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  • Model Portfolio

    Rebalancing act: adapting portfolios to changing markets

    Nov 11, 2024|ByBlackRock

    Model investment portfolio allocations created by BlackRock can help inform timely allocations and trades you make in your own portfolios.

  • Tax

    Tax loss harvesting with bond ETFs

    Nov 08, 2024|ByKaren Veraa, CFA

    Learn about the opportunities to tax-loss harvest bond funds to lower clients’ tax bills.

  • Fixed Income

    iBonds ETFs: What to do with maturing iBonds?

    Nov 08, 2024|ByKaren Veraa-Perry, CFA

    With 2024 iBonds ETFs maturing in late 2024, read our latest insight to learn a few ways to keep your clients invested and on track with their investment goals.

  • Market Insights

    BlackRock’s Monthly Market Outlook for Financial Advisors

    Nov 06, 2024|ByAdvisor Outlook

    Obtain exclusive resources from the Advisor Outlook team to help put markets in context, tying the best of BlackRock insights into actionable portfolio implications.

  • Market Insights

    Positioning around the U.S. election

    Nov 06, 2024|ByBlackRock

    Positioning around the U.S. election

  • Tax

    Time Value of Capital Losses

    Nov 04, 2024|ByLincoln Fleming, CPA/PFS, CFP, MAcc

    Learn how systematic tax-loss harvesting can reduce tax burdens and improve after-tax returns, especially when paired with active capital gain strategies.

Podcasts by BlackRock

Get to know our featured podcasts. In the Know is made exclusively for advisors and their clients. The Bid is our top-rated financial podcast produced for a wide range of investors.

Why the time may be right for 'liquid alts'

In the know podcast
In the know podcast /
Why the time may be right for 'liquid alts'

Bart Sikora, head of portfolio consulting for the Americas at Blackrock, explains the 'what, how and why' of the liquid alts category. That is: What are liquid alts…how do they fit in portfolio construction…and why more advisors might consider leveraging them for clients?

The Bid

This popular financial podcast is designed for a wide range of professional and individual investors. The Bid breaks down what's happening in the world of investing and explores the forces changing the economy and finance.

Listen to more episodes of The Bid podcast

Videos & Webinars

Within just a few minutes, get a breakdown and clear takeaways about the latest market events. Count on webinar replays and videos for timely insights on markets, geopolitics and economics.

 

Market take

Weekly video_20241111

Vivek Paul

Opening frame: What’s driving markets? Market take 

Camera frame

We are in a world where multiple, starkly different outcomes are possible. The decisive U.S. election outcome has stoked uncertainty about future U.S. policy.

At our 2025 Outlook Forum last week, BlackRock investment leaders met to discuss how to invest given large structural shifts happening now.

Title slide: Zeroing in on secular forces, not cycles 

1: Tracking the transformation 

We have seen unusually sharp swings in 10-year U.S. Treasury yields with key macro releases. We think that reflects investors viewing incoming data through the lens of a typical business cycle when actually structural changes are at play.

The goal of the Forum was to track the transformation being driven by these structural changes. We evolved our macro scenarios to better understand and position for the likely market impact. 

2: U.S. strength and geopolitics in focus

Our portfolio managers are broadly positive on U.S. stocks even if valuations look steep by some measures. The contrast with lagging European economic growth and stock performance remains stark.

Geopolitical fragmentation was consistently discussed given wars in the Middle East and Ukraine and tense China relations.

3: Gauging AI’s potential

AI and its energy and investment needs were still in focus following our June Forum. We generally agreed that the AI buildout can broaden to include other beneficiaries.

Quantifying AI’s longer-term economic impact remains a challenge, but we think it has the potential to reshape economies and boost economic growth.

Outro: Here’s our Market take 

Our Forum discussion sought to clarify how structural shifts are driving the investment opportunities we see while assessing what’s in the price.

We think having a solid framework is key for anchoring views in this unusual environment.

