31 Oct 2016

Equity Risk Dominates Your Portfolio

When I describe ‘balance’ in a portfolio, here or in person, I am almost inevitably talking about an allocation that is somewhat evenly split between stocks and bonds.  I don’t have to specify that I am talking about how much money is in each allocation (forgetting for a moment all of the sub allocations). In recent years, however, some investment managers have pointed out that a portfolio that is evenly… Read More

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24 Oct 2016

Prerequisites for Alternative Investments

One of the more popular categories of mutual funds over the past few years have been so-called ‘alternative’ funds.  Alternative investments, broadly defined, are strategies that seek returns that are uncorrelated from traditional investments like stocks and bonds. While alternative investments were once largely confined to private partnerships, they are now popular in mutual funds, or what the industry refers to as ’40 Act Funds.  Following the 2008 financial crisis, alternative… Read More

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17 Oct 2016

Buffett’s Wild Ride

Warren Buffett is rightly considered the most successful investor of all-time.  Not only has his holding company, Berkshire Hathaway, grown at a much higher rate than the overall market, he’s managed to earn exceptional returns for much longer than others who have also earned high returns. I was only able to pull data from 1987, but the last 29 years have been extraordinary for Buffett and his fellow shareholders.  Over this… Read More

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9 Oct 2016

Portfolio Insights

We are pleased to provide a digital copy of Portfolio Insights, our quarterly newsletter. Table of Contents: Stock Market Summary Bond Market Review Bulls, Bears, Donkeys & Elephants The Big Picture and Fast Facts Click here to read the issue:  2016 Q3 Portfolio Insights

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26 Sep 2016

Is the Grass Greener in Private Equity?

Private equity is in the news quite a bit, but finding the returns for this asset class is somewhat more challenging. There are a lot of stories about mega returns, but as they say at the University of Chicago, multiple anecdotes don’t make data. Until recently, I only had small windows into the world of private equity returns. First, when private equity management firms like Blackstone, KKR, and the Carlyle… Read More

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23 Aug 2016

Allocating to Risky Assets

What’s the right allocation to a risky asset class like emerging markets stocks? Since the launch of the MSCI EAFE EM index that tracks emerging markets in 1988, the returns have outpaced the S&P 500 by 0.33 percent per year: 10.56 percent versus 10.23 percent.  (All data from Jan 1988 through Jun 2016). As you might expect, the extra return has come with extra risk: the emerging markets index has… Read More

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29 Jul 2016

The Peril of Company Stock

Like most 22-year olds, I didn’t know how to invest my 401k when I started making contributions.  I asked some of the people that I worked with and they told me to put 100 percent in the company stock, Mark Twain Bancshares (ticker: MTWN at the time, but long gone!). Thanks to the magic of my Bloomberg terminal, I can see why they said to buy the stock: in the… Read More

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20 Jul 2016

A Silly but True Market Anomaly

I heard a funny exchange between Gene Fama and Dick Thaler, two University of Chicago professors that sit on opposite sides of the debate about whether markets are efficient.  If you’ve got 45 minutes, I recommend watching the whole discussion by clicking here. As an example of market inefficiency, Thaler told a funny story about a closed-end mutual fund with the ticker symbol: CUBA.  The Herzfeld Caribbean Basin fund doesn’t invest… Read More

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15 Jul 2016

Earnings Season is Upon Us

As you can see in the chart below, earnings season is upon us.  While 31 companies have already reported, a full 421 companies report in the next three weeks, leaving the last 48 companies to report during the rest of August and September. Analysts aren’t expecting much out of earnings season and think that earnings will decline by -5.6 percent. According to FactSet, it will be the first time that the S&P… Read More

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9 Jul 2016

Portfolio Insights

We are pleased to provide a digital copy of Portfolio Insights, our quarterly newsletter. Table of Contents: Stock Market Summary Bond Market Review Europe’s Brexistential Crisis The Market Hates Uncertainty Compliance Corner:  Custody The Big Picture and Fast Facts Click here to read the issue: 2016 Q2 Portfolio Insights

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