Monday, February 25, 2008

The Return of the Risk Trade

excerpts from this week's report:

"One of the immediate impacts of the US stimulus package (monetary and fiscal) has been the significant improvement in the relative performance of the higher risk portions of the US and global economy. I am referring to specifically the Smids (small and mid cap) and segments of the emerging markets, notably Latin America..."

Investment Strategy Implications

"Merrill's strategists have rightly identified the return of risk taking as a key risk to the large cap growth theme (see chart above with large cap growth, IVW, as the worst performer listed thus far this year, especially since the aggressive Fed rates cuts of mid January). In an alpha challenged investment climate, embracing the risk trade will likely be..."

"... the recent addition of ILF to the Model Growth Portfolio has already paid dividends. More on Latin America and Brazil in the coming weeks..."

also in this week's report:

* Expected Return Valuation Model
* Moving Averages Scorecard
* Model Growth Portfolio
* Sectors and Styles Market Monitor
* Key US Economic Indicators

*To gain access to this week's report (and all reports), click on the subscription information link to your left.

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