Richard Bernstein Advisors

For years, the emphasis within fixed income investing has been to seek security-specific alpha in an illiquid bond market where no single security significantly impacts portfolio returns.

An increasing number of investors believe that value investing might never again be successful. We think that is a strange conclusion because valuation is critical to every transaction in the economy. An economy cannot function properly without thoughtful value assessments. In our latest insight, we analyze the differences between value and growth investing over time and outline the generational opportunities that investors may be overlooking.

The further acceleration and broadening of corporate profit growth supports RBA’s bullish near-term outlook for many regions and sectors of the stock market. However, when constructing portfolios, it has paid to separate the equity asset allocation decision from the equity selection decision.

There are many historical relationships within financial markets based on sound economic theory, which accordingly repeat cycle after cycle. High yield bonds and small cap stocks typically move in line with each other, but the two have diverged since 2022.

In our latest research insight, RBA's Senior Research Analyst, Matthew Poterba, explains the numerous positive developments that help explain China's strong year-to-date outperformance.

Investors often forget that nothing in the financial markets is permanent. Regardless of the hype or castigation, what’s hot eventually becomes cold and what’s cold eventually becomes hot. While we remain very skeptical of today’s market’s heroes, we think the range of investment opportunities is historically broad, historically attractive, and a once-in-a-generation opportunity.

The US industrial renaissance is not a new theme for RBA. We first wrote about it in 2012 when we argued that US corporations had moved operations overseas because they were too focused on labor costs, and were ignoring transportation, governmental, geopolitical, and supply chain risks.

The current speculative environment seems to increasingly resemble the Technology Bubble of 1999/2000. All bubbles eventually burst and the burst of the Tech Bubble led to the so-called lost decade in equities.

The basic tenets of building wealth, like having a well-diversified portfolio with long time horizons, are not difficult concepts that are relatively easy to implement. So, why don’t people follow them? In our latest insight, we analyze several risk/return charts across multiple time horizons and reveal the results that investors tend to find surprising.

In what was supposed to be the “year of fixed income,” 2023 proved to be an OK year, but not a generational one. As we shift gears into 2024, spreads are tight, rates are low, and the market is pricing in a whopping six interest rate cuts before year-end.

2023 will likely go down in history as a year of extreme speculation. However, we believe there are once-in-a-generation investment opportunities for 2024 resulting from that overly speculative myopia.

History shows that returns are greatest when capital is scarce. But investors need to also realize that risks escalate when there is a glut of capital.

Whether famous or infamous, the Magnificent 7 stocks have been 2023’s stock market story. However, the fundamentals of the Magnificent 7 aren't uniquely superior, and the breadth and depth of other growth opportunities seems historically large and attractive. In our latest insight, we complete an analysis of US companies with expected earnings growth greater than 25% and compare it against the Magnificent 7 stocks.

Read our latest insight to learn why we believe the economy isn't landing but that we see profits taking off suggesting a once-in-a-generation investment opportunity.

In our latest fixed income insight, we highlight four compelling investments for the remainder of 2023 and into 2024.

Read our quick insight to learn why investors should be careful when Wall Street starts to feel like Easy Street.

We started RBA in 2009 primarily because we thought the US stock market was entering one of the biggest bull markets of our careers. However, most investors did not agree with our bullishness. Now, risk aversion seems a thing of the past.

It’s time for our annual August report, “Charts for the Beach.” Each year we highlight five of our favorite charts we think consensus is currently overlooking. So, head for the beach, but be safe and heed the warning about the critical lifeguard shortages. Yet another sign the labor markets are historically tight!

Building wealth isn't difficult, so why don't people do it? As younger generations reach the point where they have finally saved enough to begin investing it may seem overwhelming to know where to start.

Many stock market observers have commented regarding the market’s narrow leadership. However, few observers agree why this narrow leadership is occurring. Some, like us, believe it's purely speculation and others believe there's fundamental justification for it.

It has been over seven months since the October lows, and during this time, the S&P 500® has rallied over 19%. Naturally, investors are pondering whether this marks the beginning of a new bull market.

A quick PSA from RBA: Beware of the coming credit crunch. The key goal of tightening monetary policy is to reduce the flow of credit. It is also important to note that the weakest links always default first. This cycle is so far no different.

We've described the past several years' stock market as a seesaw in which the "market" was the fulcrum of the seesaw. On one side of the seesaw sit the highly speculative growth sectors and on the other side, sit virtually everything else in the global equity markets.

What's on the menu? Heading into a profits recession, there are many things to consider when building a portfolio. Here's a sneak peek at what we are serving up.

Every news item these days seem to swing between extremes. When in reality, these bank failures are not atypical. ​Read our latest insight to learn what similarities these recent bank failures have with previous failures and what the warning signals are.

