How Can Investors Prepare for a Bear Market?
No one knows when a bear market will begin, but there are strategies that investors can use to build a more resilient portfolio.
Diversifying across sectors is one approach. Consider how cyclical sectors, such as tech and real estate tend to rise when the market is on the upswing. By contrast, when the market takes a turn, traditionally more defensive sectors like consumer staples outperform.
Asset class diversification is another tactic. Including bonds in a portfolio typically reduces risk given their stable cash flows and historically low correlation to stocks. International stocks also have a lower correlation to U.S. equities which means that when U.S. stocks are down, these types of assets can help buffer the loss.
The good news is that the S&P 500 has seen +11.5% average historical returns since 1928. Overall, the majority of stock market cycles take place in bull territory both in terms of net return appreciation and length of time by a wide margin.
Link here.
Saturday, January 6, 2024
Thursday, December 28, 2023
The Credibility Mirage
Moreover, both Republican and Democratic administrations have helped turn Moscow hostile with an aggressive, expansionist military policy. Washington treated the Soviet Union and then Russia as defeated foes with the expansion of NATO, despite multiple assurances to the contrary. The U.S. also inverted the Monroe Doctrine, insisting that everything up to Russia’s border was in America’s sphere of interest, and promoted “color revolutions” and street uprisings within Moscow’s neighbors. Washington also invaded and dismantled Yugoslavia/Serbia with nary even a nod to Russia’s historic interests in the Balkans.
Unsurprisingly, members of the blob, as the foreign policy establishment has been called, insist that they are virginal public servants dedicated to all that is good and wonderful in the world. Most Washington policymakers deny the obvious: that their militaristic policies encouraged Putin to invade. Although he remains responsible for plunging Europe into war, he almost certainly would not have done so without the succession of U.S. and European decisions flouting Moscow’s security interests. After all, who imagines Washington policymakers accepting what they attempted to impose on Russia—expanding the Warsaw Pact northward through Latin America, promoting a street putsch against Mexico’s elected, pro-American government, and promising Mexico membership in the Soviet-dominated military alliance. The result in Washington would be wailing, gnashing of teeth, and rending of garments on a Biblical scale, and likely a modern Cuban Missile Crisis.
Unsurprisingly, members of the blob, as the foreign policy establishment has been called, insist that they are virginal public servants dedicated to all that is good and wonderful in the world. Most Washington policymakers deny the obvious: that their militaristic policies encouraged Putin to invade. Although he remains responsible for plunging Europe into war, he almost certainly would not have done so without the succession of U.S. and European decisions flouting Moscow’s security interests. After all, who imagines Washington policymakers accepting what they attempted to impose on Russia—expanding the Warsaw Pact northward through Latin America, promoting a street putsch against Mexico’s elected, pro-American government, and promising Mexico membership in the Soviet-dominated military alliance. The result in Washington would be wailing, gnashing of teeth, and rending of garments on a Biblical scale, and likely a modern Cuban Missile Crisis.
Link here.
Friday, November 17, 2023
War Budget Leaves Netanyahu Caught Between Markets and Politics
So the U.S. wants to give taxpayer money to Israel for a war, all while Israel continues to fund religious schools and land theft in the West Bank. Brilliant.
"Built into Israel’s expenditure program are so-called 'coalition funds,' or discretionary spending earmarked to the five parties comprising Netanyahu’s government, the most religious in Israel’s history. A record 14 billion shekels ($3.6 billion) in transfers approved last May will partly go toward religious schools — some exempt from teaching subjects like English and math. Other favored projects include the development of Jewish settlements in the occupied West Bank.
While the special allotments are a fraction of the total budget for 2023-2024, they have become a marker of competing priorities at a time when Israel confronts its worst armed conflict in half a century."
Link here.
"Built into Israel’s expenditure program are so-called 'coalition funds,' or discretionary spending earmarked to the five parties comprising Netanyahu’s government, the most religious in Israel’s history. A record 14 billion shekels ($3.6 billion) in transfers approved last May will partly go toward religious schools — some exempt from teaching subjects like English and math. Other favored projects include the development of Jewish settlements in the occupied West Bank.
While the special allotments are a fraction of the total budget for 2023-2024, they have become a marker of competing priorities at a time when Israel confronts its worst armed conflict in half a century."
Link here.
Tuesday, November 14, 2023
The American Origins of the Russo–Ukrainian War
"U.S. policymakers and foreign policy commentators routinely assert that NATO expansion has nothing to do with the Russo–Ukrainian war. This disregards the historical record, which establishes that NATO’s post–Cold War expansion, and specifically the prospect that it would incorporate Ukraine as a member, contributed importantly to the war’s outbreak. In a real sense, the Russo–Ukrainian war’s origins trace back to the 1990 negotiations on German unification and, even farther, to the origins of the Cold War itself.
