Sentences with phrase «returns over the cycle»

This is the process by which we put our research to work using the levers of credit risk and duration to make money in the bond market and to stabilize returns over the cycle.

Not exact matches

Moderate interest rates were associated with a whole range of subsequent returns over the following decade, and we know that those outcomes were 90 % correlated with the level of valuations at the beginning of those periods (on reliable measures such as market cap / GDP, price / revenue, Tobin's Q, the margin - adjusted Shiller P / E, and others we've presented over time - see Ockham's Razor and the Market Cycle).

The most reliable measures we identify in market cycles across history are consistent with the expectation of near zero total returns in the S&P 500 Index over the coming decade, and the likelihood that the market will fall by half over the completion of the current cycle.

If current levels were to turn out, in hindsight, to be the final lows of this decline, I suspect that the overall return over the next cycle (by the time we do observe a full 20 % loss) will be as tame as we've seen since the bull market started in 2003.

While valuations drive long - term returns, the primary driver of market returns over shorter portions of the market cycle is the attitude of investors toward risk, as indicated by the uniformity or divergence of market internals.

The essential thing to understand about valuations is that while they are highly reliable measures of prospective long - term market returns (particularly over 10 - 12 year horizons), and of potential downside risk over the completion of any market cycle, valuations are also nearly useless over shorter segments of the market cycle.

Likewise, investors might have believed that the extraordinarily elevated market valuations of 1929 and 2000 were «justified» by the recent economic prosperity, but that did nothing to prevent the market collapses that completed those cycles, with over a decade of negative total returns for the S&P 500 in both cases.

The main driver of market returns over shorter segments of the market cycle is the purely psychological inclination of investors toward speculation or risk - aversion.

Meanwhile, extreme valuations imply the likelihood of steep market losses over the complete cycle, and also for poor S&P 500 total returns on a 10 - 12 year horizon, but valuations often have little effect on near - term market behavior.

When market cycles move to extreme overvaluation or undervaluation, they become an exercise in borrowing or lending returns to the future, and then surrendering or receiving them back over the remaining half of the cycle.

The only alternative to this view is to imagine that the collapses that followed valuation extremes like 1929, 1973, 2000, and 2007 somehow emerged entirely out of the blue, ignoring the fact that valuations accurately projected likely full - cycle losses, and remained tightly correlated with total returns over the subsequent 10 - 12 year horizons.

Valuations are the primary driver of long - term returns, and the risk - preferences of investors — as conveyed by the uniformity or divergence of market action across a broad range of individual stocks, industries, sectors and security types (including credit)-- drive returns over shorter portions of the market cycle.

While long - term market returns are driven almost exclusively by valuations, investment returns over shorter segments of the market cycle are highly dependent on investor psychology, particularly the inclination of investors toward speculation or risk - aversion.

Estimates of prospective long - term returns for the S&P 500 reflect our standard valuation methodology, focusing on the relationship between current market prices and earnings, dividends and other fundamentals, adjusted for variability over the economic cycle (see for example Investment, Speculation, Valuation, and Tinker Bell, The Likely Range of Market Returns in the Coming Decade and Valuing the S&P 500 Using Forward Operating Earreturns for the S&P 500 reflect our standard valuation methodology, focusing on the relationship between current market prices and earnings, dividends and other fundamentals, adjusted for variability over the economic cycle (see for example Investment, Speculation, Valuation, and Tinker Bell, The Likely Range of Market Returns in the Coming Decade and Valuing the S&P 500 Using Forward Operating EarReturns in the Coming Decade and Valuing the S&P 500 Using Forward Operating Earnings).

Put simply, valuations have enormous implications for long - term investment returns, and for prospective market losses (or gains) over the completion of any market cycle, especially those that feature historically extreme valuation peaks (or troughs).

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Meanwhile, it's important to understand how risk and return work over the course of the market cycle, and in particular, the effect that compounding has on both returns and losses.

«We view the story pivoting to capital return and services from the boom - bust of iPhone cycles over the next several years.»

Do they not understand that for future prospective returns to normalize even moderately over the completion of the current market cycle (as they have done over the completion of every market cycle in history), much of those past realized returns must be wiped out?

Since the inception of the Fund (as well, of course, in long - term historical tests), our present approach to risk management has both added to returns and reduced volatility - not necessarily in any short period, but over the complete market cycle.

If you combine the two, it happens that the average full market cycle is 5 years in duration, and generates an average total return of about 10.9 % over the entire cycle.

In this workshop, Brandywine Global, who has been managing index - agnostic global fixed income portfolios since 1992, explains how an unconstrained global fixed income strategy can generate absolute returns over market cycles by identifying opportunities through country, currency, duration, and sector management strategies.

Since my impression is that the Fund continues to nicely achieve its objectives, it's important that shareholders remember that those objectives focus on achieving strong absolute and risk - adjusted returns over the complete market cycle (i.e. peak - to - peak, bull markets and bear markets combined).

On a 12 - year horizon, we project likely S&P 500 nominal total returns averaging close to zero, with the likelihood of an interim market loss on the order of 50 - 60 % over the completion of the current cycle.

