October was a massive month for US stock market ETFs
US equity ETFs brought in more cash in October than the rest of the year combined (Bloomberg)
"U.S. stock ETFs took in $10 billion, nearly double the $6 billion total they had attracted this year until October," Bloomberg's Eric Bachunas writes. "The flows were no doubt sparked by the Federal Reserve's decision not to raise interest rates in September, which helped trigger a sizable 8.5% jump in the S&P 500 Index. Until this point, the U.S. equity ETF market might have been described as "meh" compared with international developed markets, such as Europe and Japan, where central banks were in full-blown quantitative easing-mode, attracting ETF investors like moths to a light. In October, the opposite happened."
How to invest in equities in a low growth world (AllianceBernstein)
The investing environment has been made that much more challenging thanks to expectations for years of low growth. But with these assumptions in place, one can think about being more selective when picking stocks.
"We think there are three solid strategies for investing in a low-growth world," AllianceBernstein's Mark Phelps writes. "1) Invest in high quality companies that are genuine growth businesses; 2) Search for undervalued companies that can restructure themselves to unlock value; and 3) Look for companies with strong dividend yields."
George Soros' firm pulls out of his investment with Bill Gross. (The Wall Street Journal)
"George Soros's firm has pulled its roughly $500 million investment with Bill Gross, less than a year after the billionaire investor gave the former bond king his stamp of approval, according to a person familiar with the matter and industry data," reported the WSJ's Kirsten Grind and Gregory Zuckerman.
"The move is a blow to Mr. Gross, who has struggled with poor performance and outflows at his Janus Global Unconstrained Bond fund since he left Pacific Investment Management Co. last year. The money invested by Soros Fund Management was held in a separate, institutional account that followed a similar strategy as Mr. Gross's mutual fund."
US President Barack Obama's second term as president ends in 15 months. And upon review of the history, Bank of America Merrill Lynch's Michael Hartnett observed that these periods often coincide with volatility in the stock markets.
"[I]t's worth noting that the end of a two-term Presidential cycle has often signaled the end of an excess valuation somewhere in the global financial markets: the overvaluation of the US$ after JFK/LBJ, the undervaluation of bonds after Ford/Carter, the overvaluation of tech after Clinton and the overvaluation of housing after Bush," Hartnett wrote.
The right time to sell big winners (The Irrelevant Investor)
"The largest gains are enjoyed by investors with the longest time horizons," Ritholtz Wealth Management's Michael Batnick wrote. "Let's take Amazon, obviously an extreme example. From the time of its IPO through the end of 2014, Amazon gained 12,600%. Even after such a remarkable run, Amazon is up over 100% through the first ten months of this year! However, the reality is having any sort of risk management would make it all but impossible to enjoy these outsized returns as even the best performing stocks have experienced massive drawdowns."
"Philip Fisher, in Common Stocks and Uncommon Profits had this to say on the matter: 'If the job has been correctly done when a common stock is purchased, the time to sell it is- almost never.'"