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Owning Gold Is as Much About Diversification as It Is about Capital Appreciation (Advisor Perspectives, 6 min read) Hypothetically if the 10-year bond yield drops to 0.00% from today’s 0.68%, it will only provide investors 6% upside – insufficient to cushion 20% or 30% equity selloffs. Gold can replace bonds in a 60/40 portfolio since it exhibits a strong negative correlation with stocks during selloffs. Fundamentally, gold also rises with the growth of money and M2 money supply is growing at 23% YoY in the US, providing room for more capital appreciation. [Bullish Gold]
What Is Today’s Opportunity in Small-Cap Stocks? (Seeking Alpha, 7 min read) Small caps during the first quarter of 2020 underperformed large caps by over 10%, which is the most significant differential in 40 years. Russell investments remain bullish on small cap as they draw attention to a higher expected return, attractive valuation, a shift in investor sentiment (as lockdown eases) and a positive economic cycle as economies reopen.[Bullish Small Cap]
What Does a Second Wave Mean for Equity Markets? (JPAM, 2 min read) Recently, direction of growth has been a critical driver for the S&P 500, and, going forward, the level of growth will be more significant for the markets. The risk to valuation is low; do not expect the lows of March again even if cases rise. Additionally, uncertainty remains elevated amid the upcoming earnings season, and a balance of quality and cyclical stocks for investors can negate this.