Institutional investors are organizations that pool money for the goal of investing. These include mutual funds, pension funds and hedge funds. The advantage for a retail investor is that they get access to managers who are more informed and better skilled in their specific category. Retail investors also get the opportunity to place their funds in investments not always open to an individual. Individual investors are also able to get a diversified portfolio more easily, depending on the fund with which they’ve invested.
Home prices are surging in the U.S., which is usually indicative of more investments flowing into the housing market. However, if one looks at the mortgage industry, it points toward the complete opposite. Mortgage originations have seen a sharp decline in the fourth quarter of 2013 and major banks, including but not limited to Bank of America Corporation, Wells Fargo & Company, and JPMorgan Chase & Co., will be threatened by a further decline in profits if this trend continues into 2014. (Source: Mantell, R. and Rexrode, C., “‘Worst of all worlds’ for mort ... Read More
After years of easy money and a failure to secure a well-executed exit plan, it looks as though the emerging markets are getting a taste of the Federal Reserve’s economic tapering. Over the last five years, the emerging markets have benefited from low interest rates and listless growth in developed countries. But, with the U.S., Japan, and Europe—the three biggest economies globally—all expanding for the first time in four years, the tables are turning and the sheen is beginning to wear on the emerging markets. In an effort to help kick start the U.S. economy after the financial crisis in 2008, the Fede ... Read More
Ah, the U.S. housing market, the so-called silver lining in the U.S. recovery—but not for long, as it may be rusting. The U.S. housing numbers are in, and they aren’t spectacular. In the U.S. housing market, December existing-home sales rose one percent month-over-month at an annualized pace of 4.87 million units. Analysts were expecting December existing-home numbers to come in at 4.93 million. The one-percent increase also has to be taken with a grain of salt, as it was helped, in part, by a downward revision in November existing-home U.S. housing market sales to 4.82 million units. (Source: “December Existing ... Read More
As each day passes, more and more evidence builds up against the housing market in the U.S. economy. A significant amount of data is suggesting that the housing sector is cooling and will not continue to increase like it did in 2012, when institutional investors came in and bought homes in bulk, causing prices to skyrocket in some areas. When I am looking at the housing market, I want to see home buyers. If the number of home buyers in the market increases or there are indicators that suggest it will increase, then I see no problem in thinking the housing market in the U.S. economy is going to see an uptick. But as it stands, this is not the case; home buyers are shying away fr ... Read More
American investors are sitting on a lot of money. According to the Investment Company Institute, total U.S. money market mutual fund assets for the week ended July 31 came in at $2.612 trillion. Of that total, 65%, or $1.69336 trillion, is attributed to institutional investors, while $918.93 billion belongs to retail investors. (Source: “Money Market Mutual Fund Assets,” ICI.org, August 1, 2013.) Even though the stock market has been bullish since early 2009, with the S&P 500 advancing around ... Read More