Three reasons to consider bank stocks

Valuations and regulations are among the trends that we’re watching in this industry

Nick KalivasBank stocks have spun their wheels for most of 2017. Year to date through June 9, the KBW Bank Index (BKX) had risen 3.03% compared to 9.61% for the S&P 500 Index. Banks fizzled as the reflation trade faded and the outlook for fiscal stimulus and meaningful regulatory changes was delayed by the political situation in Washington, DC. However, I believe the banking industry may warrant another look for three reasons:

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Commodities: Time to buy when others are selling?

As outflows increase, oil fundamentals are strengthening

As I travel around the country to meet with institutional clients, I often hear this question: “What is everyone selling? Because that’s something I’m really interested in buying.” These are clients who have the confidence and experience to contradict the herd mentality that causes many investors to chase market returns (which often results in buying near market tops while selling near market bottoms).

That question is my cue to start talking about commodities. 

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Opportunities emerge as the ‘Trump trade’ unwinds

As the future of new policies becomes murky, investors seek opportunities that are grounded in today’s realities

The “Trump trade” has officially unwound in the global currency markets, reflecting investors’ fading confidence in Washington’s ability to pass growth-inducing legislation. After experiencing a post-election boost on the back of President Donald Trump’s victory late last year, the US dollar erased almost all of its gains as of May 17.1

While this week’s drop triggered dramatic headlines, my team believes that falling enthusiasm is creating an attractive entry point for investment opportunities based on real trends that we’re seeing today — not on inflated hopes for new policies.

The potential effects of a weaker dollar

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Commodities: Staying focused on the fundamentals

Despite recent market disruptions, a decline in global crude oil inventories could bode well for commodity investors

2017 has been challenging for commodities, which are down more than 9% on the year as of May 5, 2017.1 In the first week of May, commodity markets experienced heightened volatility in the wake of rising US crude oil output and expectations of a recovery in Libyan production. Copper and iron ore prices have also retreated on renewed concerns about Chinese demand.

Supply is critical to energy commodities

However, commodity investors need to look at

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Cheap for a reason? Beware the value trap

Combining value, momentum factors can help avoid hidden dangers of inexpensive stocks

Nick KalivasThe idea of purchasing stocks that are inexpensive relative to their peers, or to their intrinsic value, can make value investing an attractive investment strategy. After all, value has a well-earned reputation for being a rewarded factor, with famous investors like Benjamin Graham and Warren Buffet known for their value-based investment approaches. Value is also grounded in academic research. The groundbreaking Fama-French Three Factor Model incorporates value, along with the size and market factors, to help portfolio managers improve the security evaluation process.

What is a value trap?

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Examining factor performance in the first quarter of 2017

Growth and momentum strategies make a comeback as other factors take a breather

Nick KalivasThe breadth of factor performance narrowed significantly in the first quarter of 2017. During this time, only four factor-based indices outperformed the broad-market S&P 500 Index, compared with 17 in the previous quarter. The large- and mid-cap growth and momentum factors were the clear winners during the first quarter, outperforming the S&P 500 Index by sizeable margins.

Headwinds following November’s elections

Many factors faced headwinds following a strong post-election equity rally, with market gains highly concentrated. In fact, nearly a quarter of

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