12 Jul 2016

Currency Hedging after Brexit

After Andrea Leadsom withdrew herself from consideration and cleared the way for Theresa May to replace David Cameron as Great Britain’s Prime Minister, I was interested to see how British stocks were faring there after the Brexit. When I looked at the chart, I realized that I hadn’t been paying close enough attention because I was surprised that British stocks are actually up sharply this year – the chart shows a 7.9… Read More

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11 Jul 2016

Employment Rebounds, Lifting Markets

The employment situation in the US improved on Friday as the Bureau of Labor Statistics (BLS) announced that the economy added 287,000 new jobs in June, well ahead of the consensus estimates of 180,000 and surpassing the high estimate of 235.000. Keep in mind that this was a first estimate and that these numbers are routinely revised.  The revisions to recent estimates were mixed with the April numbers raised to… 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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6 Jul 2016

Negative Swiss Yields Get Even Crazier

One of the more striking headlines yesterday was that Swiss government bonds now have negative yields out 50 years – that’s right, 50 years! That’s a little hard to fathom, partly because we don’t have bonds that extend that far, but also because 50 years is such a long time.  I mean, if I bought a 50 year bond, I’d be in my 90s before I got my money back. Forget inflation, I’m just talking… Read More

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5 Jul 2016

Why Did Stocks and Bonds Gain Last Week?

One of the interesting things about the stock rally last week is that bonds also rallied.  Over longer periods, stocks and bonds are lowly correlated, which means that they are generally independent from each other. Over very short periods, especially when there is a lot of activity, stocks and bonds are usually negatively correlated.  If you had told me that stocks would rebound sharply last week and gain 3.27 percent, which reversed most… Read More

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1 Jul 2016

The Market Hates Uncertainty

One of the phrases that I hear over and over, but simply don’t like, is that ‘markets hate uncertainty.’  Forget the fact that markets are just made up of people and don’t have independent emotions, I’m talking about hating uncertainty. From a theoretical standpoint, let’s think about how uncertainty affects markets.  Let’s start with the idea that the value of an investment is the present value of its future cash… Read More

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30 Jun 2016

Mr. Market Trades the Brexit

Legendary investor Benjamin Graham wrote in his 1940 classic book, The Intelligent Investor, about a fictional character named Mr. Market. Graham asks you to imagine jointly owning a business with Mr. Market, who frequently offers to buy or sell your shares.  The trouble with Mr. Market is that he’s manic depressive and the prices that he offers swing wildly over short periods. Even though the true value of the business… Read More

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29 Jun 2016

EU Article 50

Brexit backlash has continued to build in various forms. There has been a growing chorus of calls for Britain to hold another referendum, or to opt not to invoke Article 50 and instead push for fresh concessions. Article 50 refers to five short paragraphs of the Lisbon Treaty, which was signed in 2007 and updated past agreements including the Maastricht Treaty in 1993 and the Treaty of Rome in 1958…. Read More

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28 Jun 2016

Currency Prices are Efficient Too (and sometimes wrong)

The Brexit has caused legions of analysts, economists, strategists and other pontificators to busily rework their assumptions about the world economy incorporating what seemed like an outside possibility last week to the new lay of the land. Markets fiercely incorporated their new assumptions into prices almost instantaneously – looking a chart of the British pound, you can see when the polls started to show that the Remain camp wasn’t a… Read More

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27 Jun 2016

Friday Could Have Been Worse

While markets were obviously down, one piece of good news is that they weren’t chaotic.  You may think I’m grasping at straws here for a silver lining, but wild macro events can cause markets to get sloppy and that didn’t happen Friday. Last August, when markets were selling off, the heavy trading volume caused a number of stocks and ETFs to behave erratically in what some people described as a… Read More

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