High returns can be exciting, but they don’t always mean an investment moves in step with the broader stock market. Taking the time to evaluate correlations helps you understand how an asset behaves in different market conditions. This insight is key to setting realistic expectations and building trust with your clients by ensuring they’re fully informed about the risks and potential outcomes.

For many, investing in the stock market means making educated guesses about an inherently uncertain future. Despite this unpredictability, certain economic indicators have consistently helped identify potential market trends. By analyzing their timing, patterns, and critical levels, advisors can gain valuable insights into market behavior. In this blog, we discuss five indicators that have stood the test of time.

Rebalancing plays a crucial role in portfolio management, helping keep investments aligned with your clients' objectives and risk preferences. While many advisors rely on strategies like time-based or threshold rebalancing, there’s a powerful alternative to explore: combining time-based rebalancing with percentage-based upper and lower allocation limits. This method brings added structure, flexibility, and discipline to portfolio management, all while minimizing unnecessary trades.

Market downturns can be unsettling, but they also offer a chance to reinforce smart investing habits. Advisors are instrumental in guiding retail investors toward strategies that withstand volatility and reduce losses. Mistakes like panic-selling, fleeing to cash, or holding onto poor investments can derail long-term goals. The iQUANT Portfolio Optimizer helps advisors create diversified, low-correlated portfolios that reduce risk, stabilize returns, and encourage discipline.

As Bitcoin continues to gain traction, investment advisors are increasingly exploring its role in traditional investment portfolios. Known for its high volatility, Bitcoin’s moderate-to-low correlations with stocks, bonds, and gold make it an appealing tool for diversification. By understanding Bitcoin’s unique performance metrics—like its capture ratios and distinct correlation levels—advisors can strategically balance portfolios to include growth potential without overloading on risk.

Many investment advisors rely on basic metrics like top-line beta and correlation to gauge investment risk and movement relative to the market, yet these single values often paint an incomplete picture. iQUANT challenges this by analyzing beta and correlation separately in both rising and falling markets, providing a clearer view of an asset's true behavior. This refined approach uncovers nuances—like an investment’s resilience in downturns or amplified growth in bullish periods—that are often missed with top-line numbers alone. iQUANT’s insights offer advisors a more accurate way to align investment choices with clients’ needs for growth and stability.

Understanding how political landscapes impact market performance can be a powerful tool for investment advisors aiming to make smart decisions for their clients. This blog explores how different political scenarios—like Republican or Democratic control or a split Congress—have historically influenced returns in certain market sectors and equity styles. Using decades of data from major sources like Morningstar, S&P Capital IQ, and Bloomberg, advisors can better align their strategies with political cycles, helping portfolios stay strong and take advantage of growth opportunities linked to government policy changes.

The traditional 60/40 portfolio—60% stocks and 40% bonds—has long been a cornerstone of balanced investment strategies, but recent market shifts have led advisors to reconsider its makeup. Bonds, while stable in the past, have struggled in today's inflationary and rising-rate environment, sparking interest in alternatives like gold. Gold, though it doesn't provide income, has historically acted as a strong hedge in times of crisis. A blended approach, such as a 60/20/20 portfolio with stocks, bonds, and gold, may offer a better balance of risk management and returns, allowing investors to adapt to evolving market conditions.

For investment advisors, it's important to understand how equal-weight and cap-weighted strategies differ when building portfolios for clients. While cap-weighted indices often give more weight to larger companies, equal-weight indices distribute exposure more evenly. Over time, these differences can significantly impact portfolio performance. For instance, equal-weight strategies have historically delivered stronger long-term returns across various market segments, such as large-cap, mid-cap, and small-cap stocks. At iQUANT, we prefer the equal-weight approach for its potential to enhance diversification and mitigate risk, helping portfolios perform better in the long run.

Based on conversations we've had lately, it seems like it's that time of the year again to dive into the differences between CAGR (Compound Annual Growth Rate) and Average Annual Return (AAR). While iQUANT relies on the more accurate CAGR to reflect consistent, compounded growth, many traditional investment products and SMAs (Separately Managed Accounts) tend to focus on AAR, which averages annual returns without considering the compounding effect. This distinction is crucial, especially when dealing with volatile market conditions, as CAGR offers a clearer picture of an investment’s true performance over time compared to AAR's often misleading snapshot. Understanding these differences can help you guide clients more effectively, setting realistic expectations and aligning their strategies with long-term goals.

The gap between housing prices and household incomes is widening, making homeownership increasingly difficult for many Americans. While home prices have surged over the years, incomes have lagged behind, with the price-to-income ratio jumping from 3.5 in 1984 to 5.8 in 2022. Factors like high interest rates in the past, the 2008 housing crisis, and supply shortages have all contributed to this issue. To address the problem without relying on government intervention, market-driven solutions such as shared-equity programs, wage growth from private-sector initiatives, and innovative mortgage products can help make homeownership more accessible while stabilizing the broader economy.

