Don’t Always Follow the Crowd

March 13, 2023

Enjoy this week's "Investor Insights," a weekly newsletter that highlights the financial news you need to know and provides tips and tricks to help you make better investment decisions.

Last year investors pulled $729 million dollars out of stock funds. This bodes well for the future since, historically, the stock market has had an average 1-year return of 22.3% following years with the largest outflows (compared to a -3.9% return after years with the largest inflows). ₁

Silicon Valley Bank (SVB), which was the 16th largest bank in the country by deposits (just behind Morgan Stanley), collapsed on Friday. This will be the second largest bank failure in US history after the 2008 collapse of Washington Mutual. ₂

The rapid rise in interest rates over the past year means that there are now only 34 stocks in the S&P500 that pay a dividend yield that is higher than the six-month treasury, which is around 5.1%. At the end of 2021, there were 379 companies with a higher yield than the treasury bill. ₃

A recent survey of foreign companies doing business in China showed that many are making changes. 50.8% of respondents said they were moving investments out of China to other parts of Southeast Asia. India (30.2%), Mexico (34.9%), and the US (22.2%) were also beneficiaries. ₄

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