Closing frame: Read details: blackrock.com/weekly-commentary

General disclosure:This material is intended for information purposes only, and does not constitute investment advice, a recommendation or an offer or solicitation to purchase or sell any securities to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. This material may contain estimates and forward-looking statements, which may include forecasts and do not represent a guarantee of future performance. This information is not intended to be complete or exhaustive and no representations or warranties, either express or implied, are made regarding the accuracy or completeness of the information contained herein. The opinions expressed are as of November 2024 and are subject to change without notice. Reliance upon information in this material is at the sole discretion of the reader. Investing involves risks.

In the U.S. and Canada, this material is intended for public distribution. In the European Economic Area (EEA):this is Issued by BlackRock (Netherlands) B.V. is authorised and regulated by the Netherlands Authority for the Financial Markets. Registered office Amstelplein 1, 1096 HA, Amsterdam, Tel: 020 – 549 5200, Tel: 31-20-549-5200. Trade Register No. 17068311 For your protection telephone calls are usually recorded. In the UK and Non-European Economic Area (EEA) countries: this is Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock. In Italy, for information on investor rights and how to raise complaints please go to https://www.blackrock.com/corporate/compliance/investor-right available in Italian. In Switzerland, for qualified investors in Switzerland: This document is marketing material. Until 31 December 2021, this document shall be exclusively made available to, and directed at, qualified investors as defined in the Swiss Collective Investment Schemes Act of 23 June 2006 (“CISA”), as amended. From 1 January 2022, this document shall be exclusively made available to, and directed at, qualified investors as defined in Article 10 (3) of the CISA of 23 June 2006, as amended, at the exclusion of qualified investors with an opting-out pursuant to Art. 5 (1) of the Swiss Federal Act on Financial Services (FinSA). For information on art. 8 / 9 Financial Services Act (FinSA) and on your client segmentation under art. 4 FinSA, please see the following website: www.blackrock.com/finsa. For investors in Israel: BlackRock Investment Management (UK) Limited is not licensed under Israel’s Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 5755-1995 (the “Advice Law”), nor does it carry insurance thereunder. In South Africa, please be advised that BlackRock Investment Management (UK) Limited is an authorized financial services provider with the South African Financial Services Board, FSP No. 43288. In the DIFC this material can be distributed in and from the Dubai International Financial Centre (DIFC) by BlackRock Advisors (UK) Limited — Dubai Branch which is regulated by the Dubai Financial Services Authority (DFSA). This material is only directed at 'Professional Clients’ and no other person should rely upon the information contained within it.Blackrock Advisors (UK) Limited - Dubai Branch is a DIFC Foreign Recognised Company registered with the DIFC Registrar of Companies (DIFC Registered Number 546), with its office at Unit 06/07, Level 1, Al Fattan Currency House, DIFC, PO Box 506661, Dubai, UAE, and is regulated by the DFSA to engage in the regulated activities of ‘Advising on Financial Products’ and ‘Arranging Deals in Investments’ in or from the DIFC, both of which are limited to units in a collective investment fund (DFSA Reference Number F000738). In the Kingdom of Saudi Arabia, issued in the Kingdom of Saudi Arabia (KSA) by BlackRock Saudi Arabia (BSA), authorised and regulated by the Capital Market Authority (CMA), License No. 18-192-30. Registered under the laws of KSA. Registered office: 7976 Salim Ibn Abi Bakr Shaikan St, 2223 West Umm Al Hamam District Riyadh, 12329 Riyadh, Kingdom of Saudi Arabia, Tel: +966 11 838 3600. CR No, 1010479419. The information contained within is intended strictly for Sophisticated Investors as defined in the CMA Implementing Regulations. Neither the CMA or any other authority or regulator located in KSA has approved this information. In the United Arab Emirates this material is only intended for -natural Qualified Investor as defined by the Securities and Commodities Authority (SCA) Chairman Decision No. 3/R.M. of 2017 concerning Promoting and Introducing Regulations. Neither the DFSA or