16 Dec 2014

Bonds Surprise and Delight

While no one expected the yields on bonds to fall materially this year (and remember, falling yields translate into higher prices), some elements of the bond market performance have been perfectly normal. The chart below shows the year-to-date performance of selected bond indexes through Friday, December 12, in blue. The orange bars show the performance of each index since inception of the indexes in 1976 through the end of November,… Read More

By David Ott Tags: ,
12 Dec 2014

Portfolio Construction: Get Your Yellow Hard Hat On

Sometimes I inadvertently slip into financial jargon that is meant to convey a very specific message but ends up being gobbledygook that is off-putting for a lot of people. Recently, I used the term ‘portfolio construction’ in a meeting and the client, understandably said, ‘Dave, I know you mean how it’s built, but what exactly are you talking about?’ It’s true, the term portfolio construction sounds obvious but isn’t necessarily…. Read More

By David Ott Tags: ,
11 Dec 2014

Tony Robbins: From Life Guru to Markets Master

Growing up, I watched get-rich-quick infomercials, from selling vitamins through tiny classified ads in thousands of newspapers ($50,000 per week!) to flipping real estate (buy a home with nothing down and walk away from the closing with a $30,000 check!). Although Tony Robbins didn’t sell get-rich-quick schemes, he sold something even more enticing: how to unleash the power already within you to live an extraordinary life – achieving your ultimate… Read More

By David Ott Tags: ,
10 Dec 2014

Index Funds Transform Investment Landscape

The Wall Street Journal reported yesterday that a new study suggests that index funds account for 23.1 percent of all 401k fund balances (read the full article here; subscription may be required). The study by BrightScope, a financial information company, reviewed 35,000 Federal Form 5500s that 401k plans are required to file each year with the Department of Labor, from 2012, the most recently available data. As of 2012, 401k… Read More

By David Ott Tags:
9 Dec 2014

Forecasting Oil Prices

After falling interest rates, the biggest surprise of 2014 is the dramatic selloff in oil prices. One of the great things about having a Bloomberg Terminal, is that you can go back in time and look at forecasts as of some date in the past. So, I entered my time traveling machine to see what the professional forecasters had to say about what oil prices might do in 2014. Spoiler… Read More

By David Ott Tags: ,
8 Dec 2014

Jim Cramer Gets Burned in Lightening Round

I love Wall Street soap operas. I’ve written about Bill Gross’ departure from PIMCO two times (here and here) and, for me, it’s the gift that keeps on giving. There was another long exposé on Bloomberg yesterday but I decided not to write about it hoping that you aren’t afflicted by the schadenfreude that sometimes gets me. Yesterday, it was reported that an activist investor is going after Jim Cramer,… Read More

By David Ott Tags: ,
4 Dec 2014

Perpetual Income

The question about when interest rates will rise has been a big question around here for several years, and we still don’t know. Most investors are worried about rising interest rates and most people, including me, have been very surprised this year to see the yield on the 10-year US Treasury note fall from 3.00 percent to 2.29 percent, as of yesterday. The direction of interest rates matters when you… Read More

By David Ott Tags: , ,
3 Dec 2014

We Are the World: Global Investing

The good news is that the S&P 500 is up almost 14 percent this year through yesterday. The bad news is that no other equity asset class is doing nearly as well. Most clients that I’ve been talking to understand why we diversify, but a few of them have said something along these lines: ‘Dave, I hear what you’re saying and you’re probably right, but shouldn’t we do something different?… Read More

By David Ott Tags: