same moves over and over, but tactically adjusting to make the next best move. Investing is much the same.

Commentary: True Diversification is a Process, Not a Set of Assumptions

A simple definition of investment diversification is conveyed in the overused statement, “don’t put all your eggs in one basket.” The basic buy-and-hold, set-it-and-forget-it style of investing is often premised in a 60% global stock and 40% bond allocation (known as “60/40”) and sold as enough diversification to handle whatever market turmoil might come your way over the long-term.

Commentary: After Last Quarter's Bloodbath, We've Had a Nice Rally. Is it Time to Pop the Corks?

So far in 2019, and really since Christmas Eve, we have seen a nice risk-on rally. Equities (as measured by the S&P 500® Index) were up about 8% in the month of January despite the U.S. government shutdown and international turmoil. While it is nice to have a breather from the march downward, it may be too early to pop the champagne corks and celebrate for the rest of the year. 2019 has only just begun, and (stop me if you've heard this) investing in a marathon, not a sprint!

Commentary: A Portfolio Manager's Resolution for Investors: Trailing Stops

A new year brings with it the elation of a renewed start. We proclaim resolutions about how we will make this year better than the one that just concluded. After the volatile close to 2018, investors should now be doing the same. Fortunately, there is the trailing-stop.

Observations and Perspectives: Some of These Things Are Not Like the Others

Since early July 2016, the yield on the 10-year Treasury has rocketed from 1.38% to nearly 3%. Investors in intermediate Treasuries have lost more than 7% over that period as rising interest rates have resulted in falling bond prices.

Observations and Perspectives: Show Me the Money

We are consistently hearing that bonds are making advisors and investors pull out their hair. Nearly three decades of generally falling interest rates has translated into a bull market for traditional bond strategies, but times have changed.

Observations and Perspectives: Trendless Volatility

The year 2017 went down in the record books as the calmest stock market in history. The worst decline from high to low (“drawdown”) was a scant 2.6% and the S&P 500 recorded just 8 swings of more than one percent, just about one every six weeks, all the while consistently moving to the upside.

Observations and Perspectives: Traditional Bonds = Risky Parachutes

During the short nine days of trading from late January to February 8, the S&P 500 fell like a skydiver leaping out of a plane: fast and down. In a classic flight-to-quality response, investors pulled their parachutes, socking billions into the largest ETFs tracking the widely-watched Bloomberg Barclays U.S. Aggregate Bond Index (the “Barclays Aggregate”). This time, though, it didn’t work.

Observations and Perspectives: Take It One Curve at a Time

Right now I am continually inspired by the competing Olympians and I just came across an obscure and just plain crazy sport: “skeleton.” In it, thrill-seeking competitors plummet headfirst down a twisting, frozen track at speeds over 80 miles per hour.

A Fool's Errand - 1st Quarter 2018 Commentary

As Yogi Berra famously quipped, “It’s tough to make predictions, especially about the future.” Nowhere is this truer than in the stock and bond markets around the world. It is a fool’s errand to make bold market predictions, but here we are at the beginning of 2018 and, as usual, economists, market pundits and fortune tellers alike are offering their best guesses for the next 12 months.

Observations and Perspectives: Playing Whack-a-mole in Wacko Season

A widely followed bond guru recently declared that investment markets have entered “wacko season.” Some of his reasons include bitcoin mania and also European junk bonds that yield the same as U.S. Treasuries (which would you invest in)? We do not disagree and would add to his already long wacko and confusion list:

Observations and Perspectives: Passive ETF Investing & Sleepy Markets. Stay Alert!

“The reports of my death have been greatly exaggerated”, quipped Mark Twain after being told a newspaper had published his obituary when he had fallen ill. The death of active management has also been prematurely announced and is rooted in the herds of investors pouring money into passive ETF funds mimicking indexes.

Observations and Perspectives: Canaries in the Coal Mine: What to Watch as Stocks Continue to Make New Highs

Stocks continue to teeter at all-time highs and the out-sized profits enjoyed since November of last year are really a continuation of the bull market that turned 8 years old this past March. Low starting valuations, improved economic growth and employment, increased corporate earnings and low interest rates have driven the moves upward.

Observations and Perspectives: Look Out Above! Rates Are Going Up.

About fifty days into the new administration and the trend we have observed since July 2016 remains intact: interest rates are going up.

