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Student of the Market: February 2023
February 2023 highlights:
- Don’t follow the flows in stocks
Last year had us seeing large outflows in stock mutual funds and ETFs, a relatively rare occurrence. Outflows have historically been a contrarian indicator for better performance the following year. - The most reliable recession indicator
The yield curve is currently inverted, with the-month T-Bill rates higher than 10-year treasuries. Inverted yield curves have historically meant outperformance for core bonds vs. cash 12 months later. - Time to consider emerging markets?
Besides the currently attractive value makeup of international equities vs. U.S., a negative 5-year return for EM stocks (like now) has historically indicated higher returns over the next five years.
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