Vanguard's global investment expert explains what traders are doing to kick off 2023 and how markets are reacting to the Federal Reserve's policy tightening.
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Phil Rosen
Jan 28, 2023, 08:02 IST
Fiona Greig, global head of investor research and policy for VanguardVanguard
Happy weekend, team. I'm Phil Rosen. As you could guess from this newsletter, a big part of my job involves speaking to top experts in markets and economics.
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Today, I'm sharing my conversation with Fiona Greig of Vanguard's Investment Strategy Group.
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Fiona Greig is the global head of investor research and policy for Vanguard's Investment Strategy Group. This conversation has been lightly edited for length and clarity.
Phil Rosen: Part of your expertise lies in behavioral trends among investors. What are you observing there to start 2023?
Fiona Greig: In general, when it comes to retail investors, we're just seeing fewer people trading in general. It's also true in retirement accounts.
This suggests a "stay the course" posture, meaning yes there's been volatility, but the longer term outlook they have for the stock market is stable. So unless they have a particular need to liquidate or pull out, investors are really staying the course, and I think that's good news.
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The Fed has signaled rates will keep rising, which in theory should weigh on markets — yet we've seen stocks rally. What's going on here?
There's some lower expectations for stock market returns in the short term, but we see pretty clear expectations and optimism for returns in the next 12 months, and even 10 years.
What trends should investors be cautious of, or capitalize on, in the current landscape?
FG: I would say it's a bad idea to pull out just because markets are having a bad day. Investors have to accept volatility, and can't get skittish. So I'd advocate for staying in positions for the time being.
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Then, I would make sure to take advantage right now of employer-sponsored retirement plans. Increase your savings rate. People have the opportunity now to start investing and allocating funds, and should think about moving money into the market in a balanced way at a low cost.
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9. Russian oil trade remains on solid footing despite sanctions and a price cap, according to an analyst from Kpler. Moscow's energy revenues may not have been hit as badly as some estimates may suggest, in large part because Asian customers including India and China have kept buying crude. Here's what else to know.
10. Anthony Scaramucci said he put in a $10 million investment in FTX's native cryptocurrency and received only $400,000 back. The SkyBridge Capital investor backed the crypto exchange's token after receiving $45 million in funding from FTX. Yet, Scaramucci said he remains bullish on crypto even though he got burned.
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