Ask our strategists a question
Do you believe that the VIX is a good indicator or the market's direction?
The VIX is often called the fear gauge and usually spikes when we see the market plummeting but I don’t think it is a good predictor of overall market direction. The driver of markets is fundamentals – namely corporate earnings. When earnings are growing year over year, markets will generally head upwards. We have seen very low volatility over the last couple years. I anticipate an increase in volatility as the Fed tapers and essentially hands control of the market back over to the market.
Do the emerging market, both equities and debt, still represent an opportunity for investors?
Emerging markets under-performed last year but over the last 10 years emerging market equities are actually the top performers and undoubtedly offer opportunity for investors. The good news is they are now available at a lower cost. More good news – U.S. companies are able to capitalize on the higher rates of growth in the emerging markets. In fact almost 50% of the revenue from the S&P 500 companies comes from overseas. Additionally, emerging markets, both stocks and bonds, not only offer long term return potential but also provide portfolio diversification.
What is your outlook on REIT funds?
Thanks for you great question. We highlighted REITS as one of our asset class picks for 2014 in our recent annual forecast. With interest rates moving higher, Global REITs had a tough year in 2013. But REITs are not as interest sensitive as many think and commercial real estate earnings should improve with the economy in 2014.