any other authority or regulator located in the GCC or MENA region has approved this information. In the State of Kuwait, those who meet the description of a Professional Client as defined under the Kuwait Capital Markets Law and its Executive Bylaws. In the Sultanate of Oman, to sophisticated institutions who have experience in investing in local and international securities, are financially solvent and have knowledge of the risks associated with investing in securities. In Qatar, for distribution with pre-selected institutional investors or high net worth investors. In the Kingdom of Bahrain, to Central Bank of Bahrain (CBB) Category 1 or Category 2 licensed investment firms, CBB licensed banks or those who would meet the description of an Expert Investor or Accredited Investors as defined in the CBB Rulebook. The information contained in this document, does not constitute and should not be construed as an offer of, invitation, inducement or proposal to make an offer for, recommendation to apply for or an opinion or guidance on a financial product, service and/or strategy. In Singapore, this is issued by BlackRock (Singapore) Limited (Co. registration no. 200010143N). This advertisement or publication has not been reviewed by the Monetary Authority of Singapore. In Hong Kong, this material is issued by BlackRock Asset Management North Asia Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong. In South Korea, this material is for distribution to the Qualified Professional Investors (as defined in the Financial Investment Services and Capital Market Act and its sub-regulations). In Taiwan, independently operated by BlackRock Investment Management (Taiwan) Limited. Address: 28F., No. 100, Songren Rd., Xinyi Dist., Taipei City 110, Taiwan. Tel: (02)23261600. In Japan, this is issued by BlackRock Japan. Co., Ltd. (Financial Instruments Business Operator: The Kanto Regional Financial Bureau. License No375, Association Memberships: Japan Investment Advisers Association, The Investment Trusts Association, Japan, Japan Securities Dealers Association, Type II Financial Instruments Firms Association) for Institutional Investors only. All strategies or products BLK Japan offer through the discretionary investment contracts or through investment trust funds do not guarantee the principal amount invested. The risks and costs of each strategy or product we offer cannot be indicated here because the financial instruments in which they are invested vary each strategy or product. In Australia, issued by BlackRock Investment Management (Australia) Limited ABN 13 006 165 975 AFSL 230 523 (BIMAL). The material provides general information only and does not take into account your individual objectives, financial situation, needs or circumstances. In New Zealand, issued by BlackRock Investment Management (Australia) Limited ABN 13 006 165 975, AFSL 230 523 (BIMAL) for the exclusive use of the recipient, who warrants by receipt of this material that they are a wholesale client as defined under the New Zealand Financial Advisers Act 2008. Refer to BIMAL’s Financial Services Guide on its website for more information. BIMAL is not licensed by a New Zealand regulator to provide ‘Financial Advice Service’ ‘Investment manager under an FMC offer’ or ‘Keeping, investing, administering, or managing money, securities, or investment portfolios on behalf of other persons’. BIMAL’s registration on the New Zealand register of financial service providers does not mean that BIMAL is subject to active regulation or oversight by a New Zealand regulator. In China, this material may not be distributed to individuals resident in the People’s Republic of China (“PRC”, for such purposes, excluding Hong Kong, Macau and Taiwan) or entities registered in the PRC unless such parties have received all the required PRC government approvals to participate in any investment or receive any investment advisory or investment management services. For Other APAC Countries, this material is issued for Institutional Investors only (or professional/sophisticated /qualified investors, as such term may apply in local jurisdictions). In Latin America, no securities regulator within Latin America has confirmed the accuracy of any information contained herein. The provision of investment management and investment advisory services is a regulated activity in Mexico thus is subject to strict rules. For more information on the Investment Advisory Services offered by BlackRock Mexico please refer to the Investment Services Guide available at www.blackrock.com/mx

