Global Market Insights | A Fisher Investments Blog

So Long, Daisy

Last week, the mansion said to have inspired The Great Gatsby was bulldozed into memory. Going in its place? Five new homes at $10 million a pop.

 The literati and preservationists are, naturally, in mourning. Sure, losing a bit of history is sad, but let’s not get carried away. After all, no one benefits from a dilapidated, uninhabited, $28 million shell. New homes may not be as fun as Daisy Buchanan’s dance floor, but new residents bring new revenue and new life to an empty space—all good things.

 It’s not unlike that age-old market phenomenon, creative destruction. Throughout history, once popular firms and products have fallen by the wayside, making way for exciting, new developments. Old school gamers might miss the Atari 2600, but no one can argue the Playstation, Wii, and Xbox don’t offer a more complete gaming experience. Antiquarians cling to vintage typewriters, but what would life be without the personal computer—and all the information and convenience it brings? Innovation is our economy’s lifeblood. Losing old friends is sad, but it’s progress—and capitalism—at work. 

 

Inflation, Not Necessarily What You Think

As Fisher Investments analyst Mike Hanson explains in this blog posting, inflation isn’t always simply a matter of higher prices. Inflation is typically a result of too much money chasing too few goods.  If the rising price of one good—for example, oil—causes the prices of all other goods to fall by an offsetting amount, that’s not inflation.  So, for folks arguing higher oil prices will mean both inflation and less money for other things, there’s an inherent contradiction in their argument.

 

Latest Sector Guide from Fisher Investments

Fisher Investments Press announced recently its latest sector guide in the Fisher Investments On series: Fisher Investments on Utilities.  This guide takes an informative look at the industries and sub-industries that comprise the Utilities Sector, along with the macroeconomic drivers that may impact it, and unique challenges facing Utilities companies.  Read more about the sector guide here: Fisher Investments on Utilities Released. 

Asset Allocations and Age

On the face of it, the logic of increasing an allocation to less-risky, less-volatile bonds as one gets older may seem intuitive. Fisher Investments realizes that contrary to how many folks think about this, however, many people nearing or in retirement may actually need more equity exposure than they think. James B. Stewart discusses this more fully in his WSJ article on asset allocations.  

 

Fisher Investments Analyst Discusses Selling in May

Is it time to “Sell in May and go away?” Market corrections can come at any time, for virtually limitless reasons, and evaporate as soon as they arrive. Last year, global stocks corrected over the summer, the year before, not. Both ended up fine years to be a stock investor.

 

Market Resilience

Mark J. Perry recently commented in his blog, “…The World Federation of Exchanges … recently released data on world stock market capitalization, which increased to $57.8 trillion in March. That was a 39-month high for world equity values and the highest level since December 2007, when the US recession started. Compared to the cyclical low of $26.6 trillion two years ago in February 2009, the total world stock market capitalization has more than doubled.” This is a profound development many are overlooking, and Fisher Investments sees this as a testament to the resilience of markets.  Read Mr. Perry’s original post here. 

 

Employment Myths

Employment figures have long been a lagging indicator. As the US moves farther into economic expansion, Fisher Investments generally agrees employment figures should continue their gradual but uneven improvement.

 

Fisher Investments looks at Portugal and Spain

Amid high political drama, Portugal moved closer to finalizing terms of a bailout with EU and IMF officials, assuaging fears of a wider debt contagion for now. Spain also successfully completed another bond auction, albeit at higher yields—showing little contagion from the fiscally weaker PIIGS. For more, read the Fisher Investments’ 03/24/2011 cover story on MarketMinder, “Portugal’s Socratic Method” and this WSJ article about Spain.

 

Debt Worries and Treasury Bonds

Fisher Investments recently linked to this story about the S&P’s negative outlook for the US’s AAA credit rating, which was a popular item in the press last week.  Despite the worries, US debt costs actually remain low relative to historical standards, and it’s arguable whether the bulk of the big budget busters—entitlement spending—are true debts at all. For more analysis about the story, see the 04/19/2011 MarketMinder cover story, “The Scarlet Letter.”

 

Employment Numbers Lag

Employment gains historically lag economic recovery, but expect data to improve as global economies continue expansion. For more, see Fisher Investments 01/10/2011 MarketMinder cover story, “A Tale of Two Unemployment Rates.”