Tomorrow, at 8:30 AM Eastern Time, a report detailing December’s industrial production is set to be released. The Capital Spectator’s average econometric forecast predicts a modest increase of 0.1%. This growth rate is significantly slower compared to November’s robust rise of 1.1%. Generally, economists are anticipating a slightly higher gain of 0.2% for December’s industrial output, based on consensus forecasts.
Brett Scott, a former derivatives broker who now writes for Suitpossum, posed the question: “What are the 100 Top (Anglo-Saxon) Finance Blogs?” His response, presented as a “Pseudo-Scientific Study,” includes my blog among many others, ranging from the well-known to the more obscure. Exploring such lists is a delightful way to uncover new blogs while also rediscovering familiar ones that may have faded from memory. One blog in particular that piqued my interest, and had previously escaped my notice, is The Research Puzzle.
Tomorrow’s retail sales report for December, set to be released at 8:30 AM Eastern Time, is expected to indicate a 0.3% increase for the month. This forecast slightly surpasses the 0.2% consensus derived from various economists’ surveys. Notably, retail sales also rose by 0.3% in November, as reported by the government last month here.
● Successful Investing Is a Process: Structuring Efficient Portfolios for Outperformance
By Jacques Lussier
Summary via publisher, Wiley
What do you really pay for when you hire a portfolio manager? Is it their specialized expertise or unique analytical skills? According to industry veteran Jacques Lussier, most successful investment managers struggle to articulate their successes. He contends that the gains delivered by professional portfolio managers can often be mapped to effective portfolio management practices rather than obscure knowledge. Importantly, Lussier introduces a formal, process-oriented strategy that has repeatedly resulted in substantial excess gains, all while being far more cost-effective since it can be implemented in-house.
Some analysts have been forecasting a downturn in US sales. One economist recently stated in a televised interview that sales appeared to be “rolling over.” Based on this view, he suggested the economy may already be in recession. However, contrary to expectations, sales have remained resilient and even improved in some areas. The latest update from November regarding wholesale trade figures serves as a strong counterpoint to the prevailing pessimism regarding macroeconomic trends.
Today’s weekly update on jobless claims illustrates how easily we can be misled by the inherent noise in this data series if we concentrate too heavily on recent figures. Last week, new claims for unemployment benefits rose by 4,000 to a seasonally adjusted figure of 371,000, marking the highest total in a month. This increase was somewhat unexpected compared to projections, which had suggested a slight decline. However, the prior week’s claims were revised downward, making the net effect nearly neutral. While the current figures may seem discouraging, a more comprehensive analysis reveals a significantly brighter trend.
Once again, I found myself contemplating whether to sell an asset class in my portfolio after reading an alarming article about the potential risks ahead. The article made a compelling argument for a downturn in the near future. However, I reminded myself that this asset class is only one element of my diversified portfolio and that my rebalancing strategy would address any significant deviations among the various components. Keeping the broader perspective of my asset allocation in mind helped me realize that the article’s implications weren’t as relevant to my situation as initially thought. My first emotional response turned out to be unhelpful when it came to making financial decisions.
Tomorrow’s weekly update on jobless claims is anticipated to reveal a slight decline from the previous figure, according to The Capital Spectator’s average econometric forecast. New claims are projected to decrease by 5,000, bringing the seasonally adjusted total to 367,000 for the week ending January 5. This estimate aligns closely with consensus forecasts from various economists.
This sentiment holds true across various asset classes, including stocks, bonds, and even hedge funds. As The Economist highlights, achieving market-beating returns consistently relative to a standard asset mix is challenging, and hedge funds are not exempt from this reality. “A straightforward investment portfolio—60% equities and 40% government bonds—has yielded over 90% returns in the last decade, whereas hedge funds have managed a mere 17% after fees,” the publication notes. Does this sound familiar?
The US economy demonstrated continued growth in December, as indicated by the incoming data for the month. This finding aligns with the analysis presented in our previous update from last month. While several key reports for December are still outstanding, the available data suggests that the economy concluded 2012 on a positive note. Of course, potential revisions and yet-to-be-published indicators could change this picture, but early assessments indicate that the likelihood of last year’s end marking the beginning of a recession remains low.