©2024 BlackRock, Inc. All Rights Reserved. BLACKROCK is a trademark of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.

Market take

Weekly video_20241111

Vivek Paul

Opening frame: What’s driving markets? Market take 

Camera frame

We are in a world where multiple, starkly different outcomes are possible. The decisive U.S. election outcome has stoked uncertainty about future U.S. policy.

At our 2025 Outlook Forum last week, BlackRock investment leaders met to discuss how to invest given large structural shifts happening now.

Title slide: Zeroing in on secular forces, not cycles 

1: Tracking the transformation 

We have seen unusually sharp swings in 10-year U.S. Treasury yields with key macro releases. We think that reflects investors viewing incoming data through the lens of a typical business cycle when actually structural changes are at play.

The goal of the Forum was to track the transformation being driven by these structural changes. We evolved our macro scenarios to better understand and position for the likely market impact. 

2: U.S. strength and geopolitics in focus

Our portfolio managers are broadly positive on U.S. stocks even if valuations look steep by some measures. The contrast with lagging European economic growth and stock performance remains stark.

Geopolitical fragmentation was consistently discussed given wars in the Middle East and Ukraine and tense China relations.

3: Gauging AI’s potential

AI and its energy and investment needs were still in focus following our June Forum. We generally agreed that the AI buildout can broaden to include other beneficiaries.

Quantifying AI’s longer-term economic impact remains a challenge, but we think it has the potential to reshape economies and boost economic growth.

Outro: Here’s our Market take 

Our Forum discussion sought to clarify how structural shifts are driving the investment opportunities we see while assessing what’s in the price.

We think having a solid framework is key for anchoring views in this unusual environment.

Closing frame: Read details: blackrock.com/weekly-commentary

General disclosure:This material is intended for information purposes only, and does not constitute investment advice, a recommendation or an offer or solicitation to purchase or sell any securities to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. This material may contain estimates and forward-looking statements, which may include forecasts and do not represent a guarantee of future performance. This information is not intended to be complete or exhaustive and no representations or warranties, either express or implied, are made regarding the accuracy or completeness of the information contained herein. The opinions expressed are as of November 2024 and are subject to change without notice. Reliance upon information in this material is at the sole discretion of the reader. Investing involves risks.