At MFS ®, we believe a flexible, adaptable approach that includes exposure to a wide range of bond sectors is one key to generating attractive risk - adjusted returns and managing risk over full market cycles.

Respecting that distinction, without disregarding overvaluation, allowed us to come out ahead over the complete market cycle, as the 2000 - 2002 decline wiped out the entire total return of the S&P 500, in excess of Treasury bills, all the way back to May 1996.

In fact, one can show that valuations tend to be best correlated with subsequent market returns over periods representing roughly 0.5, 1.5 or 2.5 typical market cycles (see my 2014 Wine Country Conference presentation, A Very Mean Reversion, for details).

While past returns do not ensure future results, our objective is to substantially outperform a buy - and - hold approach over the full market cycle, with smaller periodic losses, on average.

In my view, investors who view current valuations as «justified relative to interest rates» are really saying that a decade of zero total returns on stocks is perfectly adequate compensation for the risk of a 45 - 55 % market loss over the completion of the current market cycle - a decline that would historically be merely run - of - the - mill given current valuations, and that certainly can not be precluded by appealing to low interest rates.

The Canadian equity market benefited from the strength in the commodities and when this cycle turned, so did the returns with the U.S.. From 2010 to the end of 2014, the S&P 500 returned 15 % annualized over the period compared to 7.5 % for the S&P / TSX Composite.

Put simply, valuation drives long - term returns, and investor risk - preferences drive returns over shorter portions of the market cycle.

As a rough guide to how prospective returns will change over the completion of the current market cycle, we presently estimate that in order to establish expected 10 - year S&P 500 total returns of 5 % annually, the S&P 500 would have to decline to the mid-1500's.

However, over a full market cycle, each of the factors mentioned above has proven to be additive to portfolio returns.

If a portfolio loads market risk when the likely return / risk profile is favorable, and hedges market risk when the likely return / risk profile is unfavorable, it's possible to achieve a very satisfactory return / risk profile over the full market cycle without ever making a specific short - term forecast.

Of course, we expect the discipline of investing in alignment with the market's expected return / risk profile, as it changes over the course of the market cycle, to do far better still.

Because prospective 12 - year annual market returns have never failed to reach at least 8 % by the completion of a market cycle, regardless of the level of interest rates, we view a 40 % market decline as a rather minimal target over the completion of this market cycle.

That combination of improved valuation and early improvement in market action emerges over the completion of every market cycle, and is associated with the strongest estimated market return / risk profile we identify.

What's important in terms of gauging investment confidence is that the maturing Asia - Pacific industry has locked in on the virtuous capital cycle: Limited partners (LPs) have been cash - positive in the region over the past few years, meaning GPs continue to find ways to return more capital to investors than they are drawing down for new investments.

The Fund will attempt to produce a total return in excess of the return of the S&P 500 Index, and secondarily, the Russell 1000 Value Index over a full market cycle.

Looking back through history, whenever value stocks have gotten this cheap, subsequent long - term returns have generally been strong.3 From current depressed valuation levels, value stocks have in the past, on average, doubled over the next five years.4 Not that we necessarily expect returns of this magnitude this time around, but based on the data and our six decades of experience investing through various market cycles, we believe the current risk / reward proposition is heavily skewed in favor of long - term value investors.

As a result, the most historically reliable valuation measures now suggest that the S&P 500 will experience a net loss over the coming decade, while including broader (if slightly less reliable) measures results in projected S&P 500 10 - year annual nominal total returns of about 1.4 % annually (see Ockham's Razor and the Market Cycle for the arithmetic behind these estimates).

«True managers need to be tested in multiple business cycles to prove their compound annual return is consistent over long periods of time» Thomas Kahn

I wouldn't waste much ink trying to argue this is a fantastic business, but because of strong market share, over a cycle NOV has earned a decent return on capital.

He recognized early on that applying leverage to safe, cheap, high - quality stocks would magnify returns without the risk of fire - sale, allowing him to stick to the principles outlined above over the course of multiple economic and market cycles.

Figure 2 shows that during past rate - hike cycles, muni bonds not only continued to generate positive performance over the entire course of the rate - hike cycle, but also managed to generate positive returns immediately after each rate hike.

As I've emphasized in prior market comments, valuations are the primary driver of investment returns over a 10 - 12 year horizon, and of prospective losses over the completion of any market cycle, but they are rather useless indications of near - term returns.

Estimates of prospective long - term returns for the S&P 500 reflect our standard valuation methodology, focusing on the relationship between current market prices and earnings, dividends and other fundamentals, adjusted for variability over the economic cycle.

A month ago, I noted that prevailing valuation extremes implied negative total returns for the S&P 500 on 10 - 12 year horizon, and losses on the order of two - thirds of the market's value over the completion of the current market cycle.

The central message of our discipline is that valuations are enormously informative about prospects for long - term and full - cycle returns, but that outcomes over shorter segments of the market cycle are driven by changes in the psychological preferences of investors toward speculation or risk - aversion.

Oh well, it will all be over soon... The planters of our Garden of Eden will return during the galactic alignment scheduled to occur on Dec. 21st and harvest the bounty of humans for their 26,000 year feeding cycle.