4 Apr 2016

The Real Unemployment Rate

The Bureau of Labor Statistics (BLS) reported that total non-farm payrolls rose by 215,000 in March, lower than February’s upwardly revised 245,000 figure, but ahead of the consensus estimate of 205,000.  January was also revised downward to 168,000 from 172,000. The unemployment rate ticked up from 4.9 percent to 5.0 percent reflecting a large increase in the labor participation rate which increased six-tenths of a percent in the last six… Read More

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31 Mar 2016

When to Head for the Exits

Back in November, I wrote about the Sequoia fund (ticker symbol: SEQUX) on the losing side of a big bet on Valeant Pharmaceuticals (ticker symbol: VRX). Sequoia is a well-known fund, in part because when Warren Buffet unwound his hedge fund in the late 1960s, he recommended that his clients go to Sequoia, which was run by his friend Bill Ruane.  Sequoia had good results and wasn’t afraid to take… Read More

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30 Mar 2016

Over-Promising and Under-Delivering

Back in the depths of the 2008 crisis, I remember hearing a radio spot for a newly launched series of mutual funds from a well-known fund family that promised ‘absolute returns.’ In the investing world, the term absolute return refers to investment strategies that are intended to generate positive returns regardless of market conditions.  Whereas most investments are judged relative to a benchmark like the S&P 500 or Barclays Aggregate… Read More

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28 Mar 2016

Brexit Basics

The European Union (EU) is a political and economic union comprised of 28 countries from the tiny island of Malta with a population of 429,000 situated on 122 square miles to the obvious world powers like Germany, France and Britain. When combined, the EU represents seven percent of the worlds population and 24 percent of global gross domestic product (GDP, measured in purchasing power parity).  The idea behind the union,… Read More

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11 Mar 2016

Active Funds Still Struggle

Every six months, Standard & Poor’s does an analysis of how active funds compare to S&P indexes and it’s been a while since I’ve reported on the results.  Unfortunately for the actively managed funds community, things haven’t gotten any better since my last update. The report offers many details and if you want to look at the entire report, click here.  I think that if you aren’t going to look at… Read More

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10 Mar 2016

King of Wall Street Remembered

I read a newsletter on and off that always features an obituary.  I know a lot of people read them every day, but I find that a little depressing.  I wrote about David Bowie’s passing back in January, and at the risk of writing too many obits, I thought I would note the death of John Gutfreund yesterday, who was dubbed the King of Wall Street by BusinessWeek magazine. Gutfreund… Read More

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9 Mar 2016

Naming Names on Broker Misconduct

When we started this business more than 13 years ago, I maintained a scrapbook of article clippings that I called “The Big Book of Broker Misdeeds.” At the time, we were coming out of the tech wreck and there were tons of articles about how brokers steered widows and orphans into unsuitable hot technology funds during the bubble years that blew apart when they fell back to earth. I know a… Read More

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7 Mar 2016

Employment Data Supports Stocks

Payrolls rose 242,000 last month versus consensus estimates of 195,000 and an upwardly revised 172,000 reading from January. The unemployment rate held steady at 4.9 percent while the U6 unemployment measure that includes workers who are part time purely for economic reasons, dropped to 9.7 percent – the low for this cycle. Average hourly earnings declined -0.1 percent versus expectations for a positive print of 0.2 percent.  On a year-over-year… Read More

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2 Mar 2016

Performance Transparency

We have another special posting from Michael Lissner today, who will be writing Daily Insights more regularly.  Also, there was a large typo yesterday, which said that we had traded $223.2 billion worth of stocks and ETFs.  Far from it: we traded $223.2 million in stocks and ETFs, which is still a lot, but less than what I wrote, which makes more sense given our $1.2 billion in assets under management…. Read More

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1 Mar 2016

The Inside Story on Trading Costs

Some things are easy to measure, like the internal costs of a mutual fund or exchange traded fund (ETF) or how much we spend in commissions at our custodian to buy or sell stocks, bonds, mutual funds and ETFs. It’s much harder to measure the market impact of your trading, or how much you pay as a price-taker (like us) between the price to buy a security (the offer) and how… Read More

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