In the U.S. and Canada, this material is intended for public distribution. In the European Economic Area (EEA):this is Issued by BlackRock (Netherlands) B.V. is authorised and regulated by the Netherlands Authority for the Financial Markets. Registered office Amstelplein 1, 1096 HA, Amsterdam, Tel: 020 – 549 5200, Tel: 31-20-549-5200. Trade Register No. 17068311 For your protection telephone calls are usually recorded. In the UK and Non-European Economic Area (EEA) countries: this is Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock. In Italy, for information on investor rights and how to raise complaints please go to https://www.blackrock.com/corporate/compliance/investor-right available in Italian. In Switzerland, for qualified investors in Switzerland: This document is marketing material. Until 31 December 2021, this document shall be exclusively made available to, and directed at, qualified investors as defined in the Swiss Collective Investment Schemes Act of 23 June 2006 (“CISA”), as amended. From 1 January 2022, this document shall be exclusively made available to, and directed at, qualified investors as defined in Article 10 (3) of the CISA of 23 June 2006, as amended, at the exclusion of qualified investors with an opting-out pursuant to Art. 5 (1) of the Swiss Federal Act on Financial Services (FinSA). For information on art. 8 / 9 Financial Services Act (FinSA) and on your client segmentation under art. 4 FinSA, please see the following website: www.blackrock.com/finsa. For investors in Israel: BlackRock Investment Management (UK) Limited is not licensed under Israel’s Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 5755-1995 (the “Advice Law”), nor does it carry insurance thereunder. In South Africa, please be advised that BlackRock Investment Management (UK) Limited is an authorized financial services provider with the South African Financial Services Board, FSP No. 43288. In the DIFC this material can be distributed in and from the Dubai International Financial Centre (DIFC) by BlackRock Advisors (UK) Limited — Dubai Branch which is regulated by the Dubai Financial Services Authority (DFSA). This material is only directed at 'Professional Clients’ and no other person should rely upon the information contained within it.Blackrock Advisors (UK) Limited - Dubai Branch is a DIFC Foreign Recognised Company registered with the DIFC Registrar of Companies (DIFC Registered Number 546), with its office at Unit 06/07, Level 1, Al Fattan Currency House, DIFC, PO Box 506661, Dubai, UAE, and is regulated by the DFSA to engage in the regulated activities of ‘Advising on Financial Products’ and ‘Arranging Deals in Investments’ in or from the DIFC, both of which are limited to units in a collective investment fund (DFSA Reference Number F000738). In the Kingdom of Saudi Arabia, issued in the Kingdom of Saudi Arabia (KSA) by BlackRock Saudi Arabia (BSA), authorised and regulated by the Capital Market Authority (CMA), License No. 18-192-30. Registered under the laws of KSA. Registered office: 7976 Salim Ibn Abi Bakr Shaikan St, 2223 West Umm Al Hamam District Riyadh, 12329 Riyadh, Kingdom of Saudi Arabia, Tel: +966 11 838 3600. CR No, 1010479419. The information contained within is intended strictly for Sophisticated Investors as defined in the CMA Implementing Regulations. Neither the CMA or any other authority or regulator located in KSA has approved this information. In the United Arab Emirates this material is only intended for -natural Qualified Investor as defined by the Securities and Commodities Authority (SCA) Chairman Decision No. 3/R.M. of 2017 concerning Promoting and Introducing Regulations. Neither the DFSA or any other authority or regulator located in the GCC or MENA region has approved this information. In the State of Kuwait, those who meet the description of a Professional Client as defined under the Kuwait Capital Markets Law and its Executive Bylaws. In the Sultanate of Oman, to sophisticated institutions who have experience in investing in local and international securities, are financially solvent and have knowledge of the risks associated with investing in securities. In Qatar, for distribution with pre-selected institutional investors or high net worth investors. In the Kingdom of Bahrain, to Central Bank of Bahrain (CBB) Category 1 or Category 2 licensed investment firms, CBB licensed banks or those who would meet the description of an Expert Investor or Accredited Investors as defined in the CBB Rulebook. The information contained in this document, does not constitute and should not be construed as an offer of, invitation, inducement or proposal to make an offer for, recommendation to apply for or an opinion or guidance on a financial product, service and/or strategy. In Singapore, this is issued by BlackRock (Singapore) Limited (Co. registration no. 200010143N). This advertisement or publication has not been reviewed by the Monetary Authority of Singapore. In Hong Kong, this material is issued by BlackRock Asset Management North Asia Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong. In South Korea, this material is for distribution to the Qualified Professional Investors (as defined in the Financial Investment Services and Capital Market Act and its sub-regulations). In Taiwan, independently operated by BlackRock Investment Management (Taiwan) Limited. Address: 28F., No. 100, Songren Rd., Xinyi Dist., Taipei City 110, Taiwan. Tel: (02)23261600. In Japan, this is issued by BlackRock Japan. Co., Ltd. (Financial Instruments Business Operator: The Kanto Regional Financial Bureau. License No375, Association Memberships: Japan Investment Advisers Association, The Investment Trusts Association, Japan, Japan Securities Dealers Association, Type II Financial Instruments Firms Association) for Institutional Investors only. All strategies or products BLK Japan offer through the discretionary investment contracts or through investment trust funds do not guarantee the principal amount invested. The risks and costs of each strategy or product we offer cannot be indicated here because the financial instruments in which they are invested vary each strategy or product. In Australia, issued by BlackRock Investment Management (Australia) Limited ABN 13 006 165 975 AFSL 230 523 (BIMAL). The material provides general information only and does not take into account your individual objectives, financial situation, needs or circumstances. In New Zealand, issued by BlackRock Investment Management (Australia) Limited ABN 13 006 165 975, AFSL 230 523 (BIMAL) for the exclusive use of the recipient, who warrants by receipt of this material that they are a wholesale client as defined under the New Zealand Financial Advisers Act 2008. Refer to BIMAL’s Financial Services Guide on its website for more information. BIMAL is not licensed by a New Zealand regulator to provide ‘Financial Advice Service’ ‘Investment manager under an FMC offer’ or ‘Keeping, investing, administering, or managing money, securities, or investment portfolios on behalf of other persons’. BIMAL’s registration on the New Zealand register of financial service providers does not mean that BIMAL is subject to active regulation or oversight by a New Zealand regulator. In China, this material may not be distributed to individuals resident in the People’s Republic of China (“PRC”, for such purposes, excluding Hong Kong, Macau and Taiwan) or entities registered in the PRC unless such parties have received all the required PRC government approvals to participate in any investment or receive any investment advisory or investment management services. For Other APAC Countries, this material is issued for Institutional Investors only (or professional/sophisticated /qualified investors, as such term may apply in local jurisdictions). In Latin America, no securities regulator within Latin America has confirmed the accuracy of any information contained herein. The provision of investment management and investment advisory services is a regulated activity in Mexico thus is subject to strict rules. For more information on the Investment Advisory Services offered by BlackRock Mexico please refer to the Investment Services Guide available at www.blackrock.com/mx

©2024 BlackRock, Inc. All Rights Reserved. BLACKROCK is a trademark of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.

