29 May 2015

Finding the Best Ratio to Value Stocks

For a few years now, I’ve been pondering why academics always evaluate the cheapness or expensiveness of stocks based on the price-to-book (PB) measure.  Even more oddly, they call it book-to-market, but that’s a mystery that won’t be solved. In case it’s been a while since you’ve had an accounting class, the book value of a company is equal to the assets minus the liabilities, or equity of a company…. Read More

By Tags:
27 May 2015

Advice for Graduates: Buy Stocks

It’s that time of year when another batch of kids finishes school and begins working. Old folks like me will offer plenty of advice knowing that most of what we say will be a little lost on these fine young people, just as it was on us when we were their age.  You never know, though, good counsel today might get re-tweeted and go viral. My advice is simple: buy… Read More

By Tags: , ,
26 May 2015

Quality Investments Over Quantity Investments

In recent months, I’ve been working to create a set of ‘primers’ that describe certain market factors that we pursue in our strategy in hopes of increasing returns, lower risk, or, in a perfect world, doing both. So far, we’ve looked at three equity factors: size (small companies tend to outperform large companies), value (cheap companies tend to outperform expensive companies) and momentum (stocks that have recently outperformed/underperformed are likely… Read More

By Tags: ,
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

By Tags: , , ,
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: , ,