viernes, 18 de septiembre de 2015

viernes, septiembre 18, 2015

Read This, Spike That

Welcome to the ‘No Place to Hide’ Market

It’s not just bad news for stocks and commodities: Even bonds have lost ground in 2015.

By John Kimelman           

Even casual investors are aware that stocks have taken it on the chin over the past month.

But here’s what might surprise many: The troubles this year are extending to asset classes that often perform well when stocks are down.

A post on the Capital Spectator blog offers a sobering look at 14 asset classes ranging from emerging markets stocks to inflation-protected Treasuries.

It is widely known that U.S. stocks are down modestly and that emerging markets and commodities have been particularly hard hit. (The latter two classes are down roughly 25% and 30%, respectively.)

But bonds, from Treasuries to U.S. corporates, have lost anywhere from a fraction of a point to a few percentage points.

“For first time since the 2008-2009 financial crisis and Great Recession, we have the following worrisome trend hobbling all the ETF proxies for the major asset classes: negative year-over-year returns,” writes James Picerno, the editor of Capital Spectator. “That’s a formidable force.”

Picerno’s advice: “Beyond nibbling on the edges for speculative purposes, strategic-minded investors may want to wait for more encouraging signs before redeploying capital into risky assets in a meaningful way.”

This across-the-board negativity also caught the attention of Cullen Roche, the editor of the Pragmatic Capitalism site.

“If you had told me that China might be falling apart in 2015, emerging markets were falling 25% and we’d have a flash crash I’d have guessed that long-term bonds were up 10% in that period,” writes Roche. “But no, even bonds have been suppressed.”

He adds, “There has been almost nowhere to hide this year. Except for cash of course.”

Meanwhile, for investors who have long wondered about whether the time of day should be of significance to investing, The Wall Street Journal has an illuminating answer.

The article assets that “rising stock-market volatility is proving especially costly for retail investors who typically buy and sell stocks soon after the market opens—often the most perilous time of the trading day.”

The piece tells us that buying and selling by individual investors is “especially heavy in the minutes immediately after the market opens in the U.S. at 9:30 a.m. Eastern time, when the chances of getting the best price for a stock are lower and swings tend to be bigger, traders and other market observers said. But within minutes, the gap between the price sellers want for a stock, known as the “ask” price, and what buyers are offering, the “bid,” shrinks sharply and continues to narrow up until the end of the trading session. This quirk in the market has been amplified in recent weeks amid the big market swings.”

Investors know that the smaller gap, or spread, is better for investors because they are less likely to overpay for a stock or sell below the prevailing price in the market. “The wider the spread, the more exposed investors are to high costs, which can erode returns at a time when major stock indexes are down for the year,” the Journal article states.

The Journal reports that in the first half of 2015, the difference between the bid and ask prices of shares in the Standard & Poor’s 500 was 0.84 percentage point in the first minute of trading, according to data from ITG, a brokerage. That gap shrinks to 0.08 percentage point after 15 minutes and to less than 0.03 percentage point in the final minutes of the trading day.

“This difference often amounts to only pennies a share,” the article states. “But it can add up for the many individual investors who pile into the market early in the trading day.”

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