30 Jan 2015

Those Clever Institutional Investors

Maybe I’m a little hung-up on this, but I am always a little annoyed when institutional investors look down their noses on retail investors. When a bull market is finally getting going, you’ll hear them sniff that ‘retail is finally waking up,’ or when markets are falling, they’ll say that the losses are exaggerated because retail is selling into the downturn. No matter what markets are doing, institutional investors seem… Read More

29 Jan 2015

Expected Returns for Stocks

A friend recently forwarded me the address of a fascinating investment website that I have spent hours studying. The site, found here, beautifully displays market forecasts for stocks, bonds, commodities and currencies from around the world. This site is run by Research Affiliates, an investment research firm that develops indexes and strategies that other investment managers license. They say that as of the end of the third quarter last year,… Read More

28 Jan 2015

Size Matters, If You Control Your Junk

It should be no surprise that small cap stocks struggled last year compared to large cap stocks. While the S&P 500 enjoyed above average results earning 13.7 percent, the Russell 2000 index of small cap stocks only gained 4.9 percent (click here for a chart of major asset class results). A little more than a year ago, I wrote that there is a long-running debate in academia about whether small… Read More

27 Jan 2015

Currency Traders Beware

When the Swiss National Bank (SNB) broke their peg to the euro, the Swiss franc shot up 17 percent overnight. Investors that owned Swiss francs had a fantastic return and those that had bet against the franc, or gone short francs, lost an equivalent amount (more details here). That shock caused several currency brokers around the world to fold, although the biggest firm, FXCM managed to stay afloat thanks to… Read More

26 Jan 2015

When a Strategy Stumbles

Last year was tough for some of our stock strategies. For example, we take a portion of our large cap portfolio and invest in ‘value’ stocks. Another, equally sized percentage is invested in a strategy that buys ‘momentum’ stocks. I’m going to oversimplify here, but value stocks can be thought of as ‘cheap’ stocks. For a stock to be cheap, the market value of a company has to be low… Read More

23 Jan 2015

The ECB Strikes Back

After years of stalling, the European Central Bank (ECB) finally launched a meaningful quantitative easing (QE), or bond-buying program. ECB President Mario Draghi announced that the ECU will buy €60 billion, which at today’s rate is roughly equivalent to $69 billion dollars. The program will begin in March and is expected to last through at least September 2016, which means that the ECB is expected to spend close to €1… Read More

22 Jan 2015


The Swiss National Bank (SNB) revaluation of the Swiss franc caused me to look at The Economist magazine’s ‘Burgernomics’ website (which can be found here). While it may not be popular with high minded economists, the Burgernomics site attempts to put a fundamental value on currencies from around the world by looking at the cost of buying a Big Mac in each country. In theory, a Big Mac ought to… Read More

21 Jan 2015

Are New Taxes Coming?

It seems like only yesterday that the tax issues were finally settled after years of uncertainty, although it was actually 2012. Judging from the President’s State of the Union address last night, it appears that taxes may be in flux again. First, a quick and dirty background on the estate tax law as it stands today. For those that pass away in 2015, there is no federal estate tax unless… Read More

By Tags:
20 Jan 2015

CalPERS Scales Back Private Equity

Over the summer, the California Public Employees Retirement System (CalPERS) announced that it was eliminating its exposure to hedge funds. CalPERs is making headlines again by saying that they are going to substantially cut their exposure to private equity, the other major strategy that falls under the ‘alternative investment’ umbrella. I’ve made the case for a decade that we can do almost anything a very large institution can do on… Read More

16 Jan 2015

Central Bank Shocker

In September 2011, Switzerland’s central bank, the Swiss National Bank (SNB) decided that it didn’t want the Swiss franc to become too valuable against the Eurozone common currency, the euro. For better or for worse, the Swiss franc has been considered a safe haven and during the sovereign debt crisis a few years ago, money poured into the franc. That was a concern for the SNB since it could have… Read More