About

Ahead of the Curve provides you with analysis and insight into today's global financial markets. The latest news and views from global stock, bond, commodity and FOREX markets are discussed. Rajveer Rawlin received his MBA in finance from the Cardiff Metropolitan University, Wales, UK. He is an avid market watcher having followed capital markets in the US and India since 1993. His research interests includes areas of Capital Markets, Banking, Investment Analysis and Portfolio Management and has over 20 years of experience in the above areas covering the US and Indian Markets. He has several publications in the above areas. The views expressed here are his own and should not be construed as advice to buy or sell securities.

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Is a Recession Imminent?

Definition of a Recession: The textbook definition of a recession is two quarters of negative GDP growth. Some examples of recessions in...

Showing posts with label stocks. Show all posts
Showing posts with label stocks. Show all posts

Wednesday, 11 July 2018

Mid Week Market Insight

Trump fires yet another salvo in the trade war with China, which should guarantee a recession down the line given all the curve flattening of late. Turkish bonds, lira and stock market still in free fall. A massive collapse in base metals like copper adding to the recessionary case down the line.These and other stories from some of the best asset managers, market commentators, financial analysts and CMT's of today:

Wednesday, 4 July 2018

Mid Week Market Insight

More trouble in emerging market land. Massive curve flattening across the globe. China free fall continues. These and other stories from some of the best asset managers, market commentators, financial analysts and CMT's of today:

Wednesday, 27 June 2018

Mid Week Market Insight

China in absolute free fall and the collapse in the yuan is putting pressure on risk assets across the globe. While growth seems to be holding up in the US it is collapsing everywhere else and just a matter of time before the malaise spreads to the US. The emerging market currency rout continues. This and other stories from some of the best asset managers, market commentators, financial analysts and CMT's of today:

Wednesday, 20 June 2018

Mid Week Market Insight

Emerging markets still looking pretty wobbly. A global trade war has begun in earnest. Valuations are still at peak levels. China looks flat out disastrous. Here's all this and more from some of the best asset managers, market commentators, financial analysts and CMT's of today:

Wednesday, 30 May 2018

Mid Week Market Insight

The dollar continues to surge as the euro plunges in response to the crisis in Italy, which has sent Italian bond yields skyrocketing. A flight to quality in US bonds as a risk off trade emerges. Here are these and other stories from some of the best asset managers, market commentators, financial analysts and CMT's of today: 

Wednesday, 23 May 2018

Mid Week Market Insight

The dollar continues to surge and emerging market currencies like the Lira and the PESO are weakening. Italian credit spreads continue to widen and a broad risk off trade is emerging. Here is your mid week market insight on these topics from some of the best asset managers, market commentators, financial analysts and CMT's of today: 

Wednesday, 16 May 2018

Mid Week Market Insight

Global risk are piling up off late. Whether it be surging US bond yields or the surging dollar that has arisen out of a collapsing Euro following the Italian elections, risks to global asset classes are on the rise. The prospects for a waterfall decline similar to 1987 are fast rising. Here is your mid week market insight on these topics from some of the best asset managers, market commentators, financial analysts and CMT's of today:

Wednesday, 9 May 2018

Daily Market Insight

Here is your daily market insight from some of the best asset managers, financial analysts and CMT's of today:

Wednesday, 2 May 2018

Daily Market Insight

Here is your daily market insight from some of the best asset managers, financial analysts and CMT's of today:

Wednesday, 25 April 2018

Bond Yields and Asset Allocation

While the current focus is on US 10 year bond yields pushing through 3% what is more important is the implication of surging bond yields for asset allocation decisions. First a look at a chart comparing 10 year bond yields to the earnings yield on the S and P 500. Thanks to the relentless QE's from the Fed the earnings yield is still well above the 10 year bond yield though the differential has narrowed considerably of late:

Earnings Yield Vs Bond Yield
data source: multpl.com, St. Louis Fed

Next a look at a chart comparing 2 year bond yields to the dividend yield on the S and P 500. After a very long period of time 2 year bond yields have now eclipsed the dividend yield on the S and P 500. Thus risk free assets are going to look increasingly attractive when compared to risky assets like stocks if yields surge further:

Dividend Yield Vs Bond Yield
data source: multpl.com, St. Louis Fed

Friday, 23 March 2018

Stock Market Panic Just Beginning?

