The Yield Curve And Stocks: Much Ado About Everything

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The good news? Most domestic indexers have quite a bit of exposure to FANG-plus in their portfolios. That means they are currently outperforming tech-shy active managers, value indices as well as international stock enthusiasts.

The bad news? Most domestic indexers will get whacked should anything go wrong with the hold-n-hope, FANG-plus paradigm.

From where I sit, yield curve inversion is likely to take a fairly dramatic toll on job growth. Downward pressure on stocks would follow suit. And over-leveraged ownership of FANG-plus securities could result in a wave of margin calls, forcing the liquidation of the investment world’s most desired shares.

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Did you have a plan in 2000? Did you have a plan in 2008? Even if catastrophe never comes to fruition, planning ahead for the possibility of extremely difficult outcomes is financially astute.

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Disclosure: ETF Expert is a web log (“blog”) that makes the world of ETFs easier to understand. Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered ...

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