9 Mar 2015

It’s Good News that Good News is Bad News

The Bureau of Labor Statistics (BLS) offered some good news regarding the employment situation on Friday. The economy added 295,000 new jobs in February, far better than the consensus expectations of 240,000 and the unemployment rate fell from 5.7 to 5.5 percent, a new low since the 2008 financial crisis and the peak unemployment rate since then of 10 percent in 2009. Part of the reason for the decline in… Read More

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6 Mar 2015

Another New Normal?

A few weeks ago, I wrote about negative interest yields on bonds as long as ten years in Europe. (Click here for a refresher) The main point that I was trying to deliver (other than that it’s a crazy mixed up world) was that we really can’t say where yields in the US are going with much confidence. While that’s not a new argument coming from me, the idea that… Read More

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5 Mar 2015

Vanguard Changes Course

I’m a big fan of Jack Bogle and Vanguard, so I was interested to see that Vanguard has made some fairly substantial changes to their Target Date Funds (TDFs). A TDF is a mutual fund that is designed for working people who know roughly when they will retire. For example, if I want to retire at 67 when my Social Security payments begin, I would buy a 2040 TDF. As… Read More

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4 Mar 2015

Another Internal Market Correction

A correction is defined as a 10 percent peak-to-trough decline and a bear market is defined as a 20 percent peak-to-trough decline. With those definitions in mind, it’s worth noting that the utilities sector entered correction territory yesterday after falling 10 percent from their highs at the end of January. Energy stocks are down more than 20 percent since their high last summer, and have been in bear market territory… Read More

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3 Mar 2015

NASDAQ: Party Like It’s 1999

If you were watching CNBC or Bloomberg television yesterday, you saw that the ‘big news’ of the day was that the NASDAQ market crossed 5,000 for the first time since the peak of the tech bubble. Although the financial news media loves to celebrate when indexes cross round numbers (think 2,000 for the S&P 500 or 18,000 for the Dow Jones Industrial Average), they don’t do a whole lot for… Read More

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2 Mar 2015

Buffett Speaks, Acropolis Listens

Warren Buffett released his 50th annual letter to shareholders over the weekend and, as usual, it was an enjoyable read. In case you missed it, here’s a link. The report on 2014 activities was fine, but the really interesting part is a look back at the past, present and future of Berkshire Hathaway that begins on page 24. Buffett spends the first five pages discussing the early days, most notably… Read More

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27 Feb 2015

Trading to Win

A little less than a year ago, author Michael Lewis created a firestorm with his book, ‘Flash Boys: A Wall Street Revolt,’ that chronicled the world of high-frequency trading (HFT). At the time of the launch, he went on 60 Minutes and announced that ‘the market is rigged’ and that everyone who had money in the stock market was a victim of predatory traders.  Michael Lewis is one of my… Read More

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19 Feb 2015

Negative Yields: It’s a Crazy Mixed Up World

One of my most vivid memories from the 2008 financial crisis was when the yield on the US three-month Treasury bill turned negative. Investors were so scared about what might happen that they were willing to pay so much for short-term bills that they would accept negative yields. Investors knew with certainty that they would get back less than their investment. I printed the screen because I thought it was… Read More

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18 Feb 2015

Mutual Funds: Decisions, Decisions..

In a recent issue of one of our industry trade ‘rags,’ the following chart really caught my eye: The chart shows the number of mutual funds by category in the US, according to Morningstar. It’s hard to read, but back in 1990, there were 665 US stock funds, 123 non-US stock funds, 481 taxable bond funds and 686 funds that fall into the ‘other’ category (I am guessing that they… Read More

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17 Feb 2015

Fun With Discount Rates

Far and away, one of the best reads of the year is the Credit Suisse Global Investment Returns Yearbook – and the 2015 edition is no exception. Click here to download. The yearbook is hot off the presses, 68 pages and chock full of thought provoking content, so I am not even close to being finished at this point. One of the articles titled ‘Do Equity Discount Rates Mean Revert?’… Read More

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