Watch Eugene take a fresh look at stock markets, and highlight recent changes in our stock portfolios. Notwithstanding the recent volatility, we are still finding many attractive opportunities to enhance returns and manage risk. Let’s take a look at what this means for your stock portfolio rebalancing and other asset management.
Commentary summary for Q3 2020
As news outlets continue to report on the Covid-19 pandemic, we remain positive with new news on vaccination rollouts and efficiency rates on those vaccines. With this in mind, Signet remains positive with what is ahead and makes way for a positive environment for our equities. However, this confidence does not change our approach which remains focused on our long-term investments. We want to keep our barbell approach while still staying selective with what we want to keep in our strategies.
Changes on the virus front can still impact us on the short term. Growth has outperformed value stocks, with fairly significant levels of gains driven by a few growth stocks on the S&P500. Furthermore, the valuation spread chart which Eugene elaborates on shows the large difference in stock prices between the cheapest and most expensive stocks that are available on the market.
Short-term interest rates
Now, taking a look at the short-term interest rate spread chart, we can see that the Federal Reserve continues to prioritize low interest rates. As Eugene explains, even if inflation perks up, the Federal Reserve really reigns in on the short interest rates, but does not have a power on long-term interest rates. The yield curve, the difference between 10 year interest rates and 3 months interest rates. is steepening. This is generally good news for the economy. This serves as an indicator for economic recovery within the stock markets.
For more information about our stock portfolio rebalancing and updates, stay tuned into our insights.
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