Read our latest insight where Dan Suzuki explains what investors need to know about the Silicon Valley Bank collapse.

Read our latest insight to learn why we believe this year's market rally is just speculation and how we are positioning our portfolios for a change in leadership.

Read Michael Contopoulos' latest report highlighting opportunities outside of Investment Grade corporate bonds and why one does not need to own credit to generate income at the moment.

Last year an infamous cryptocurrency ad featured the slogan “fortune favors the brave.” And while historically fortune does favor the brave, there is a difference between courage and blind faith.

During the holiday season, everyone is looking for a good deal. While searching by the highest percentage discounts seems like it may lead to a steal, the results tend to be underwhelming. Investors often make the same mistake during bear markets.

2023 may be another difficult year for investors who hope to relive the speculative markets of 2020 and 2021.

Remember, the Fed hikes short-term interest rates to slow long-term growth and inflation.

One of the reasons we formed RBA in 2009 was we thought the US was entering perhaps the biggest bull market of our careers.

It has always been important to separate one’s political views from one’s investment portfolio.

Investors see a myriad of unknowns right now, and popular discussion continues to focus on a dichotomy between growth and cyclicals. We think there is a third choice that's being ignored.

We more than doubled our portfolios’ duration in a single day this summer.

Bubbles don't deflate overnight and bear markets always signal a change in leadership, yet investors appear eager to jump back into owning prior cycle winners.

It’s time for our annual August report, “Charts for the Beach.” Each year we highlight five of our favorite charts we think consensus is currently overlooking. Load up the cooler, get your towel and chair, and enjoy the charts! And, watch out for those sharks!!

We’ve all heard the famous Yogi Berra quote, “Nobody goes there anymore. It's too crowded.” Investors today seem jazzed up on an opposite but similarly absurd concept: Wall Street thinks it’s a huge buying opportunity because everybody’s too bearish. In his latest Quick Insight, Dan Suzuki analyzes explains seven signs that suggest that investors have yet to capitulate.

Global liquidity has tightened dramatically this year, which may be a headwind to global equity markets. However, not all central banks are tightening because not all countries have an inflation problem. Our latest research insight explains why we think Japan and China warrant a closer look.

The investing world seems highly uncertain these days. Investors are understandably having trouble balancing earnings, the Fed, fiscal policy, inflation, economic growth, disease control, and geo- and US politics. Read our latest report to learn about the two certain events that are central to our current portfolio positioning.

Given year-to-date fixed income returns, one would be forgiven if they never wanted to own the asset class again. Such a view, however, could prove costly as, for the first time in a year, areas of the market are starting to look attractive.

Bear markets always signal a leadership change within the overall equity market. The leadership going into a bear market is rarely, if ever, the leadership coming out. Because of this rule of thumb, we view bear markets as periods of extreme opportunity.

In our latest insight, we analyze the recent DALBAR study to determine how well (or not well) active fixed-income investors performed during the bull market and explain what we believe will be the best approach for fixed-income investing given the start of a pro-inflation paradigm shift.

To start, let’s discuss what diversification is and what it is not.

The global economy seems to be significantly changing, yet investors remain very hesitant to alter their basic portfolio strategies. As they did around 2010, investors are using the old leadership as their portfolios’ core. We think this could be a mistake.

The 2s10s curve is once again knocking on the door of becoming inverted (while some curves like the 3s10s and 5s10s already are), causing quite a stir among market watchers that recession is imminent. In his latest report, Michael Contopoulos examines the 2s10s yield curve movement leading up to the past 6 times the US economy slipped into a recession and discusses what could be different this time.

With the sell-off in bubble assets beginning to broaden out and accelerate this year, many pundits are suggesting the bubble has already deflated.

We all love alliteration (hence, Rich’s favorite term to describe the Fed is “lily-livered”) but when it comes to the “Powell Put” or the “Powell Pivot,” we think investors need to understand the facts and intentions of the Federal Reserve before accepting a saying just because it rolls smoothly off the tongue.

Investors have been spoiled by the trend in falling long-term interest rates over the past 40 years, but the economic backdrop is changing. Read our new report where we explain the concept of equity duration and analyze how interest rates, earnings, and the relationship between the two can impact equities.

In October, we published analysis demonstrating why it’s never too early to sell a bubble. Unsurprisingly, investors still seem reluctant to reduce their bubble exposure, preferring instead to move up in bubble quality.

In his latest report, Dan Suzuki shows that when a bubble collapses, everything in it goes down, including proven leaders and tomorrow's winners, regardless of valuation, beta or quality. Thus, the only way to protect from a bubble is to get as far away from it as you can.

While the Fed has now dropped "transitory" from their communications, the US and global economies might indeed be in a transitory state, and the important investment question is transitioning to what? It seems highly unlikely the economy will return to its pre-pandemic state. In our year ahead outlook report, we highlight our views on the best investment opportunities for 2022, given our analysis of an economic transition during the coming year.

