Chris

This seems to be one of the most asked questions in the finance industry in 2020…from clients and professionals alike.  While there are nuanced reasons for this seemingly disconnected state of reality, I’ll share the simpler point first:  The stock market is a forward-looking machine (often referred to as a leading indicator).  On a general basis, the market is looking beyond the pain of the current economic conditions brought on by the virus-related shutdowns and is predicting recovery in the level of earnings.  The forward-looking timeframe utilized by market participants shrinks during times of great concern and lengthens during periods of renewed optimism.  This was clearly observed during this last period of volatility in early 2020.  Read More

What is rotation risk?

Simply put, rotation risk is the chance that investments in one asset class or category within an asset class that were previously in favor, experiencing strong returns and price appreciation (gains), will become less favored and experience price depreciation (losses).  This can happen rather quickly, leaving investors with an asset that lost much of the gains enjoyed when that asset was prized.  Worse yet, rotations can create sizeable losses to those that bought the appreciating asset towards the end of its run-up in price.

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