Rampant stock market fears shake investor confidence during the recent Fed Chair transition from Yellen to Powell.

Charlene Vos

2018-02-03 07:42:00 Sat ET

Quant Quake 2.0 shakes investor confidence with rampant stock market fears and doubts during the recent Fed Chair transition from Janet Yellen to Jerome Powell. This healthy fundamental recalibration indicates the recent fact that 96% of all S&P 500 stocks experience 20% drastic declines from their own 52-week high share prices. Key investor concerns relate to U.S. inflationary momentum and bond yield appreciation. As professional forecasters mull over the inexorable and mysterious trade-off between inflation and unemployment, the new Federal Reserve chairman tends to retain a hawkish monetary policy stance. These forecasters predict that the Federal Reserve may hike the interest rate at least 3 to 4 times this year. This neutral interest rate curtails U.S. inflation near full employment well within Powell's congressional dual mandate.

AQR money manager and founder Cliff Asness points out that the U.S. financial system remains robust with less leverage and fair valuation despite the recent stock market plunge in early-February 2018. Asness believes in his conservative implementation of quantitative fundamental strategies across the vast majority of his factor portfolios of stocks, bonds, commodities, and currencies.

His favorite value and momentum factor strategies resonate with Warren Buffett's long-term asset investment philosophy: *Price is what we pay, and value is what we get. We should be fearful when others are greedy, and we should be greedy when others are fearful.* In his recent letter to Berkshire Hathaway shareholders, Warren Buffett emphasizes that stock market corrections are often both normal and unpredictable. From a long-run perspective, the U.S. stock market sometimes goes *on sale*. Thus, Buffett suggests that it is important for investors to replenish their cash positions in order to take advantage of sporadic stock market corrections. When these corrections take place, the stock price often fall below the long-term equilibrium intrinsic value. Beyond conventional wisdom, greed is *good* and pays well in the tripartite form of capital gains, cash dividends, and share repurchases.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

U.S. trading partners such as the European Union, Canada, China, Japan, Mexico, and Russia voice their concern at the WTO.

James Campbell

2018-07-05 13:40:00 Thursday ET

U.S. trading partners such as the European Union, Canada, China, Japan, Mexico, and Russia voice their concern at the WTO.

U.S. trading partners such as the European Union, Canada, China, Japan, Mexico, and Russia voice their concern at the World Trade Organization (WTO) in ligh

+See More

Lyft seeks to go public with a dual-class stock ownership structure that allows the co-founders to retain significant influence.

Amy Hamilton

2019-03-11 10:32:00 Monday ET

Lyft seeks to go public with a dual-class stock ownership structure that allows the co-founders to retain significant influence.

Lyft seeks to go public with a dual-class stock ownership structure that allows the co-founders to retain significant influence over the rideshare tech unic

+See More

Fed Chair Jerome Powell increases the neutral interest rate to a range of 1.5% to 1.75% in his debut press conference.

Chanel Holden

2018-03-21 06:32:00 Wednesday ET

Fed Chair Jerome Powell increases the neutral interest rate to a range of 1.5% to 1.75% in his debut press conference.

Fed Chair Jerome Powell increases the neutral interest rate to a range of 1.5% to 1.75% in his debut post-FOMC press conference. The Federal Reserve raises

+See More

AYA fintech finbuzz illustrative video tutorials on YouTube

Amy Hamilton

2019-05-05 10:46:10 Sunday ET

AYA fintech finbuzz illustrative video tutorials on YouTube

This video collection shows the major features of our AYA fintech network platform for stock market investors: (1) AYA stock market content curation;&nbs

+See More

American parents often worry about money and upward mobility for their children.

Becky Berkman

2019-01-03 10:38:00 Thursday ET

American parents often worry about money and upward mobility for their children.

American parents often worry about money and upward mobility for their children. A recent New York Times survey suggests that nowadays American parents spen

+See More

European Commission President Ursula von der Leyen now protects the European circular economy and green growth from 2020 to 2050.

Dan Rochefort

2019-12-22 08:30:00 Sunday ET

European Commission President Ursula von der Leyen now protects the European circular economy and green growth from 2020 to 2050.

European Commission President Ursula von der Leyen now protects the European circular economy and green growth from 2020 to 2050. The new circular economy r

+See More