Opening (00:00) 

This is Mark Peterson with the November 2024 BlackRock Student of the Market update.

Slide 2 (00:06) 

For November, a handful of things for you on stocks. First, we'll touch on seasonal factors. We'll hopefully have our last election slide for a while. Largest stocks also driving performance been a big issue and growth versus value. We'll move on and finish up with bonds and alternatives. Look at bond volatility and long-term interest rates and inflation. Have a slide on interest rates following a Fed rate cut, and then finish up with alternatives when correlations are high.

Slide 3 (00:39) 

Let's begin with seasonal returns on stocks. This is, of course, our favorite time of the year when stocks do their best. From November 1st to April 30th, we affectionately call it Turkey to Tax. November, of course, being the month of Thanksgiving, and April normally when we do our taxes. That's where the naming convention comes from, makes it easy to remember. November 1st to April 30th, the best six months for stocks. You've averaged seven and a half percent in that six-month window since 1926. Actually, done better over the last 40 years. And the opposite six-month window, May 1st to October 31st, we call that Mommies to Mummies, considering May's Mother's Day and of course 31st of October is Halloween. That six-month is actually the worst. That's the old sell and may go away. Market adage, that's out there, but you can see the returns are still pretty darn good in that six-month window. You certainly don't want to leave 4.4% on the table. That's the average for Mommies to Mummies since 1926. You can see on the right side what's happened in the last 10 years. Doesn't work every time, but there is a little bit of a seasonal bend here towards that six-month Turkey to Tax period.

Slide 4 (01:51) 

Now the election is over finally. We can move on, but I thought I'd finish up with just one more slide looking at historical election data, looking at election years, looking at years after the election, right in line with average, by the way, that first year after the election, 10.7%. So, right in line with average, a little bit less than an election year. It's those midterms that are a little bit more challenging. And year three, actually, the year before the election is actually the best up 18%. And you can see the last two months of the year tend to be pretty good. If you annualize that out, that's over 12%. So, I think that feeds into that little Turkey to Tax period as well. You get November, December. After an election's over, usually pretty good for stocks.

Slide 5 (02:37) 

Now, of course, largest stocks have been driving index returns. The Mag Seven, right? Certainly, the Apples, Microsofts, Google, Amazons, Teslas of the world, NVIDIAs. They've been driving the performance of the market again this year. Not nearly as dramatic as last year. You can see last year; they were up 111% on average. This year about 41%. So, you can see the drop-off is much less than last year, but still there. And I put in valuations. I've been getting this question quite a bit. Just what about the valuations between the two? But median valuation certainly higher, especially in the top 20 stocks. You know, once you get to that bottom, 400 stocks. You can see on the far right the median price earnings ratio is about 24. Very different than 37 at the very top. So, I thought that was interesting. Clearly, a break between the broader market from a valuation standpoint and those top seven or top 20 names.

Slide 6 (03:34) 

And of course, that leads us to growth and value on the next slide. I think one of the big stories has just been the historic growth outperformance. And we did this on a two-year rolling basis. That really looks at, I think that's captured some of the swings here in growth and value the last handful of years. You can see had a big swing post-December of 2020, you know, which was almost as big as what we saw back in the Tech Bubble on a two-year rolling basis. And you can see, obviously, when you've had some big historic swings to growth, the opposite's been true too, where you've swung back towards value the next couple years. So, you can see what happened value outperformance on the right side of the slide, following some of the historic periods. So, this would be the third highest period ever. Clearly, some room though between where we're at, 16% of average annual outperformance where you had over 23% back in December of 2020 or 26% in the Tech Bubble in February 2000. But something to keep an eye on. I think our folks are a little bit warmer to value, certainly not overweight value.

