News & Research

Every market we track except the UK and Australia have seen a further deterioration in sentiment. The decline in sentiment is not new, however last week, markets finally heeded the call and declined in-line with sentiment.

Markets and sentiment continue to diverge. A shift has taken place among some market participants towards the speculative model and away from the fundamental one.

For the past few weeks, markets have been ignoring sentiment’s gradual pull-back and rallied, confident in their belief that neither central banks’ easy credit nor their massive asset purchasing programs will come to an end any time soon.

The year of the Rat is finally over. The COVID-19 pandemic. Global lockdowns. Failed reopenings. Second and third infection waves. Anti social distancing protests. Pre and post US election theatrics. Brexit trade deal. Multiple vaccines. GameStop. So, what’s in store for investors in the year of the Ox?

The week ended mixed with most markets showing a divergent mood between our Style and Sector ROOF Ratios.

Investor sentiment in the US, global developed markets, and Asia has been trying to convince markets they were wrong to keep rising, and that the premiums being paid for risk assets ran counter to investors’ deteriorating risk appetite.

The absence of clear economic and immunization success stories globally, has turned investors into hypochondriacs, debating who’s feeling bullish and who’s not and who’s not now but was a few weeks ago or isn’t bearish yet but thinks they might be soon, etc..

In capital markets investing, the greater fool theory1 states that an investor buying a risk asset, no matter its current valuation, can always find a “greater fool” to buy it later at a higher price. The theory rests on the subjectivity of valuations and the fact that beauty (the attractiveness of the investment) is always […]

In a surprising turn of events, most equity markets finished 2020 with sizable gains—and the fourth quarter unquestionably did its part. Benchmark risk continued to slide in Q4—except for a blip in November—but still ended the year higher than where it started. Factor returns went wild in Q4 and many regions saw outsized returns for the year.

This week, sentiment in the US weakened further ahead of a potential reaping this coming Wednesday. But, as they did then when they chose to ignore those shenanigans two weeks ago, markets rose last week and seemed to refute investor sentiment by observing that their Propter Hoc isn’t even a Post Hoc (i.e., markets didn’t fall after the (first) violence).

While taking risks by not wearing a mask offered zero upside in 2020, taking sentiment-savvy risks with your portfolio delivered bigtime. Using the Qontigo Sector ROOF Scores, we developed a methodology to construct Risk-On and Risk-Off variants of the STOXX USA 500 index portfolio.

It is safe to assume that most educated Times-subscribing US investors were rather flummoxed by last week’s storming of the US Capitol by pro-Trump supporters – some seen wearing farm animal headgear about which the less speculation the better.