<div class="entry-content">Every investment strategy comes with distinct advantages and drawbacks. Understanding how your chosen approach compares to others can enhance your decision-making. To illustrate, consider an unmanaged, market-weighted asset allocation strategy.
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<p>* Russia <a href="https://www.reuters.com/article/us-ukraine-crisis-russia/russia-warns-u-s-warships-to-steer-clear-of-crimea-for-their-own-good-idUSKBN2C00WD?il=0">advises</a> US warships to avoid Crimea<br/>* Japan plans to <a href="https://www.reuters.com/article/us-disaster-fukushima-water-release/japan-to-release-contaminated-fukushima-water-into-sea-after-treatment-idUSKBN2BZ2U3">discharge</a> treated water from its nuclear plant into the sea<br/>* Will Treasury auctions and inflation data <a href="https://www.reuters.com/article/us-usa-bonds-supply/analysis-big-u-s-treasury-auctions-could-restart-rise-in-yields-idUSKBN2BZ0C0">end the recent lull</a> in the bond market?<br/>* Upcoming US inflation reports for the <a href="https://www.brookings.edu/blog/up-front/2021/04/08/dont-overreact-to-inflation-data-this-spring/">next few months</a> might be misleading<br/>* China's international trade activity <a href="https://www.bloomberg.com/news/articles/2021-04-13/chinese-trade-booms-in-first-quarter-on-strong-overseas-demand?srnd=economics-vp">shows a sharp rebound</a> as the global economy recovers<br/>* Banks are poised for a <a href="https://www.wsj.com/articles/banks-after-bracing-for-disaster-are-now-ready-for-a-boom-11618306200?mod=hp_lead_pos1">boost in profits</a> as the economy strengthens<br/>* The UK economy <a href="https://www.bloomberg.com/news/articles/2021-04-13/u-k-economy-rebounds-in-february-as-end-of-lockdown-approaches">improved</a> in February<br/>* New US Covid-19 cases suggest a <a href="https://twitter.com/jpicerno/status/1381906807564668930">fourth wave</a> may be on the horizon<br/>* The US federal deficit <a href="https://www.marketwatch.com/story/u-s-budget-deficit-soars-to-660-billion-in-march-after-stimulus-checks-are-sent-out-11618250852">ballooned</a> to $660 billion following the distribution of stimulus checks:</p>
<div class="entry-content">For the second consecutive week, US stocks emerged as the leading performers across the main asset classes in last week’s risk-on rally, as evidenced by a range of proxy ETFs through Friday’s close (April 9).
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<p>* Iran <a href="https://www.reuters.com/article/us-iran-nuclear-natanz/iran-blames-israel-for-natanz-nuclear-plant-outage-vows-revenge-idUSKBN2BZ0HD">accuses</a> Israel of sabotaging a key nuclear facility<br/>* Iran <a href="https://www.bbc.com/news/world-middle-east-56715520">promises</a> to retaliate for the attack on its nuclear site<br/>* Secretary of State Blinken expresses <a href="https://www.cnbc.com/2021/04/11/blinken-warns-moscow-of-consequences-amid-troop-buildup-near-ukraine.html">"serious concerns"</a> regarding Russia's military presence near Ukraine<br/>* Intense lobbying <a href="https://www.nytimes.com/2021/04/11/us/politics/biden-infrastructure-congress.html">begins</a> over Biden’s $2 trillion infrastructure and jobs initiative<br/>* A Covid variant <a href="https://www.cnbc.com/2021/04/11/covid-variant-from-south-africa-was-able-to-break-through-pfizer-vaccine-in-israeli-study.html">evades</a> some protection offered by the Pfizer-BioNTech vaccine<br/>* Fed Chairman Powell states the US economy is at an "inflection point" with anticipated growth <a href="https://www.cnn.com/2021/04/11/economy/jerome-powell-federal-reserve-60-minutes/index.html">set to accelerate</a><br/>* As the economy gains momentum, does this <a href="https://www.wsj.com/articles/with-economy-poised-for-best-growth-since-1983-inflation-lurks-11618149601">increase</a> inflation risks?<br/>* Bitcoin <a href="https://www.bloomberg.com/news/articles/2021-04-12/bitcoin-nears-record-before-largest-u-s-crypto-exchange-listing?srnd=premium">approaches</a> a record high ahead of the largest US exchange listing<br/>* The US financial system's stress level <a href="https://fred.stlouisfed.org/series/STLFSI2">remains</a> low at the start of April:</p>
<div class="entry-content">Maintaining parity with the benchmark remains a challenge for our proprietary strategies this year. Beta, in this context, is still exceptionally vibrant as we approach the third quarter.