Slide 7 (04:51) 

Switching gears on the bond side, we actually updated this chart that looks at how many bond days that you have that are up or down by a half a percent or more. So, anytime the core bond index is up a half a percent or more on a given day or down by a half percent or worse on a given day, you can see we've had 24 so far this year through the end of October, off the pace of last year and 2022. Look at all the volatility in bonds that we've seen really the last two and a half years here have been pretty dramatic and really out of lockstep with history. You can see we had 45 back in 2008, but the average is about 15 a year. So, we're well past that pace. We'll probably get a handful more between now and year end. So, higher volatility, but it has come down versus what we saw in 2022 and 2023. And of course, similar to stocks, very similar story. Less volatility is better for returns on the bond side, not nearly as dramatic as what we see on the stock side but certainly a lean towards better bond performance if you have less volatility in daily returns. So, I thought that was interesting. Again, you look at some of these periods and obviously, some of the volatility are around periods where the economy is really figuring out where the... Or excuse me, the market's trying to figure out where the economy is headed. That's when you see more volatility both on the stock and the bond side.

Slide 8 (06:18) 

Inflation below long-term interest rates has been the case now for several months. We're down to 2.4% on the headline inflation number. Long-term interest rates have bounced back here about 4.3% at the end of the month, drifting a little bit higher here in November. And this is generally a good position to buy fixed income whenever your yield is above inflation. The old classic real return argument, you're giving a real return of above inflation. Look at the returns on the right. Anytime you buy when 10-year treasury yields are above inflation, look at the return for that core bond category, 8% over the next 12 months. Whereas if you buy when inflation is above interest rates, that really wipes out your return. All bets are off. So, I thought that was interesting. Just the backdrop for one, the reason why we like bonds and fixed income at this point. Real returns are good. You're getting almost two percent above inflation. History tells you that's a nice time to own bonds and fixed income.

Slide 9 (07:28) 

Now, interest rates have drifted higher here since the Fed cut interest rates back in September, on September 18th, lowered by 50 basis points. We think we'll get another one here in November. Maybe one more in December. But we have interest rates backed up but if you look at when the Fed lowered interest rates, lowered that Fed funds rate, the 10-year treasury was at 3.7%. Like we said, we're up over 4.3% today. So, I wanted to look back historically. And it's not unusual for interest rates to back up, actually, after a Fed rate cut. It doesn't happen every time. You can see three out of the last five times, rates have actually backed up or stayed the same one month later following a Fed rate cut. You can see what happened three months and one year later. I thought it was interesting that a lot of times, the good news from a rate reduction standpoint gets baked in by the time the Fed actually lowers rates. And again, kind of backing up what we saw in the previous chart, when the Fed makes its first rate cut, not a bad time to own core bonds historically. We've had a little rough patch here to start, but when you look historically, you've averaged about 7.2% one-year returns following the first Fed rate cut.

Slide 10 (08:46) 

Last slide, one we ran earlier this year. I thought we'd update it, especially because we're still at record high correlations on stocks and bonds. So, if you just look at the three-year correlation for stocks and bonds, it's 0.71, which ties the highest ever for traditional stocks and bonds. So, it's really led a lot of advisors that we talked to to the alternatives category. You're actually getting some nice returns on some of these alternative categories. And they tend to do well when correlations tend to be high for stocks and bonds. We just ran a clean breakdown since 1994 of what happens when correlations are lower, 0.5 or less between stocks and bonds. What were some of these alternative categories returning over a three-year window? And then, what happens when correlations are high? And you can see the returns on alternatives tend to correlate with higher correlations. So, some of the thought we have here is the returns are better for alternatives because cash returns tend to be better in a high correlated world. These funds utilize cash as a part of their strategy, their... excuse me, cash plus strategies. So, when correlations are high, usually yields on cash are higher. That bodes well for better returns on these alternative categories. That's exactly what we've seen recently. So, whether it's equity market neutral, some multi-strategy or global macro, these tend to be in a good position when cash rates are high. And even as the Fed lowers rates, right, we'll still have decent returns on cash going forward. So, these alternative categories seem to still have the wind at their back. From a high correlation to stock and bonds, high return on cash, backdrop bodes well for returns going forward.

