The S&P 500 tried to pull back yesterday, but as usual the late day trading pushed the loss to just 65 bps. This has become the normal market. In 2012, volatility puttered at 12.77%. In 2013 it fizzled down to 11.07%. YTD we have crept up to 11.73%. These metrics tell you to expect daily gains and losses to be +/- .75%. Very Exciting.
Unlike the investment banks that prioritize making money off of their clients, GMO seems to think making smart investment decisions is the more important job. On an annual basis GMO releases their 7 year forecasts for different asset classes. Most recently they released a rather uninspiring forecast that puts US equities as one of the least attractive:
Some of the most unpopular policies often create tremendous opportunities. Take the Affordable Care Act for example. While the public is complaining bitterly about this legislation, some investors will be (or already have been) profiting handsomely. Venture capital firms for example are expected to rake it in by funding companies that provide healthcare-related software services (see story).
Japan has become our petri dish for central bank efficacy. Much of the market action over the last few weeks has been driven from news coming from Japan. When the Yen strengthens, markets fall and vice versa. The question everyone is asking is whether central banks are heading down the right path or bound to lose control.