As an investment advisor, staying informed about potential economic downturns is crucial for communicating with clients. Three significant indicators—yield curve inversion, the Leading Economic Index (LEI), and unemployment trends (via the Sahm Rule)—are showing signs of risk. The yield curve has been inverted since late 2022, the LEI has been declining for months, and unemployment figures are trending upward, indicating a possible recession.

In times of uncertainty, it’s worth focusing on sectors like utilities, consumer staples, and healthcare, which tend to remain stable during downturns. Advisors should also consider high-quality bonds, dividend-paying stocks, and gold, as they’ve historically performed well in recessions.

As 2024 unfolds, the economic climate is beginning to echo that of the mid-1990s, a period when the Federal Reserve moved to cut interest rates in an effort to sustain growth following a tightening phase. Back then, these rate cuts sparked major changes across financial markets, leading to small-cap and growth stocks outperforming, bonds rallying, gold gaining strength, and the U.S. dollar weakening. Fast forward to today, and while the overall setup feels familiar, the presence of cryptocurrencies like Bitcoin introduces an entirely new dynamic. With their potential to serve as alternatives to traditional currencies, they could see significant gains as well. This article will delve into how a rate cut in 2024 might affect stocks, bonds, gold, the dollar, and the ever-evolving cryptocurrency landscape.

As artificial intelligence (AI) continues to grow, along with the data centers supporting it, it's transforming the investment world across several key sectors. This shift brings exciting opportunities but also some risks for investors. Companies like Amazon, Microsoft, and Google are leading the charge, using AI to improve their cloud services. Meanwhile, semiconductor makers such as NVIDIA and AMD are seeing increased demand for the AI processors they produce.

The rising need for data storage is also boosting data center REITs, which offer investors the chance for steady income and long-term growth. However, the rapid expansion of AI is challenging traditional energy sectors like oil and gas, as these industries may face decreasing demand due to the push for more sustainable energy options.

For advisors, it's important to understand these changes to help clients take advantage of new opportunities while managing the risks that come with them.

If a company believes in itself enough to buy back its own shares, shouldn't we also take notice? At iQUANT.pro, we've harnessed the power of share buybacks, incorporating this strategy into our equity models to enhance performance. Share buybacks have consistently proven to be a strong indicator of potential stock gains, regardless of the region, sector, or market style. By reducing the number of shares outstanding, buybacks can boost earnings per share and drive up stock prices, offering a more tax-efficient and flexible way for companies to return capital to shareholders compared to dividends. This approach not only signals management's confidence in the company's future but also creates valuable opportunities for investors seeking reliable growth. Dive into the historical benefits and explore why companies that engage in share buybacks often outperform the market, supported by compelling real-world data and examples.

Curious about why some people benefit more from new money in the economy while others struggle with rising prices? This is the Cantillon Effect in action—a phenomenon that explains how the flow of money creates inequality and fuels inflation. Dive into this fascinating topic to see how it played out during the COVID-19 pandemic and why some believe that a return to the gold standard could offer a solution to these economic imbalances. Discover how real growth comes from innovation, not from printing more money.

As layoffs (and layoff announcements) continue to rise across multiple industries and market cap sizes, the economic outlook for 2024 is becoming more uncertain. This uncertainty means that investment advisors must be more vigilant than ever. Diversifying client portfolios to minimize risk is critical, but so is maintaining open, honest communication with clients about the potential challenges on the horizon. By including sectors and strategies that tend to be more resilient during economic downturns in their portfolios, advisors can help safeguard their clients' investments. This approach not only helps clients reduce potential down-market capture but also positions them for less volatile growth. Ensuring clients feel informed and supported during these times is key to maintaining trust and confidence in the advisor-client relationship.

The original meaning of "inflation" wasn't directly tied to rising prices, as measured by indices like the Consumer Price Index (CPI). Instead, it described an increase in the money supply within an economy, which could lead to higher prices under certain conditions.

M2, a broader measure of money supply than M1, includes liquid assets such as currency, demand deposits, savings deposits, small time deposits, and retail money market funds. Since 2009, M2 has surged by over 160%, reaching about $21.5 trillion due to economic support measures following the 2008 financial crisis and the COVID-19 pandemic. Recently, M2 growth has stabilized around $21 trillion, indicating a potential tapering of the rapid money supply increase.

The gold standard was a system where the value of U.S. currency was directly linked to gold, providing stability because the money supply was limited by the amount of gold. In 1971, the U.S. abandoned the gold standard due to economic pressures, foreign exchange issues, and the need for more flexible monetary policy, replacing it with a fiat money system. This change allowed for unlimited money printing, leading to potential inflation and economic instability. During the 2008 financial crisis, the Federal Reserve's actions to lower interest rates and increase the money supply initially weakened the dollar but aimed to stabilize the economy and maintain trust in the currency's value.