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AMG Insights

March 14, 2019

What’s the biggest mistake investors make?

Buying high and selling low. Investors are plagued by human psychology. As a species, we learned to survive by paying close attention to recent events and assuming those events will be repeated. This strategy worked well for hunter-gatherers who quickly learned to flee from rustling bushes and to avoid eating white berries.

Unfortunately, in investing scenarios, this psychology leads many of us to buy stocks after share prices jump based on the assumption they will rise again. Similarly, we want to sell stocks after a price drop, thinking they will continue falling. This behavior leads to markets going on long runs either up or down based strictly on investor psychology. To make matters worse, many professional short-term traders are aware of this and jump on these trends, extending the movements even farther.

How does an investor cope with markets plagued with irrational decision makers? Any trend that can’t continue forever won’t. Eventually, markets revert to their long-term fundamental values. The key is to work with your advisor and examine every investment’s long-term potential. Then, have the courage to take some profits when stocks are rising and buy when the market is falling. This might cause some heartburn because it’s counter to our instincts, but that’s okay. You’re human after all.

March 7, 2019

Unicorns might run wild in 2019

Ride-sharing competitors, Uber and Lyft, are planning to drive their competition from the roads to the stock market in 2019, as each looks to shift from privately held to publicly traded. These moves could set off a wave of initial public offerings (IPOs) this year for several other high-profile unicorns—private, venture-backed companies with valuations in excess of $1 billion. Unicorns also working toward IPOs this year include Airbnb, Pinterest, Postmates and Slack.

Click here to read the full article.

February 26, 2019

Fed Chairman Powell Says Labor Force Participation Rate Key For Widespread Prosperity

In his February 26, 2019 Congressional Testimony, Fed Chairman Jerome Powell cited Labor Force Participation Rate (LFPR) as one of the key factors for increasing widespread prosperity in the United States. The Chairman cited the fact that the United States lags its peer group in LFPR, especially among young, uneducated men, as one of the main mitigating factors to such widespread prosperity. “It is a problem here that stands out relative to other countries.” Powell emphasized the need for legislative efforts to encourage work via retraining and eliminating disincentives for participation saying, “Incentives do matter, and if you go back to work, your pay should only go up.” A recent AMG White Paper, Wanted: GDP Growth at 3% or Higher; Needed: Higher Labor Force Participation Rate, helps to explain the concerns of the Fed Chairman and suggests some policy initiatives that Congress might want to consider to get people back to work.

Click here for the white paper.

February 21, 2019

Record junk-debt levels could mean trouble in downturn

Low interest rates since 2009 have driven yield-starved debt investors into riskier assets. The high-yield credit market now totals nearly $3 trillion split between high-yield bonds and leveraged loans. The growth of these markets has been spurred by a plethora of nonfinancial corporate debt, which stands at its highest level in U.S. history.

Click here to learn more, and look for an AMG white paper coming soon.

February 14, 2019

If China stimulates its economy, emerging-market equities might rally

Many emerging-market equities have more or less gone sideways since recovering from the 2008 financial crisis. Much of this price stagnation has been driven by China’s slowing economy, which dominates emerging markets in two ways. First, China’s economy is huge, and its equity market makes up 30% of the MSCI Emerging Market Index, a leading measurement of performance. Second, up until the early 2000s, emerging economies did business mainly with developed economies. But now emerging economies do business primarily with each other, and China is the nexus. Thus, any economic hiccup or government stimulus in China permeates emerging markets.

Click here to read the full article.

February 7, 2019

U.S. economy should slow in 2019 but keep on chugging to growth record

The U.S. economy is the little engine that could—it just keeps chugging along uphill. “I think I can. I think I can. I think I can.” And it shows no signs of derailing anytime soon. In fact, Americans this summer are likely to see the longest boom in U.S. history—a decade of continuous GDP growth. AMG National Trust Bank doesn’t anticipate a recession in 2019, although we expect growth to slow down a bit through 2020. It makes one wonder why America has all this sustained growth. Some reasons are obvious and some are not.

Click here to read the full article.

January 31, 2019

Sustainable investing allows investors to align their values with their investing.

How do you employ your capital? Do you invest in equities and bonds, or donate to charities and philanthropic endeavors? Many investors do both to achieve two different goals: financial returns and giving back to their communities. For those investors, these two goals represent mutually exclusive uses of their capital. Sustainable investing is a growing type of investing that may offer certain investors the ability to invest with both goals in mind. Similar investing is sometimes called Socially Responsible Investing or ESG (Environmental, Social and Governance) Investing.

Sustainable Investing graphic

Click here to learn more about sustainable investing at AMG.

January 25, 2019

Government shutdown should have little economic impact, unless…

The U.S. government shutdown—while disruptive to the lives of some 800,000 federal workers and bothersome to
millions of Americans in general—should not materially affect America’s 2019 first-quarter economic growth.
But the longer it continues, the more impact it could have. Click here to learn why:

January 17, 2019

Understanding Blockchain and Cryptocurrencies

Is the end near for Bitcoin and other digital currencies? What about the new technology on which they operate: blockchain? A new AMG Special Report, Understanding Blockchain & Cryptocurrency, delves into the technological, regulatory and market forces impacting blockchain and cryptocurrencies, and tells investors what to expect going forward.

Figure that shows the how blockchain technology works.

Click here for the white paper.

January 10, 2019

Wanted: GDP Growth at 3% or Higher; Needed: Higher Labor Force Participation Rate

The U.S. Labor Force Participation Rate is expected to decline as the baby boomer generation retires, and key groups of workers, including prime-age men, are dropping out at alarming rates, threatening GDP growth. How can the U.S. increase its Labor Force Participation Rate to mitigate these trends? AMG’s white paper, Wanted: GDP Growth at 3% or Higher; Needed: Higher Labor Force Participation Rate, suggests that public policy solutions can help, with significant implications for investors.

Figure that shows the Labor Force Participation Rate, Men Ages 25-54.

Click here for the white paper.

January 3, 2019

Finding Value in Active Management

What can investors expect from active management? AMG’s white paper, Finding Value in Active Management, examines historical trends and reviews key items investors should consider when researching active managers.

Figure that shows the amount of value added by active management has an inverse relationship with overall stock market returns.

Click here for the white paper.

December 27, 2018

Questions to Ask Yourself About Managing Your Wealth

Now that you have worked hard and have accumulated wealth, worrying about how to manage it and coordinating all the various advisors may have become burdensome. Knowing how all the “pieces fit together” can give comfort that allows you to enjoy what you have and may continue to create. If you are a little uneasy, taking an inventory on your wealth relative to who you are and your goals could help to put your mind at ease. AMG’s wealth management questions are intended to help you confirm your strategy in creating a strong wealth management plan, so you are well positioned for the future.

Click here for the questionnaire.

December 21, 2018

Building a Sound Financial Future

Taking a few moments to assess how you feel about your financial future can lead to a stronger commitment to finding the direction and focus needed to determine your financial goals and ultimately financial success for you and your family. AMG has found that creating a comprehensive financial strategy is one way to meet your goals, and while there are no guarantees about future financial success, you are more apt to meet your financial goals with a strategy. AMG has a simple quiz to help assess how well prepared you are for your financial future.

Click here to take the quiz.