Observations and Perspectives: Is the Sugar High Wearing Off?

Anticipation of lower taxes and higher infrastructure spending initially pushed investor enthusiasm and stock prices higher for several weeks following the election of Donald Trump as the 45th President of the United States. At the same time, a sea of change from central bank dominated markets to a focus on fiscal policy sparked inflationary fears, a stronger dollar prompted a melt-up in interest rates. As the Dow inches toward the historic level of 20,000, the sharp runs in stocks have begun to consolidate while rates have retreated. The sugar high is wearing off.

Observations and Perspectives: Do You Smell That?

What’s that smell? No political jokes. No celebrity ones either. That smell you smell is the faint whiff of inflation seeping into the economy. It’s also one of the big reasons for the cruel October bond selloff.

Observations and Perspectives: Your Client Doesn't Care About Standard Deviation

All else equal, given the choice between a 10% gain or a 5% gain, most (all) investors prefer the 10%, right? A degree in math or a course in probability and statistics isn’t needed to figure that out.

Observations and Perspectives: Sell Everything? Even the Kids?

A very smart investor (more than one very smart investor, actually) is saying to sell everything. These “smart guys” are very likely smarter than me. They most certainly are wealthier than I am. Some may argue they are also better looking than me.

Observations and Perspectives: Right Back Where We Started From

In an emotional vote against crony capitalism, immigration fears and the widening gap between haves and have-nots, the UK voted on Thursday to leave the European Union, shocking pollsters and market makers the world over. The psychological damage on Friday was jarring: the British pound touched a 30-year low, European bank stocks plunged close to 20% and jittery investors rushed into gold and anything U.S., including bonds and the dollar (but not stocks or high yield bonds….yet).

Observations and Perspectives: Pass the Pepto-Bismol

As stocks reach record highs, it’s worth re-visiting the ride to get here. It’s not unusual to see pullbacks in stocks, but over the past 12 months, investors in U.S. stocks have suffered two 12+% drops in the S&P 500 and in the process made a full 2.85%. That includes dividends. As you likely recall, the U.S. market had the worst start ever to a calendar year in 2016. Happy New Year and please pass the Pepto-Bismol.

The Dove, the Fed and the Tanker

Since the Federal Reserve raised its borrowing rate by 25 basis points (bps) this past December, the U.S. dollar keeps dropping to lower and lower levels relative to other currencies. The tanking dollar is the exact opposite of the predictions of economists’ models. Here's what most economists say: if rates are higher and rising in the U.S. versus Japan, people want U.S. bonds, so they sell yen to buy dollars. This should push up the value of the dollar versus the yen. In fact, the opposite has occurred.

Observations and Perspectives: Is it Time to "Live Happily Ever After"?

Stocks have rallied back into the green for 2016, recovering completely from the January collapse. The market breadth is convincing. Last year, we highlighted that “risk-on” assets were in fact at risk. One reason we held this view was the serious lack of breadth in the broad stock market. While the FANGS (Facebook, Amazon, Netflix, Google and Starbucks) were dazzling in their meteoric returns, the average stock was in negative territory for 2015. In fact, over 400 of the stocks in the S&P 500 lost ground in 2015, a terribly low level of market breadth.

Observations and Perspectives: Are We Out of the Woods Yet?

We’ve had a year’s worth of trading moves already in 2016. Seven weeks into the trading year and global markets, from commodities to stocks, went on a tear to the downside. Most recently, many market benchmarks have reversed course, posting solid gains. The big question now is whether this newer move is sustainable. Are we out of the woods yet?

Markets in Focus: January 2016 - What the Heck?!

Equity markets around the world ended January down substantially, and the declines in the major U.S. stock indices, in the first week and as well as the first two weeks of the year, were the worst in over 100 years. (The month as a whole was the worst January since 2009.)

Observations and Perspectives: Global Confidence is Fragile

Kicking off the start of the second full week of trading for 2016 did little to calm investors. The year started in an ugly way when The People’s Bank of China depreciated the value of its currency, the renminbi, causing shares to tumble in Shanghai. The descent in Chinese stocks was so sharp that circuit breakers were triggered, halting trading. Just like when you are fighting with your spouse, or getting ready to hit the send button in an angry email, a short pause can often stop destruction.