MRA Blog

Price of Admission

Volatility is uncomfortable. No one enjoys seeing their portfolio decline in value. However, volatility is the price of admission to the stock market. It is what allows us to achieve an annualized return of 12% since 1980. It is what allows your retirement assets to grow and combat the villain that is inflation. Volatility is what we sign up for when we invest in any risk-asset.

Triple Tax Advantaged Health Savings Account: What Does This Mean & Why Should I Care?

You’ve been working with a wealth manager for a few years now. Your savings are built up to a level that makes both mathematical and behavioral sense to you e.g. 3-12 months of expenses built up, targeted savings bucket for big life purchases, special expenses etc. You’ve received guidance and developed a game plan to pay down outstanding debt such as student loans. Things feel good. You’ve made real progress and are now exploring ways to maximize your retirement savings.

Global Ex. US Equities: A Challenging Year For Passive Management

2021 highlighted the momentum-like nature of market cap weighted indices. Despite all the chop we saw from the average stock in the US, an index like the S&P 500 was able to stay above its 50-day moving average 91% of the time. Talk about strength of trend! 2021 was a very difficult year for investors seeking passive exposure to global ex. US equities. It’s easy to point to the monster returns achieved from the major US stock market averages, but around the globe other markets struggled to keep pace. In a passive world, it can feel as if market capitalization is all that matters. Majority of indices are constructed in a way that benefit from a type of momentum due to market cap weighting i.e., A company appreciates in value, simultaneously increasing its market cap, resulting in a larger index weighting and increased influence on the direction of said index. But what happens when the largest weighted components fail to keep up or just downright decline?

Risk Tolerance and Retirement Planning

Among my many conversations with clients this past week, three of them were with people roughly my age who were contemplating what the next 10 years will look like for them. All three had essentially the same thought and wanted to bounce some ideas off our team. The conversations went in the direction of discussing risk tolerance and asset allocation for a pre-retiree. All three of these clients had similar personal financial situations – they had been working and saving for 35 years or more, had been good savers and built a comfortable sized retirement nest egg, had put their kids through college and paid off their mortgage. All three indicated that they wanted to work around 10 more years.

MRA Technical Corner #3

We find ourselves in the heart of earnings season as US stocks continue to print new all-time highs. The story of Q3 was not one of market euphoria or investor complacency. Rather, the true story consisted of seasonal trend, bond pessimism and China equities. Let us begin with seasonality. On our right, is a chart of the average daily return for the S&P 500 from 1990-2019 (black line) overlayed with the index’s price path for 2021 (red line). The month of September is a seasonally weak period for stocks. Typically, we see this weakness fade in early to mid-October, followed by a strong finish to the year. It’s mind boggling how similar 2021’s price path is to the seasonal pattern. However, seasonality is just one piece of information. Although interesting, if seasonal trends held such a strong predictive power, forecasting returns would be simple and our jobs as wealth managers would cease to exist! As we’ve stressed in previous write ups, it’s just one datapoint.

MRA Technical Corner #2

Q2 2021 is in the books. We enter the month of July with US equities trading at all-time highs, interest rates forming multi-month lows, and volatility returning to pre-pandemic levels. The current news narrative is centered around inflation and whether the Fed’s “transitory” stance is likely to be true or not. Despite this narrative, last quarter long-term US treasury bonds formed multi-month highs. All this talk about inflation and we’re seeing t-bonds print new highs? It’s always interesting when the narrative runs counter to actual price action. We’re not attempting to speculate on the direction of t-bonds - We are simply pointing out that often headlines and price action tell two very different stories. Below is a chart of US Treasury Bond futures alongside the 14-period Relative Strength Index.


Passing the Baton of Financial Literacy to the Next Generation

We all have a story of someone in our lives who is either exceptionally good with managing money or conversely, someone who struggles to avoid common financial mistakes. There is debate in terms of whether people are inherently good or poor money managers. We believe that given the correct tools, people who struggle can vastly improve the way they handle their finances.  One of the long-time passions of our investment practice is promoting and encouraging financial literacy for the younger generation.  We’ve ramped up our efforts in this area over the past year – in part because of the tremendous efforts of Shane.

MRA Technical Corner

Welcome to the first edition of the Michael Roberts Associates Technical Corner bulletin. Each quarter for the remainder of 2021, we’ll review global market developments through the lens of technical analysis. Now, what is technical analysis? Technical analysis is the study of price action and trends within capital markets. This is performed by evaluating the economic forces of supply and demand (sellers & buyers). To learn more about the discipline, I suggest you check out the CMT association website.


“E.S. Whaaaat?” – The Basic Principles of ESG Investing

If you are like many of us, you may have heard the acronyms “ESG” or “SRI” pertaining to investing, but have not really understood what they mean. Environmental/Social/Governance and Socially Responsible Investing has been around for 50+ years, but has changed significantly in the past few years as the trend of ESG investing continues to grow. We thought we’d share some of the features surrounding ESG investing with you. 

While ESG investing refers, in general, to measuring and screening an investment’s environmental, social and corporate governance impact, it is more complex than just “screening out the bad guys” (tobacco, firearms, gambling, alcohol, etc.) Today, ESG investing principals have grown to include the direct engagement of money management firms with the companies they own in terms of proxy voting, direct dialogue with management, shareholder resolutions and public advocacy.

The US Dollar & Emerging Markets

The relationship between the US dollar and risk assets is quite an interesting one. The dollar is considered the world’s reserve currency as majority of globally traded commodities are priced in US dollars. During turbulent economic times it is not the South African Rand or the Australian Dollar that investor’s flock to for protection, it is US dollars. Whether or not the dollar is in a bullish or bearish regime generates vast implications across all asset classes. Today, we are going to talk about one relationship in particular, the US dollar and emerging market equities.

Now, what does it mean to be considered an emerging market (EM)? Well, typically EM nations have seen their economic activities evolve from an agricultural focus to a manufacturing and industrial focus. EM countries are not quite as developed as the United States, Germany or Japan but are considered to be “on their way” to becoming a developed nation. Naturally, their economic growth is driven by exports. The two biggest players in EM are China and India.  They make up a very big percentage (+30%) of the global labor force and have seen rapid economic growth over the past decade or more.