#inflation #stockmarket #globalinvestment
Volatility is the name of this market’s game. The Dow and S&P 500 both entered bear markets this week, although they both put up a brief fight with a robust rally on Wednesday. Yields on U.S. Treasury securities also bounced around.
These stomach-churning moves are hard to ignore unless you can take a longer view. This week’s guest is focusing on bigger investment themes and identifying cheap global sectors as the market sorts things out.
A year ago on WEALTHTRACK, in September of 2021, Research Affiliates’ Rob Arnott made two macro observations. One, he predicted there were “very high odds” of a resurgence in inflation. Two, that the multi-year outperformance of growth over value stocks was probably finally over. He dated the turn to August of 2020.
He proved prescient on the inflation call and so far seems to have gotten value’s comeback right.
Rob Arnott is Chairman of the Board and Founder of Research Affiliates, which is celebrating its 20th anniversary this year. Research Affiliates describes itself as a “research-intensive asset management firm that focuses on innovative products.”
Among the many funds that Arnott created and now co-manages is the PIMCO All Asset Fund, also celebrating its 20th anniversary this year.
In this weekend’s interview, Arnott shares his outlook on inflation, value stocks, and his cheap diversifiers strategy. We also have an exclusive EXTRA feature with Arnott, who will discuss his penchant for high-performance motorcycles, including his most recent acquisition.
00:00 Hello
00:47 Introduction
03:06 Interview with Robert Arnott
23:35 One Investment
24:35 Action Point
WEALTHTRACK #1914 broadcast on September 30, 2022
Arnott on WEALTHTRACK from September 2021: …(read more)
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I always enjoy hearing Mr. Arnott's insights.
The spectacular level of profits that Oil Company Investors found in the last few years allows some of the profits to be used to insure the illusion that Markets will react in a secure and predictable manner.
Taking a temporary loss to insure good economic indicators, seems to provide future profits that have been flowing to the folks who provide the flow of Oil.
We may be no where near the bottom of a stock slide that gravity has got a firm grip on?
This was a FANTASTIC segment !!
High inflation wrecks society. Assuming inflation can rip at 8%+ for years and not cause major unrest is delusional. Fed has to squash inflation now or unintended consequences will rear their ugly heads.
Fed already showing chicken because they mentioned 4.6. That means he is telling the market, don't expect higher than that. And he is signaling Fed will surrender at 4.6. And gold to the moon if inflation continue winning.
Thank you for your insights!
Fed continue tighning, MBS zero down from $7.8B last period. Market will continue to crash.
Please bring him back more frequently. Excellent.
Always enjoy this podcast to keep that level
Nice… not too positive… not to negative… good ideas for the future… thank you.
"asset allocation" and strategic AA funds have been a big part of many financial advisor careers since the late 90's. Unfortunately, EVERY provider has completely FAILED in managing bond risk, despite swearing up and down that a strategic bond allocation will manage foreign/credit/duration risk. In reality, the fund managers do NOTHING and the bond portfolio winds up having a nearly entire correlation with the stock markets. So, in 2000-2002, 2008-2009, and this debacle, you have the Conservative Asset Allocation model with nearly as bad a return as the Strategic Growth Allocation model. So back in October, fully expecting the fed to raise rates like crazy, I fired all the asset allocators and created my own bond allocation of 1/3 tbills, 1/3 2yr average, and 1/3 5-6 yr average….after that declined net 3% earlier this year I decided that the bond markets demise was upon us and moved it all to the tbills, cash. I have since added some CDs. Wall Streets' dirty secret can be explained in the movie Margin Call, the board room scene discussing bond liquidation. You'll see that there is a gentleman's agreement on not tossing a large stone into the fish pond. This means that you and your clients are the bag holders. WS would say, sure, but it's temporary….. Will that loss be temporary this time? Only if rates continue the downward trajectory of the last 41 yrs, and based on the charts, that does NOT appear to be the case. As the guest in this video states, fighting inflation isn't measured in months, it's done so in years. Somewhere in the coming few years, everyone will realize that higher rates are the new norm. The implications on the economy of course are massive, just consider ARM loans in r/e as one example.
Thank you for a fantastic channel, with a very good guest. I'm a value investor and the ideas I got from this video will be helpful for me going forward.
Wonderful video..
21:12 he seems too proud, when he should be humble, given his poor return this year. Look up his all asset fund 'PAAIX'; see how it's down -19.4%. And when he says "Everything is down", that's not true. That's self-consoling drivel. Look at the oil companies, a major sector: Exxon is up 43% year to date, and Chevron is up 20%. The mark of a good investor is humility. This guy acts like he knows a lot. He knows nothing about the future; the market schools him every year, yet he seems blind to it all. Oil is a basic commodity, an asset; he runs a "all asset" fund; and oil co's beat him by about 50% so far in 2022 and he's acting all proud? Plus, he's got about 39% allocated to bonds now. Ridiculous. 'Vanity' be thy name. Lose the hubris. Get some results.
Amazing interview and insights, thank you!
He's been wrong for 15 years
Whenever he looks down, he has that amused smile as if he's thinking, "I'm the only one who knows I'm wearing Snoopy, flannel-pajama pants."
Excellent.
Great guest. Very thoughtful and logical. He makes eminent sense.
I'm usually wrong, but I'm starting to ease in every week. Based on the fact I am getting in, you all should wait a bit longer. JS
The Fed totally screwed up. Late to increase rates. Late to QT. Now the Fed will over react the other direction. Excessive Fed balance sheet and QT is why bonds are being hammered worst in history.