The Factor Report

Market Wrap

Stocks had a rocky start to the week, but were ultimately higher for the week ended July 23, 2021. Covid variant cases initially spooked investors, but it was all roses from there. On Thursday, the US weekly jobless claims came in much higher than expected. While that seems like bad news, it was seen as a relief and an indication that the Federal Reserve will not have to rush to raise interest rates.  In the meantime, stock buyers were rewarded with a spate of good news from corporate America. Although Netflix was punished for bad results, financial companies and traditional Dow components alike saw their shares rise on the back of strong earnings. Airlines were the exception as American beat expectations, but the stock sank on fears of the Covid variant. Bonds ended the week higher as the yield on the 10-year US treasury finished lower at 1.28%, according to MarketWatch.

Performance Summary

Geographically, the US carried the global markets with a return over 2%. Non-US Developed was flat and Emerging Markets was down over 2%. After favoring "re-opening stocks" early in the week, investors rotated into Tech and Tech-related stocks, giving them a decided advantage as they bested the S&P. Momentum and Quality were the winners from a factor perspective. The long-term results continue to demonstrate factor efficacy, as shown in the table to the right. As can be seen, for the 15-year periods 3 out of 5 factors win although Size is close for a fourth.

In The News

Please click here for an academic paper discussing why Nassim Taleb sees zero value in Bitcoin. He also wrote a great book called Fooled By Randomness.

Please click here for a discussion about when to claim social security. Editorial: this is highly dependent on the individual.

Please click here for a little-known strategy to make additional “back door” contributions to a Roth IRA if you make too much money. Note: this requires working for an employer that allows after-tax contributions to a retirement plan.

Disclosures

Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable or equal the corresponding indicated performance level(s). Moreover, you should not assume that any of the above content serves as the receipt of, or as a substitute for, personalized investment advice from Metric Financial.

USA is the MSCI USA index, Non-US Developed is the MSCI EAFE index, Emerging Markets is the MSCI Emerging Markets index, and All Country World is the MSCI ACWI index. One cannot invest in an index. Because the factor indexes have varying inception dates, some of the returns provided are back-tested and do not represent actual performance. Inception dates are as follows:

Momentum = MSCI ACWI Momentum NR USD Index (Inception: 11/30/95)

Value = MSCI ACWI Enhanced Value NR USD Index (Inception: 5/29/15)

Quality = MSCI ACWI Quality NR USD Index (Inception: 5/29/92)

Low Volatility = MSCI ACWI Minimum Volatility (USD) NR USD Index (Inception: 5/28/93)

Size = MSCI ACWI Risk Weighted NR USD Index (Inception: 4/6/11)

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All written content is for information purposes only. Opinions expressed herein are solely those of Metric, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.