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<p><a href="https://www.amazon.com/gp/product/164313678X/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=164313678X&linkCode=as2&tag=thecapitalspe-20&linkId=b52b966db4c16058bda63bab76709967" target="_blank" rel="noopener"><img decoding="async" class="alignleft" src="https://ws-na.amazon-adsystem.com/widgets/q?_encoding=UTF8&MarketPlace=US&ASIN=164313678X&ServiceVersion=20070822&ID=AsinImage&WS=1&Format=_SL250_&tag=thecapitalspe-20" border="0"/></a>● <a href="https://www.amazon.com/gp/product/164313678X/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=164313678X&linkCode=as2&tag=thecapitalspe-20&linkId=d4900dc52c89cf5112d4b290d95fa83e" target="_blank" rel="noopener">You Are What You Risk: The New Art and Science of Navigating an Uncertain World</a><br/>Michele Wucker<br/><strong><a href="https://www.simonandschuster.com/books/You-Are-What-You-Risk/Michele-Wucker/9781643136783">Summary</a> via publisher (Simon & Schuster)</strong><br/><em>This book examines how your perception of risk and your reactions to it are shaped by your background and experiences. The decisions we make regarding risk often depend on our cultural context, values, and even environmental factors such as the temperature or the music we hear. By recognizing these subtle influences, we can better identify opportunities and mitigate dangers. "You Are What You Risk" advocates for a revamped dialogue about risk and uncertainty. In this insightful and timely book, Michele Wucker emphasizes the significance of understanding your individual risk profile and how to improve your engagement with risk in business and daily life.</em></p>
<div class="entry-content">In this edition:
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<p><strong><span style="color: #ff0000;"><a style="color: #ff0000;" href="https://www.kiplinger.com/investing/602384/how-much-bitcoin-should-i-own-a-mathematical-answer">How Much Bitcoin Should I Own? A Mathematical Answer</a></span></strong><br/>Adam Grealish (Betterment)<br/><strong>March 9, 2021</strong><br/><em>Answering this question can be quite complex. We can, however, apply concepts from modern quantitative finance to approach a potential solution. For years, Wall Street "quants" have utilized a mathematical framework, known as the Black-Litterman model, for portfolio management. This framework begins with a neutral, "equilibrium" portfolio and provides a formula to adjust your holdings based on your worldview. Remarkably, it accounts not only for anticipated return but also for your confidence in these estimates, which informs specific portfolio allocations.</em></p>
<div class="entry-content">
<p>* Fed Chairman Powell reports the US is <a href="https://apnews.com/article/jerome-powell-coronavirus-pandemic-economy-5e193e836df3baaec7df6c44396040bd">on track</a> for a robust economic recovery<br/>* Rising famine risks are noted in <a href="https://www.bbc.com/news/world-asia-56685356">North Korea</a><br/>* Escalating violence <a href="https://apnews.com/article/joe-biden-belfast-boris-johnson-northern-ireland-violence-5741c1a1efd11f1ec7d53bf6940ce079">reported</a> in Northern Ireland<br/>* Blackrock’s green-investing fund launches as the <a href="https://www.ft.com/content/43b757a3-306d-4567-b6db-69ab226500e2">largest-ever ETF</a> launch<br/>* Will US plans to reform corporate taxes <a href="https://www.bloomberg.com/news/articles/2021-04-09/global-corporate-taxes-face-revolution-after-u-s-turnaround?srnd=premium">have global ramifications</a>?<br/>* The push to unionize Amazon in Alabama is <a href="https://www.cnbc.com/2021/04/08/amazon-union-vote-count-in-alabama-live-updates-of-results.html">facing obstacles</a><br/>* Wealthy countries <a href="https://www.bloomberg.com/news/articles/2021-04-09/when-will-world-be-fully-vaccinated-pace-is-2400-faster-in-wealthy-countries?srnd=premium">account for 40%</a> of global vaccinations<br/>* China's <a href="https://www.bloomberg.com/news/articles/2021-04-09/china-s-march-producer-prices-jump-most-in-more-than-two-years">producer prices</a> rose steeply in March, the highest since 2018<br/>* Increased inflation in China <a href="https://www.reuters.com/article/global-metals/metals-copper-falls-as-china-inflation-fuels-fears-of-credit-tightening-idUSL1N2M20B9">suggests</a> that tighter monetary policy could be imminent<br/>* Unexpectedly, US jobless claims <a href="https://www.cnbc.com/2021/04/08/weekly-jobless-claims.html">increased</a> last week, surpassing predictions:</p>
<div class="entry-content">The question arises: how long can small-cap value stocks continue to outperform the broader market? According to the renowned Fama-French research, this sector of US equity has historically excelled over time. However, in recent years, it faced challenges as growth and large-cap stocks took the lead. In a surprising turn, small-cap value stocks are rebounding in 2021 and are currently ahead of other equity factors in terms of year-to-date performance.