Markets have been taking a turn for the worse on fears of a global trade war. A look at the Fear and Greed Index computed by CNNMoney shows that investor sentiment is hitting record lows:
fear and greed


However the Vix is yet to take out the February highs and suggests that there is no major panic yet:

volatility vix


Also the NYSE McClellan Summation Index (courtesy stockcharts) has just begun breaking down again following the recent rally and has more room to fall suggesting more selling ahead:

summation index


Taken together we probably are headed for more selling and panic that should take us a lot lower to the major break out zone of the S and P 500 near 2400 first before any relief rallies occur.

Wednesday, 14 February 2018

Bond Yield Spike Signaling Brand New Crisis

A very interesting chart from Marketwatch.com that shows every time bond yields tagged their long term down trend line a crisis of some proportion erupted we finally manage to pop above that line sowing the seeds for the next major crisis:
financial crisis 2018


What is interesting is as Northmantrader points out the the S and  P 500 ten year yield ratio is showing signs of a major long term top suggesting a significant asset allocation out of stocks into bonds possibly on flight to quality fears when the next crisis commences:
stock bond ratio

Friday, 1 December 2017

Are Mutual Funds the Best Investment Vehicles? Think Again!

Mutual funds are very good investment avenues for the average investor. There is a popular belief that mutual funds are terrific investment vehicles because they potentially diversify risk away. A look at some of the best mutual funds in the recent past paints a rather interesting picture:

mutual fund comparison

source: spotalpha.com

What is interesting in the above chart  is that the returns above closely track each other. Funds that take high risk deliver higher returns while funds that take lower risk deliver lower returns. Thus it appears that none of the funds are consistently generating excess returns relative to the risk they are taking.

So how do we solve this problem? Why not consider an optimized portfolio of stocks that can produce significantly superior returns for a given level of risk? Enter the portfolio optimizer tool from Spotalpha.  Set your maximum risk profile (say -10%). Identify stocks and keep optimizing till you find a portfolio that provides maximum performance within identified risk profile. Allocate to these stocks and comeback every 15 days or so to check if there are any new re-balancing suggestions to the allocation. You are now on the path to superior returns.

 An optimized portfolio of stocks like this one delivered +154% return at a lower draw down risk of -5%, when compared to the best mutual fund which delivered +28% return for a draw down risk of -10% on an annual basis:
portfolio optimizer spotalpha

Thursday, 23 November 2017

Indian Market Volatility Surging Relative to US Market Volatility

Indian market volatility has been surging off late relative to US market volatility much like in November 2016 when the last meaningful correction of 10% occurred. With the market close to record highs could complacency kill the cat yet again? Possible triggers - over valuation (p/e > 25), over bullish technicals, a slowing economy, you name it.

Visit StockCharts.com to see more great charts.

Thursday, 2 November 2017

Daily Market Insight

Here is your daily insight from global financial markets. Today's post is an aggregate of interesting news and views form the Stock, FOREX, Commodity markets and the Economy:

Tuesday, 31 October 2017

Daily Market Insight

Here is your daily insight from global financial markets. Today's post is an aggregate of interesting news and views form the Stock, FOREX, Commodity markets and the Economy:

Thursday, 26 October 2017

Daily Market Insight

Here is your daily insight from global financial markets. Today's post is an aggregate of interesting news and views form the Stock, FOREX, Commodity markets and the Economy:

Tuesday, 24 October 2017

Daily Market Insight

Here is your daily insight from global financial markets. Today's post is an aggregate of interesting news and views form the Stock, FOREX, Commodity markets and the Economy:

Thursday, 12 October 2017

Daily Market Insight

Here is your daily insight from global financial markets. Today's post is an aggregate of interesting news and views form the Stock, FOREX, Commodity markets and the Economy:

Tuesday, 10 October 2017

Daily Market Insight

Here is your daily insight from global financial markets. Today's post is an aggregate of interesting news and views form the Stock, FOREX, Commodity markets and the Economy:

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My Asset Allocation Strategy (Indian Market)

Cash - 40%
Bonds - 20%
Fixed deposit - 20%
Gold - 5%
Stocks - 10% ( Majority of this in dividend funds)
Other Asset Classes - 5%

My belief is that stocks are relatively overvalued compared to bonds and attractive buying opportunities can come along after 1-2 years. In a deflationary scenario no asset class does well other than U.S bonds, the U.S dollar and the Japanese yen, so better to be safe than sorry with high quality government bonds and fixed deposits. Cash is the king always. Of course this varies with the person's age.