Emerging Markets & State Owned Enterprises

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Emerging Markets & State Owned Enterprises

About 43% of world’s market capitalization is found outside of the United States. Said another way, if you were to take every stock in the world and multiply its total available shares outstanding by it’s price, you would find that roughly 43% of that value is outside of the US. You may be surprised by this statistic given how much attention is paid to the US economy and markets. It’s understandable given most of our business and financial decisions are focused to events happening within the US. However, when it comes to investing, a global perspective is needed. For the purposes of this paper, we are focusing on one area of international markets: Emerging Markets.

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Equity Income as Bond Alternative Given Inflation Expectations

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Equity Income as Bond Alternative Given Inflation Expectations

As we make our way through 2021, bond investors continue to face the challenge of finding income/cash flow in a world of low interest rates. While the 10yr US Treasury bond rate has had a meaningful increase to start the year from just under 1% to about 1.6%, this interest rate is still at extremely low levels compared to historical context. Bond investors have seen yields drop for close to 40 years now. The drop in yields over these 40 years has resulted in amazing returns for bond investors because as market rates fall, bond prices rise. This inverse relationship between bond prices and interest rates is known as interest rate risk and is defined as the risk a bond’s value could change due to movement in prevailing market rates, shape of the yield curve, and various other interest rate relationships. In addition to interest rate risk, bond investors also face credit default risk, which reflects the borrower’s ability to repay the loan over time. In this piece, we will focus on where to find income and the asymmetric interest rate risk bond investors face today.

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Internet of Things - An Overview

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Internet of Things - An Overview

In 1997, the world had its own pandemic scare with the first human cases of the Avian Flu, The Titanic and The Lost World: Jurassic Park were both released, and the first Harry Potter book was published.I(1) Yet, the most meaningful event of the year may have come when a man named Vic Hayes created the standards for what we know today as wireless internet, or Wi-Fi.(2)

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What is Fintech? The trend towards mobile payments and a cashless economy.

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What is Fintech? The trend towards mobile payments and a cashless economy.

Recently, my wife and I stopped by our local Costco, which was rare for me because I had not stepped foot in a retail store in a while, particularly since the COVID-19 period began. I was surprised at what I saw.

Rather than the social distancing and other COVID-related protocols that the store had implemented, it was the check-out process that intrigued me.

Behind a protective plexiglass shield there was an attendant who used a scanning device for all steps in the checkout process - including scanning through the plexiglass our credit card which was displayed on my wife’s mobile phone.

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The Driven Fiduciary - Precautions for Young Traders

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The Driven Fiduciary - Precautions for Young Traders

Market displacements over the past 4 months have led to a massive boom in American trading activity. The extreme volatility, unusual amount of free time due to working from home, and availability of trading apps has led to more Americans day trading than ever before. According to popular mobile trading app Robinhood, they have added more than 3 million users year to date. More than half of these users are millennials who are opening an investment account for the first time. Everything considered, I think this is great for the world of finance that younger investors are getting involved. However, I think there are some important precautions I would like to raise to this generation of traders.

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The Apex Advisor - Managing Cash in a Crisis

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Strenuous market environments often shine a light on one of the more challenging aspects of personal finance, cash management.  How much cash is too much? How much is not enough?  If you have excess cash, where should it go?  If the answer is financial markets, when is the right time to do that?  These questions are universal whether you are at the start of your career and just beginning your accumulation plan or a seasoned saver near the end of your career, and everyone in between.  Let’s review these in sequence.

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Jeff DeHaan

Jeffrey DeHaan, CFP® is a Partner with Clearwater Capital Partners. Jeff primarily works with a select group of successful business owners and professionals, along with their families, to achieve their unique visions of their financial futures. Focusing on the interdependence between portfolio management, retirement planning, gift planning, estate planning and risk management, Jeff endeavors to give his clients a clear path to their goals and a solid framework for decision making.

Beware of Behavioral Biases

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The coronavirus (COVID 19) breakout has been a fascinating real life case study of behavioral finance and the effect it can have on investors, particularly those operating outside of a trusted advisor relationship. Behavioral finance is the field of study that looks at investor psychology as it relates to money. It reveals the many pitfalls and fallacies the brain is vulnerable to when dealing with decisions specifically relating to money or investments. It is no secret that people, in general, are not great at investing. Emotions can be powerful and counter productive. Separating one’s feelings from the facts is a high hurdle for many Americans, leading many to doing the exact wrong things at the worst times.

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Capital Gain Distributions - Portfolio Insights

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As we approach year-end, investors need to be aware of upcoming capital gain distributions. In addition to realizing capital gains through selling securities that have appreciated, investors can be blindsided when their funds distribute capital gains to their investment account. These gain distributions will add to the investors tax liability unless the funds are held in a tax deferred account such as an IRA.

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“Don’t let the Tax Tail wag the Investment Dog”

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“Don’t let the Tax Tail wag the Investment Dog”

Ok wait what..? I know I know allow me to explain what I mean by this ridiculous sounding sentence.

“Don’t let the tax tail wag the investment dog” is a phrase I heard repeated across our trading floor from one of our Senior Partners during my first years in portfolio management. I was understandably confused by this insane sentence, but I did not want to be “that guy” and ask. What I went on to learn was that he meant that we could not allow tax consequences to dictate our portfolio management strategy. Managing a portfolio in a tax efficient matter was critical, however there would be moments when a portfolio would need to be rebalanced and that sale would trigger capital gains taxes. In essence he acknowledged that paying taxes was of course never fun, but that we could not allow that to intrude into our portfolio management.

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Asset Location—What is it and why is it important?

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As we frequently discuss with our clients, asset allocation is by far the most important determinant of long-term investment portfolio performance. Asset allocation is the process of investing one’s investment dollars across various asset classes, regardless of the type of account where those assets are held.

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A Guide to MLPs

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Investors seeking dividend yield have conventionally employed traditional fixed income investments for this portion of their portfolio. In today’s low interest rate environment, filling this part of the portfolio has become more and more difficult. Given the inverse relationship that bonds have with interest rates, a rising rate environment is suboptimal for conventional fixed income. This has lead investors to seek out other types of arrangements to generate cash flow.

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