Category Archives: Markets

Is High Yield Worth The Risk?

Posted on July 19, 2018 by Gemmer Asset

Given where credit spreads are (see below) and the fact that we’re late in the economic cycle, it’s worth asking the question: is taking high yield credit risk worth it?     If you look at yield alone, the roughly 6% you’re getting from junk bonds is certainly appealing, but we’d argue that there are three main risks to having this type of credit exposure at this stage in the cycle.   High Yield Spreads…
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Emerging Markets – An Alternative View

Posted on June 28, 2018 by Gemmer Asset

Over two centuries ago, famed British banker Nathan Mayer Rothschild coined the trading phrase, “buy on the sound of cannons; sell on the sound of trumpets.” He was insinuating that markets tend to panic at the outbreak of wars (“the sound of cannons”), presenting good long-term values. On the other hand, markets typically become sanguine once a conflict comes to an end (“the sound of trumpets”), driving them to elevated levels where traders may want…
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Valuations Are High – So What?

Posted on June 26, 2018 by Gemmer Asset

For years market prognosticators have been saying that valuations are high.  And if you look at the data, it’s true.  The Cyclically Adjusted PE or CAPE Ratio (see definition here), a measure of valuation that is generally thought to be more stable than other relative valuation measures, has been above its historical average since August of 2009 (S&P 500).     Here is the same chart with two additional horizontal lines showing +/- two standard deviation bands…
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Market Note

Posted on August 24, 2015 by Gemmer Asset

We started Monday morning with the screens full of red, again. Over the last few days the equity and commodity markets have been under pressure, especially in the emerging world. Through Friday the S&P is off -6.8% from its high while the Dow is down -9.4% (including dividends). Emerging equities are off -21.2% and China is off roughly -25%. ...
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The Yield Curve and Recession Forecasting

Posted on February 3, 2015 by Gemmer Asset

For years economists and fund managers have used an inverted yield curve as a predictor of a coming recession…...
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