With inflation surprising to the upside and lasting longer than most expect, we believe investors will need to rethink portfolio management and what it means to own a balanced portfolio. Michael Contopoulos's latest report addresses investors' many questions related to our view on inflation and its implications for the future.

Investors become myopic during bubbles. As we’ve repeatedly highlighted, it is exactly that narrow-mindedness that presents opportunities because investors ignore the broad range of potential investments outside the bubble. In this report, we outline the opportunities available outside of today's bubbles and analyze the fundamentals that support our views.

When it comes to RBA's view that we're in a bubble, investors seem to fall into two camps- "duh" and "you just don't get it." But recognizing the bubble is only the first step in dealing with the bubble. In his latest report, Dan Suzuki analyzes historical performance data from the 2000 Tech Bubble to determine how early is too early to reduce exposure to bubble assets.

We have become famous (or infamous) regarding our views that there is a bubble in long-duration assets. In this report, we investigate what’s causing such widespread bubbles, their potential effects on the overall economy, and the interesting investment opportunities resulting from the bubble’s misallocation of capital.

Investors are increasingly looking outside developed countries for investment opportunities, but it’s important to remember that not all Emerging Market countries are the same. In this report, we compare the opportunities in China & Brazil.

The global economy is changing, yet many investors seem to have static portfolios. RBA explains why we believe the current shift in market leadership will last longer than investors are expecting.

With very low inflation expectations for this year, Rich analyzes the shifts in the global and US economies that could impact inflation and explains how to position your portfolio for this change.

Read our year-ahead report to learn how this shift could lead to investment opportunities in 2021 and to understand RBA's positioning.

In RBA’s latest report, Rich revisits the "Earnings Expectations Life Cycle" from the perspective of growth versus value investors and outlines why growth investors need to be contrarians in 2021.

This year our annual summertime report, “Charts for the Beach”, visually highlights newsworthy issues that aren’t yet in the news.

Black swans are swimming in flocks. We highlight today’s biggest black -and white- swans that can hurt -or help- your portfolio.

Coronavirus is a global pandemic that few if any could have predicted, but it’s deteriorating fundamentals throughout 2019 into 2020 that set the table for the recent extreme market volatility. Now that volatility has clearly arrived, what‘s the strategy when black swans swim?

Every instance of financial speculation today is termed a “bubble”, but true financial bubbles are rarer than most investors believe and they go beyond the financial markets and pervade society.

Throughout this 10-year bull market, investors have been overly cautious toward equity markets and ignored “new highs”. Now in this late-cycle market environment, investors are piling into cyclicality, private equity and venture capital. It’s time to stop saying everyone is so bearish.

Smoke detectors and fire extinguishers are critical safety devices. But investors in every cycle ignore the markets’ warning signals regarding risk. Rather than ignore the warnings, we are dusting off and priming the traditional portfolio “fire extinguishers”.

Today’s markets are experiencing decreasing liquidity amid increasing volatility. To stay ahead, investors must adapt their strategies to the ever changing market environment and learn to invest like a chameleon.

Unprecedented market uncertainty is leading many investors to focus on the markets more than ever, but are they focusing on the right things? For our annual August report, Charts for the Beach, we highlight 5 charts that consensus is currently overlooking.

All too frequently investors use the rear-view mirror to determine an investment’s attractiveness. An upward sloping price chart often automatically makes a stock more attractive. Recent performance helps determine a “good” manager. Past interest rate movements can cause changes to bond portfolio duration.

One wayward tweet can send the markets spiraling in the short term, but RBA knows that in the long term, profits determine the direction of the markets, not politics.

Investors remain fixated on longer-duration bonds even as their risk increases. Duration is a measure of risk and myopically focusing on the long end of the curve while it appears to be significantly overvalued may prove fruitless.

Investors have remained on the sidelines for most of this 10+ year bull market, yet FOMO is leading many to join the party late. In this late cycle environment, one should consider sobering up before the punch bowl is taken away.

Investors’ current enthusiasm for piling money into next great tech unicorn is ominously reminiscent of March 2000. Might we be doomed to repeat the Tech Bubble?

The Fed’s constant balancing act between easing and tightening monetary policy is intended to influence banks’ lending habits, but as the old axiom goes; you can lead a horse to water, but you can’t make it lend.

RBA’s unique Pactive® investing approach has made us one of the largest and fastest growing ETF model managers in the United States. But we don’t choose our ETFs at face value. Instead, we treat each ETF as a portfolio before making our selections. Learn why our ETF “x-ray” approach is critical for our investment process.

We think it’s better to position our portfolios based on 2019 fundamentals than structuring them by looking backward at December 2018’s volatility.

