19 May 2015

Dow 36,000

Seeing the DJIA at 18,000 reminds me of a book published at the peak of the internet bubble titled, ‘Dow 36,000: The New Strategy for Profiting from the Coming Rise in the Stock Market,’ by James Glassman and Kevin Hassett. At that point, the DJIA was about 11,000, so it only had to little more than triple to hit the 36,000 mark.  I had graduated from college in 1995 when… Read More

18 May 2015

Nobody Knows Nothin’

The Wall Street Journal ran an interesting article over the weekend, ‘How Much Should a Currency be Worth?  No One Really Knows.’  Click here for the article, though a subscription may be required.     We don’t have any direct investment in currencies, but the headline caught my attention because I have the view that no one really knows what anything is really worth.    The article focuses on the… Read More

15 May 2015

The Trouble with Hedge Funds

Yesterday, in my article about activist investors, I referred to a Yale academic who said that one hedge fund index showed that activists had sluggish performance, but then said that this index series is widely known to be troublesome without any explanation for what makes them problematic. Hedge fund ‘indexes’ are well known to overstate performance and understate risk, making them appear more appealing to investors than they really are.  The… Read More

14 May 2015

Another Wall Street Soap Opera

You know I love Wall Street soap operas and one just ended yesterday between the activist investor Nelson Peltz and the old-line chemical company, DuPont (ticker symbol: DD).    An activist investor is someone who buys a large stake in a publicly traded company and uses that ownership stake to force management to make major changes.     Being from St. Louis, Carl Icahn is the most famous activist investor in… Read More

7 May 2015

Unconstrained funds and Uncontained funds

Yesterday, I wrote that Bill Gross, the former bond king, said that shorting German bonds was the short of a lifetime. Although I didn’t have my nice chart (which I’ve added below), I did note that German yields had spiked, which means prices fell and his short must be working out well.  I also went through the details of a short trade, so if you missed it, you can click here…. Read More

By Tags:
6 May 2015

Celebrating Short-Sellers

Just 13 trading sessions ago on April 17th, the yield on the German 10-year government bond, or bund, fell to less than 0.05 percent. Given that a third of all non-US bonds issued worldwide had a negative yield, the question wasn’t whether the yield on bunds would go lower, but how far into negative territory they would go.  Unfortunately, I didn’t have the right tools to make a chart, so I’ve… Read More

5 May 2015

Estimating the All-In Costs

While I was in New York over the weekend, my sister walked me past a six-story townhouse right off of Fifth Avenue that now belongs to one of my (very few) high school girlfriends.  It’s a pretty nice house with views of Central Park and apparently cost them a cool $26 million (not including any renovation and decoration costs).    This woman married her college boyfriend who is now the… Read More

By Tags:
1 May 2015

Those Brits Know How to Invest

When academics evaluate a strategy like value or momentum, they test the data in a variety of ways to make sure that the effect that they are studying is real and not spurious (to use their term for bogus). When Rolf Banz first proposed the small cap effect in 1981 (the original study can be found here), he used US return data from 1936 to 1975.  He used the data that was available to him… Read More

30 Apr 2015

American Stocks and Cities

The other night while washing the dishes, I had the thought that St. Louis is a mid-cap, meaning that the size of our fine city is roughly equivalent to a mid-sized US company.  It’s a weird thought, but I thought it would be fun to carve up US cities the same way that researchers carve up the capitalization of the stock market. I started at Wikipedia with a list of… Read More

29 Apr 2015

Twitter is the Perfect Growth Story

The social media company Twitter (ticker symbol: TWTR) announced yesterday that first quarter revenue grew less than expected and told investors to expect lower sales growth in the near future as well.  As a result, the stock was down almost -20 percent in late trading. When I first saw the headlines, my immediate thought was, ‘this is why you don’t buy growth stocks – when they disappoint on growth or… Read More