“Everything you don’t understand about money combined with everything you don’t understand about computers.” ~ HBO’s Last Week Tonight with John Oliver, March 11, 2018
Bitcoin and related cryptocurrencies (now numbering in the thousands) are the subject of much debate and fascination. Given bitcoin’s dramatic price changes, it is not surprising that many are speculating about its possible role in a portfolio. (more…)
KEY TAKEAWAYS
This paper summarizes the economics of climate change. We first review the basics of climate science and the historical evolution of greenhouse gas emissions. We then discuss the relation between climate change and economics and assess the economic costs, direct and indirect, of climate change. These costs are uncertain and sensitive to the choice of discount rate, but overall, the expected costs are economically significant, and early mitigation efforts may be more cost-effective than later actions. We discuss the tradeoffs associated with different potential actions, such as carbon taxation and cap-and-trade programs. Finally, we examine the implications of climate change for asset pricing and investment choices.
A top-heavy stock market with the largest 10 stocks accounting for over 20% of market capitalization and a marquee technology firm perched at No. 1? This sounds like a description of the current US stock market, dominated by Apple and the other FAANG stocks,1 but it is actually a reference to 1967, when IBM represented a larger portion of the market than Apple at the end of 2019 (5.8% vs. 4.1%). (more…)
Climate scientists have identified greenhouse gas (GHG) emissions as the largest contributor to global climate change.1 As a result, many investors are looking to reduce their emissions exposure through their portfolios and wondering if doing so would affect their expected performance. A new research paper from Dimensional delves into this subject by examining the relation between firm-level emissions and expected returns.
By Daniel Campbell, CFA
If I told you that we’d have a partial breakup of the European Union, a contested U.S. election, an economic contraction, and a global pandemic over the course of a year, would you expect the stock market to be up or down? Most of us might guess that the markets would be down (probably significantly). Few may have predicted that the markets would continue to set record highs. But that was 2020: a year of the unprecedented. Britain left the European Union, the first country ever to do so. The U.S. election was hotly contested, bringing out a record number of voters. And the defining event of 2020 – a global pandemic – upended normal life. Best-case scenario, it only changed the way we work, travel and connect with family and friends. (more…)
By Jonathan Scheid, CFA, AIF®
Investing is a series of trade-offs. Every one of us has a finite amount of money, and we must determine how much we want to put where. Placing a large portion of our money in stocks means we might have tremendous upside potential, but it also means we won’t be able to put a lot of money in the cash and bonds that help stabilize some of the ups and downs of stocks. Placing all our money in cash and bonds might not get us the growth we need to meet our financial life goals. (more…)
Historically, value stocks have outperformed growth stocks in the US, though recently that hasn’t been the case. While disappointing periods emerge from time to time, the principle that lower relative prices lead to higher expected returns remains the same. (more…)
The year 2020 proved to be one of the most tumultuous in modern history, marked by a number of developments that were historically unprecedented. But the year also demonstrated the resilience of people, institutions, and financial markets. (more…)
As companies grow to become some of the largest firms trading on the US stock market, the returns that push them there can be impressive. But not long after joining the Top 10 largest by market cap, these stocks, on average, lagged the market.
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