The Dow finally hit 20,000.  I wouldn’t ordinarily put much importance on an arbitrary milestone (see The Dow 20,000...Should We Care?), but the long hover just below this level was extraordinary.  This is not to say that markets need behave in any predictable manner.  Daily movements of the market tend to behave like random walks, and random walks commonly...

“Dow 20,000”

Those two words encapsulate three concepts: 1) the Dow is a relevant economic indicator; 2) 20,000 is a noteworthy milestone; 3) special consideration should be given to investing at all-time highs.  I’ll examine each in turn...

There has been much discussion and speculation of the political and economic consequences of yesterday’s vote for the UK to leave the European Union.  Ignoring politics altogether, and anything speculative about economics or financial markets, what can be said based on probability, financial theory, and an...

Interest rates affect your portfolio through all asset classes, but may do so in different ways. Investors are on edge about rising interest rates today, but sensitivity to interest rates has long been a concern of serious investors (along with all other aspects of portfolio risk).  Duration is the standard statistic used to describe the sensitivity of a portfolio to small cha ...

Question: U. S. Equity markets are up. Why isn’t all of my money in the S&P 500? Why do I have any exposure to treasuries when everybody knows they are underperforming U. S. equities? At the heart of New Frontier’s investment policy is planning for all contingencies and reducing portfolio risk. It may be fashionable to bet strongly on particular outcomes, but a sensible lo ...

The Federal Reserve’s announcement of continuing the stimulus program without change surprised many investors and pundits.  The media is much guilty of the hype surrounding the September announcement. In a note sent to our investors on the 9th we indicated that the most likely scenario in our view was that the Fed would continue the stimulus program unchanged and that tapering ...

Dr. Richard Michaud wrote the following on September 6th.  On September 9th, we sent it to our investment clients: “The August labor report just came in today.  It is a bit weaker than expectations and July and June revisions were downward, some significantly.  While no one can predict what the FOMC will do, I think it is fair to say no one will be predicting a startup of seri ...

Investors have nervously anticipated the end of the Federal Reserve policy of stimulating U.S. economic growth with quantitative easing (QE3).  The June 19^th report by the Federal Reserve Chairman on the state of the economy reflected an unexpectedly positive view of the recovery.  As a result...