True diversification is achieved by owning investments across multiple asset classes with low correlation to one another, but that hasn't worked over the past 18 months with stocks being "the only game in town." Is diversification dead or will "the knife cut both ways" for this style of investing? http://www.seasoninvestments.com/insights/is-diversification-dead/
The foundational principal of Diversification 2.0 is finding and investing in assets with low correlation to each other. A portfolio consisting of highly correlated investments is nothing more than a one directional bet on the future. The portfolio will do well in one particular environment but is exposed to a great number of risks if the world doesn't unfold as expected. http://www.seasoninvestments.com/insights/achieving-real-diversification/
The global financial crisis in 2008 was a game changer on many levels. One of which was, and continues to be, the gross reality that developed economies can no longer borrow their way to prosperity. According to many central banks, the answer to this problem is to export unemployment to other countries through competitive currency devaluation. http://www.seasoninvestments.com/insights/exporting-unemployment/
The global slowdown and specific concerns over China’s economy have resulted in Chinese equities being one of the worst performing markets this year. This weakness largely reflects the market’s uncertainty surrounding the soft or hard landing debate. We believe the underperformance has left China’s market very attractive from a valuation standpoint. http://www.seasoninvestments.com/insights/shanghai-hanging-low/
QE3 will have no real impact on economic growth since it will not loosen any of the “binding constraints” preventing growth from accelerating. The pop in stocks and commodities following the Fed’s announcement has been referred to over and over again as the “sugar rally”, making it analogous to the surge of nervous energy one gets after indulging in too many sweets. http://www.seasoninvestments.com/insights/pour-some-sugar-on-me/
A common concern among investors today is the prospect of runaway inflation. The knee jerk asset that many flock to for this purpose is the Treasury Inflation Protected Security (TIPS). It’s a common misconception that the primary role of TIPS is as an inflation hedge, which reflects a lack of understanding of the intricacies of how TIPS actually work. http://www.seasoninvestments.com/insights/are-tips-really-inflation-hedges/
We have been in a policy-driven market now for roughly four years. Both monetary and fiscal authorities have played a heavy-handed role in the economy and capital markets over this time period. Global central bank (monetary) policy is on our Macro Radar due to its post-financial crisis impact on investor sentiment and the performance of both stocks and commodities. http://www.seasoninvestments.com/insights/macro-update-central-bank-policy/
Our entire portfolio management methodology is based on the believe that “the best offense is a good defense”, and that the best way to achieve return objectives over time is by mitigating large capital losses that come from “riding out” steep downturns in risk assets. http://www.seasoninvestments.com/insights/introducing-marketvane/
Precious metals have been an excellent store of value and are considered to be on the more defensive end of the commodity risk spectrum. They tend to outperform the broader commodity complex when real interest rates are low, or negative as they are today, since the opportunity cost of holding a non-yielding asset is minimal. http://www.seasoninvestments.com/insights/micro-update-white-metals/
Walter Energy (ticker: WLT) is a pure play metallurgical coal producer with operations in the United States. The market for met coal has been very tight over the past several years due to constrained supply and increasing demand from emerging markets like China, India and Brazil. http://www.seasoninvestments.com/insights/micro-update-walter-energy/
As we head into the New Year there are four factors on our “Macro Radar” that we believe will be the primary drivers of financial market performance in 2012, which means we will spend a lot of time proactively focusing our research efforts on understanding and monitoring their development throughout the year. http://www.seasoninvestments.com/insights/macro-update-2012-macro-radar/
