Insights

Taking Advantage of Today’s Low Interest Rate Environment

As a result of the coronavirus pandemic and associated economic shutdown, the Federal Reserve has continued its course of accommodative monetary policy. In March, it cut its benchmark interest rate to 0.0% – 0.25%. While this has provided some challenges for savers and more risk-averse investors, it can present some beneficial opportunities as well.

With rates near historic lows, here are some ways in which you might benefit from current monetary policy:

Tech Bubble Déjà Vu?

Executive Summary

• Market Capitalization of 5 largest stocks approaching levels of previous stock market bubbles
• Indications are mixed as to whether a bubble exists, but enough to be on a bubble alert
• Prudence suggests not being overly reliant on the largest firms and Tech stocks in general
• Make sure there is an allocation to various laggard assets, as they could outperform later

For over a decade now, we have witnessed a prolonged cycle in which growth stocks – particularly large technology companies – have significantly outperformed most other U.S. stocks.  Additionally, U.S. stocks overall have far outperformed foreign stocks over the same time period.  As a result, we are now experiencing one of the largest divergences in performance between these large growth stocks and the rest of the stock market. This has also resulted in the five largest U.S. companies taking a very large share of the entire U.S. stock market, and the global stock market.  This is very reminiscent to conditions just prior to the Tech Bubble that burst in 2000.  How real or imminent is this risk?   Is it time to seek other alternatives?

WESCAP Group 2020 2nd Quarter Market Update

Global monetary and fiscal stimulus on an unprecedented scale along with business reopening measures have done wonders this last quarter for global stock markets, commodities and credit-sensitive fixed income markets. 

Improving Financial Security During the Current Pandemic

The COVID-19 pandemic has had a devastating economic effect worldwide on both personal health and finances. It is during these times of crisis that elevated uncertainty and volatility can cause significant stress when considering the long-term effects an event like this could have on your economic well-being.

WESCAP’s Mid-April Take on the Coronavirus Outbreak and Investment Implications

Summary:  Covid-19 appears to be retreating.  Many countries can begin to reopen large parts of their economies in the next month or two. Much of the economic damage is still unknown, but it could be worse than expected, though it may reverse fairly quickly.  There is a good chance that stock prices saw their lows in late March, but some additional price risk may reappear as economic fears reach a maximum over the next few months.