Diversified Digest: May 15
May 15th, 2017 | posted in: Insights
by: R. Samuel Fraundorf
Diversified Trust’s investment team brings you headlines of note for the week. Click on the links to access the articles.
- Smart Beta, or factor investing, has continued to both gather more assets and increase in its number of strategies. As you can imagine, not all of them actually outpace the overall stock market, when you consider the stocks you really can buy and the costs of trading those equities. A few factors actually do, however, and we have been using them!
- A very thought-provoking essay by the Chief Investment Strategist at Salient Partners explores the impact of current and future wealth inequality between those who arrived at the top 2% through coding and quantitative theory and those that experience the remaining 98% through physical wealth creation (manufacturing, service, farming, etc.). It provides a backdrop for Emmanuel Macron, Donald Trump and perhaps more.
- Expanding on the thought of where wealth will be generated is a new study considering where jobs will be lost due to automation. The University of Redlands report expects that most large U.S. metropolitans will lose more than 55% of their current jobs over the next 20 years. But perhaps that isn’t enough jobs or even fast enough.
- An interesting thought to consider for why political uncertainty can be high and yet stock market volatility can be low: perhaps learning about the world through social media has begun to jaundice our understanding.
- Finally, while we and others have pointed out the high level of equity market values based upon their long-run average, as measured by the Shiller P/E ratio, it is unlikely that valuations alone would cause the market to swoon as long as global earnings continue to grow, which is partly why we still hold the equities we do.