Closing (10:41) 

So, that does it for our November 2024 Student of the Market update. As always, let us know if you have comments or questions. Love suggestions from advisors across the country. Some of those questions and ideas make up the best slides. We'll see you next month on BlackRock's Student of the Market update. Thank you.

Student of the Market: November 2024

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Featured Webinars for Advisors

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00:00:01

Hi, I’m Carolyn Barnette, Head of Market and Portfolio Insights for US Wealth here with your recap of our September In the Know Webinar.

00:00:07

We talked about three things today. We talked about public policy, we talked about markets, and we talked about preparing portfolios in a – for capital gains season.

00:00:20

So, first up, talking about public policy and elections. We’ve got one presidential race coming up, we also have 468 congressional races coming up. We heard that 82% of you are not planning on making any changes around the election but staying invested through it even if we do see market volatility pick up a bit as the races sort themselves out. Next, we spent a lot of time talking about markets, and in particular, that the Federal Reserve just cut interest rates by 50 basis points with guidance for another 50 basis points of cuts in 2024, followed by another 100 basis points cuts in 2025. So, seeing that cash rates are coming down, and starting to look for opportunities in other income producing assets, asset classes to make up income, whether that’s dividend paying equities on the equity side, spread assets within bonds, or looking at option overlays to earn even more income in a more volatile environment.

00:01:20

We also talked a lot about our economic outlook, growth staying resilient. You know, kind of GDP growth is staying well above recessionary levels. So, we’re staying invested in equities, but within equities, we like large cap, high qualities over smaller cap securities. Our concern is that rates are not dropping yet enough to really support those smaller cap securities that are struggling with higher borrowing costs, and if we do see growth start to slow, and certainly, the Q4 GDP growth outlook is lower than the one for Q3 and what we saw for Q2. So, we’re continuing to prefer those larger cap, less volatile names.

00:02:02

And also spent some time talking about strategies for really nervous investors looking for, you know, whether it’s minimum volatility equities, buffered strategies or those high-quality dividend payers as ways to stay invested in volatile markets.

00:02:19

We also talked a bit about, you know, what the path forward for inflation and unemployment might look like and how the combination of uncertainty around that, plus the yield curve being in the process of disinverting, really creates opportunities to get active within fixed income. We see a lot of opportunity to take advantage of yields in the belly of the curve and just are not seeing a lot of opportunity in the longer end barring a recession.

00:02:50

Last piece within markets, a really good time to be diversifying your diversifiers amidst that uncertainty. A lot of reason to have uncorrelated assets that might be able to benefit from higher volatility and also a high degree of dispersion between assets.

00:03:07

And then we wrapped up In the Know talking about how to rebalance in a tax efficient way because in a year where a lot of assets are up and a lot of advisors are thinking about rebalancing going into the end of the year, it could be hard to do that in a tax aware way.

00:03:23

So, we talked through some best practices, keeping an eye out for capital gains distribution announcements, and also looking for opportunities to potentially tax loss harvest below the surface. You know, one of those things is looking at price returns rather than total returns when you’re evaluating which one of your holdings might have a loss to harvest. But also looking at individual stocks that could be opportunities below the surface. You know, every year, even though, even years that the Russell 3000 was up, there was still plenty of individual stocks in there that were down and were creating those opportunities for tax loss harvesting.

00:03:59

So, hopefully the main takeaways that you got from all of that is that we are here for you. We want to be a great partner for you in these times.

00:04:09

So, you can always look to our Advisor Center for tools and also timely insights, and you can also reach out to your BlackRock partners or call 877-ASK-1BLK if you have any questions or there’s anything that we can help you with you. So, thank you very much, and we will see you next time.

00:04:33

(END)

In the Know recap: September 2024

Watch a recap of our latest In the Know event where our top thought leaders gathered to share their perspectives around inflation, the intricacies of investing in an election year and portfolio perspectives to tie it all together.