Public policy can be corporate-friendly or corporate-unfriendly. But what if it’s corporate-uncertain? Then investors are faced with volatility. Part I of our Year Ahead investigates the current corporate-uncertain environment.

The US government’s debt problem isn’t new. It has been steadily growing for nearly 40 years, and growing interest expense has secularly weighed down domestic economic growth. Why has this happened and how do we fix it?

Most investors purchase insurance for their homes, vehicles and health, but rarely expand the practice to their investment portfolios. At RBA, we diversify our portfolios using negatively correlated asset classes, but just like insurance, it comes with a premium.

Investors seem overly concerned about equity market volatility, but ignore the growing risks in fixed-income and seem oblivious to the bonds’ already multi-year underperformance. One might say they are looking for risk in all the wrong places.

Don’t leave home without your summer essentials: sunglasses, sunscreen, towel and RBA’s Charts for the beach.

Investors appear to remain oblivious to how high inflation already is in the US relative to inflation rates around the world. With Washington DC policy overtly pro-inflation, investors need to be positioned for the overheating ahead.

Investing based on short term-market gyrations and noise from the 24/7 business news cycle rarely drives alpha. At RBA, we’d rather invest dispassionately based on market fundamentals and focus on longer time horizons. Remember to ignore the Tweet and invest for the meat.

When the Fed instituted ZIRP, investors were overenthusiastic to invest in the next great Unicorn. Now that rates are rising and money is no longer free, investors are beginning to realize that rational investing and positive cash flows trump hype and speculation.

If the only difference between playing for digital coins in mobile games and mining for cryptocurrencies is the ability to openly trade the coins for goods and services, one should wonder if the crypto frenzy is worth the hype and speculation. We think not.

Many income-oriented investors may not be appropriately positioned for the current market environment, with increasing inflation and looming tariffs poised to lead to significant underperformance.

Successful investing in this cycle has depended largely on following the business cycle and ignoring the myriad of fears. As the economy enters a late-cycle phase, investors need to recognize the characteristics of a late-cycle environment and how to accordingly position portfolios.

In the 9th year of this bull market, investors remain overweight bonds in an environment poised to drastically limit fixed income returns. It’s time to avoid bonds’ day of reckoning.

2017 turned out to be a better year for the stock market than most investors surmised. For 2018, we yet again see investors avoiding one of the longest post-war bull markets in history and continuing to ignore the fundamentals driving markets higher.

While Tech remains one of RBA’s largest overweight sectors in our portfolios, one thing to consider is the sector’s dirty little secret: it’s really a deep cyclical.

2008 may have generationally scarred investor psychology. As a result, many continue to disavow the current bull market and instead heed warnings of an impending bear market. We argue that fundamentals remain strong and the global equity markets are rife with opportunity.

Many investors no longer view the US as the global safe haven to turn to during bouts of volatility. We argue that US and global fundamentals remain strong, however, many global investors seem to be losing religion.

It’s time again for RBA’s annual ‘Charts for the beach,’ where we highlight what consensus is currently missing.

Investing based on headlines and political promises is rarely beneficial to one’s portfolio. It’s dispassionately investing for fundamentals that continue to drive the markets.

Many investors seem to be stuck in the middle of the false dichotomy between active and passive investing. At RBA, we argue it’s much more important for investors to ascertain which active or passive portfolio to buy and when to own it.

Political rhetoric may make it seem that the end is nigh, however, it’s fundamentals, not fear that will benefit your portfolio.

Many investors believe that November 8th was the catalyst for recent market performance, however, fundamentals began improving much earlier. Remember, it’s profits, not politics that matters.

Historical studies show individual investors are very poor asset allocators, and are undoubtedly no better at selecting ETFs. At RBA, our Pactive® Management portfolios combine the benefits of low-fee, transparent and liquid passive investments with RBA’s asset allocation expertise.

ETFs continue to play a highly disruptive role in money management. RBA has embraced this trend by employing what we refer to as Pactive™ Management, which is the active allocation, whether strategic or tactical, of passive investment instruments such as ETFs, stock baskets, and index funds. These Pactive™ portfolios have quickly become the fastest growing part of our business.

While many investors ascribe recent market performance solely to a post-election surprise, we argue that there’s a simpler explanation. Remember, it’s checkers not chess.

2017 is all about inflation. As many investors hold onto the notion of “lower for longer”, we recognize that re-inflation will likely take hold in the New Year and those positioned for an improving global economy will benefit.

Fears of a repeat 2008 bear market are causing many investors to remain wallflowers during the second longest bull market of the post-war period. We argue, this fear is unfounded and the opportunity cost of avoiding equities keeps growing and growing.

Bears might blame the bull market on the Fed, but it’s improving fundamentals that keep it on course. It ain’t just the Fed.