Perspectives Blog

The end of “risk-on/risk-off”

Anwiti Bahuguna, Ph.D., Senior Portfolio Manager | February 3, 2014

…we have witnessed a decline in inter-asset class correlations as evidenced by the decline in the correlation of stocks within the S&P 500 Index. Source: Columbia Management Investment Advisers, LLC, December 2013 Lowering both cross-asset correlations and inter-asset correlations provides potential benefits for structuring multi-asset portfolios. First, as the correlation of stocks within the S&P 500 has declined from the peak reached i…

Second quarter earnings preview

Tom West, Director of Equity Research | June 30, 2014

We believe YTD valuation improvement in stocks is more likely the result of basic supply and demand than an upward revision off corporate prospects. Going into corporate reporting season, we’re focused on whether the cyclical sectors show some signs of increasing activity. For the less cyclical sectors and consumer discretionary industries, we want to see if pricing holds up amid flattish demand and a tepid wage growth. In about a week, corpor…

Q&A with Jeff Knight

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | January 6, 2014

Can the stock market continue to move higher in 2014? How do you think monetary policy will impact the markets? Given where interest rates are, what are your thoughts on fixed income? How do you think about asset allocation today? Q: Can the stock market continue to move higher in 2014? A: I think we are a ways from stocks being so expensive that you have to be a seller just because they’ve gone up a lot. Historically, the kind of momentum tha…

Asset allocation: Q4 equity strategy

Columbia Management Global Asset Allocation Team, | October 27, 2014

…blished our September outlook. For now, though, we favor building that overweight primarily using U.S. large-cap stocks. We believe that although U.S. stocks appear fairly valued, they can rise with earnings growth. U.S. corporate fundamentals look solid and supportive of earnings growth, with the U.S. economy on a clearly divergent path relative to other developed economies (Exhibit 1). Domestic economic conditions continue to indicate an enviro…

Second quarter U.S. corporate earnings wrap-up

Tom West, Director of Equity Research | August 18, 2014

…e for a pickup in health care utilization this quarter following a seasonally challenged first quarter. Hospital stocks saw robust profit gains ahead of expectations driven by the Affordable Care Act (ACA) and reduction of bad debts. To a lesser extent there were modest improvements in utilization, but this may have been more share driven than market driven because device stocks did not see a noticeable improvement in their results. While device…

In the land of 7 footers, 6’8″ plays guard

Fred Copper, Senior Portfolio Manager | May 5, 2014

The expected real return on most “safe haven” assets is currently negative. Risk seeking behavior could result in a bubble encompassing all risky assets. While current indicators support a pro risk stance, we are prepared to change our positioning as market conditions dictate. There is a great deal of discussion currently about the likely emergence of asset bubbles in capital markets driven by hyper-stimulative central bank policy. However, we…

Global Asset Allocation Outlook (June 2014)

Columbia Management Global Asset Allocation Team, | June 30, 2014

…recommend modestly overweighting equities over bonds with a neutral allocation to commodities. We upgraded U.S. stocks from an underweight to a neutral position. U.S. equity valuations relative to other countries are looking a little rich but not enough to remain an underweight at this point. Within U.S. we upgraded small-cap stocks from an underweight to a neutral position. Small-cap stocks sold off sharply in the first few months of the year a…