Perspectives Blog

Three investments that could return to favor in 2014

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | December 16, 2013

When an out of favor investment is re-discovered, sustained outperformance often follows The three criteria we look for in identifying an out of favor asset class or investment strategy Why Japanese stocks, EM stocks and active equity strategies may soon be rediscovered When investors lose confidence in an asset class, especially one that had been popular enough to attract outsized allocations, subsequent rebalancing generally leads to prolong…

Should investors care about valuation?

Rich Rosen, Portfolio Manager | November 25, 2013

Is valuation an effective tool for deciding on whether to invest in a stock? We look at other drivers of a stock’s worth Earnings and earnings growth could be more useful in evaluating a stock’s worth Many of the market experts paraded around on the business programs, when asked about their forecast for stocks, often begin with a comment about valuation. But really, how effective is valuation as a gauge for determining whether it is a good tim…

Thoughts on navigating market volatility in today’s technology markets

Rahul Narang, Senior Portfolio Manager | April 28, 2014

We are seeing a market rotation from momentum to value on macro factors and internal market dynamics. Keys are to stay diversified, look for businesses with strong moats and that produce solid cash flow and compare to historical valuations. Favored themes are industry consolidation plays, mobile and Internet. In recent weeks there has been a dramatic shift in alpha generation from hyper growth technology stocks to more value-oriented names. We…

Could tapering be good for stocks?

Fred Copper, Senior Portfolio Manager | December 16, 2013

Despite all the discussion surrounding quantitative easing (QE), there has been little theoretical justification for the link between QE and equity prices. Europe provides a glaring counter-example of the impact of central bank policy on financial markets. Once the psychic umbilical cord of QE is cut (tapered), the market may actually be cheered by the end of what has always been perceived as a temporary and extreme form of life support. Few i…

Building wealth through dividend investing

February 18, 2014

We believe a disciplined dividend strategy that focuses on rising dividends produced by high-quality companies can help investors build wealth over time. Historically,  dividends have been an important component of total return, with the best opportunity for total return in the stocks of high-quality companies that can sustain and grow their dividend over time. Higher quality stocks act to mitigate risk and offer downside protection during time…

Beware of earnings gimmicks

Jason Wang, Senior Quant Analyst | March 10, 2014

The combination of slow revenue growth, high existing margins and increased multiples creates incentives for more aggressive accounting. Stocks with the lowest accounting accruals outperformed their benchmark by 2.7% per year between 1993 and 2013. History suggests that paying close attention to changes in earnings quality can be of significant value for investors. Since the global financial crisis, economic recovery worldwide has been slow. O…

Has dividend investing lost its luster?

Columbia Management, Investment Team | May 12, 2014

…factors support strong dividend growth in the next few years. We believe the drivers that have resulted in historical stock market outperformance from high-yielding equities remain intact. Briefly, valuations of high-yielding stocks benefit from the capital discipline dividends impose on management, dividends enjoy favorable tax treatment relative to interest income and growth in dividends can provide a measure of inflation protection for portfol…