NATO expansion was part of a flawed American approach to building a post–Cold War security order in Europe. Major wars, including cold ones, can end with either vindictive settlements or magnanimous and far-sighted ones. The classic example of the former is the Treaty of Versailles after World War I, which left Germany justly aggrieved and vengeful. On the other hand, there have been high-minded peace accords like the 1815 Congress of Vienna, which ended the Napoleonic wars, and America’s enlightened policies toward Germany and Japan after World War II.
The U.S. did not deal with Russia in the same spirit as it dealt with Japan and Germany. Instead, Washington drew a new dividing line in Europe that isolated Russia, ignored its legitimate security interests, and sowed the seeds of future conflict. As Stent writes, Russia felt doubly humiliated by the Cold War’s outcome. The Kremlin lost sway in places that historically had been part of Russia’s sphere of influence, and Moscow was expected to conform to an international order based on America’s unipolar power. Washington should have been more sensitive to the historical, political, and cultural dynamics that shape Russian foreign policy. Instead, the United States brushed aside Moscow’s concerns in what Samir Puri, a security affairs expert at King’s College London, has dubbed 'Operation Ignore Russia.' This was an avoidable policy blunder that predictably created a resentful 'Weimar Russia.'”
Link here.
NATO expansion was part of a flawed American approach to building a post–Cold War security order in Europe. Major wars, including cold ones, can end with either vindictive settlements or magnanimous and far-sighted ones. The classic example of the former is the Treaty of Versailles after World War I, which left Germany justly aggrieved and vengeful. On the other hand, there have been high-minded peace accords like the 1815 Congress of Vienna, which ended the Napoleonic wars, and America’s enlightened policies toward Germany and Japan after World War II.
The U.S. did not deal with Russia in the same spirit as it dealt with Japan and Germany. Instead, Washington drew a new dividing line in Europe that isolated Russia, ignored its legitimate security interests, and sowed the seeds of future conflict. As Stent writes, Russia felt doubly humiliated by the Cold War’s outcome. The Kremlin lost sway in places that historically had been part of Russia’s sphere of influence, and Moscow was expected to conform to an international order based on America’s unipolar power. Washington should have been more sensitive to the historical, political, and cultural dynamics that shape Russian foreign policy. Instead, the United States brushed aside Moscow’s concerns in what Samir Puri, a security affairs expert at King’s College London, has dubbed 'Operation Ignore Russia.' This was an avoidable policy blunder that predictably created a resentful 'Weimar Russia.'”
Link here.
George Orwell’s 1984 in Washington (on Syria)
"Yet Washington continues to waste American lives, materiel, and credibility for barely discernible objectives in the Middle East. Intervening in Lebanon’s bitter civil war cost hundreds of U.S. Marines their lives. Backing Israel’s colonization of Palestinian lands has made Americans a terrorist target. Invading Iraq resulted in the deaths of thousands and wounding of tens of thousands of U.S. and allied personnel—and turned the country into a charnel house with hundreds of thousands of civilian deaths.
Deploying faux humanitarian claims to oust Libya’s Muammar Gadaffi left that land a wreck, violent and divided a decade later. Support for Saudi Arabia’s aggressive war against Yemen ravaged the region’s poorest nation, leaving hundreds of thousands of dead. And America’s botched attempt to oust Syria’s secular dictator led to a de facto alliance with brutal jihadists, including al-Qaeda’s local affiliate. The Syrian people ultimately faced rule by either the despotic Assad regime or terrible variants of bloody Islamists.
Although this civil war is largely over and the Islamic State, an outgrowth of Washington’s Iraq invasion, has been defeated, the U.S. continues to occupy Syria. The country serves no American security interest. Damascus was long allied with Moscow but is of minimal strategic value. Although Syria is no friend of Israel, the latter is a nuclear-armed power more than capable of defending itself."
Link here.
Deploying faux humanitarian claims to oust Libya’s Muammar Gadaffi left that land a wreck, violent and divided a decade later. Support for Saudi Arabia’s aggressive war against Yemen ravaged the region’s poorest nation, leaving hundreds of thousands of dead. And America’s botched attempt to oust Syria’s secular dictator led to a de facto alliance with brutal jihadists, including al-Qaeda’s local affiliate. The Syrian people ultimately faced rule by either the despotic Assad regime or terrible variants of bloody Islamists.
Although this civil war is largely over and the Islamic State, an outgrowth of Washington’s Iraq invasion, has been defeated, the U.S. continues to occupy Syria. The country serves no American security interest. Damascus was long allied with Moscow but is of minimal strategic value. Although Syria is no friend of Israel, the latter is a nuclear-armed power more than capable of defending itself."
Link here.
Monday, November 13, 2023
A Case for BlackRock’s New Defined-Maturity TIPS ETFs
"I highly approve of these new funds. They not only meet a need, being the first target-date TIPS funds, but at 10 basis points per year in expenses, the price is right. Plus, the launch is very timely, as TIPS now sell at their lowest price in more than a decade."
Link here.
Link here.
Sunday, November 5, 2023
Subscribe to:
Posts (Atom)