The 2004 book, The Wisdom of Crowds, by James Surowiecki, starts with a vignette about the famous British scientist Francis Galton set in 1906. In the story, Galton travels to the county fair and finds a weight judging competition, where the crowd could wager on how much a fat ox weighed. For a sixpence, people could write down their wager and the closest person one a prize (but not the… Read More
My favorite author, Michael Lewis, appeared on 60 Minutes last Sunday and started out by saying, ‘The stock market is rigged. The United States stock market, the most iconic market in global capitalism, is rigged.’ A few second later, when anchor Steve Kroft asked who the victims were, Lewis said, ‘Everybody who has an investment in the stock market.’ Wow – that’s scary! Thankfully, his comments aren’t really true. It’s… Read More
Thanks in large part to today’s rally, the S&P 500 closed up 1.81 percent for the quarter. That might not seem like much, but if you annualize it, it works out to an annualized return of around 7.5 percent. I’m not saying that the market will return 7.5 percent for the year since there are nine months to go, but I am saying that what the market earned in the… Read More
When a company earns a profit, all accounting maneuvers aside, there is more cash in the till at the end of the year than there was in the beginning. Some of the money reinvested in the business in the form of capital expenditures (often called CAPEX), which refers to the purchase or upgrade of physical assets like property, buildings or equipment. When management has made all of their capital expenditures,… Read More
A few days ago, I was listening to the podcast EconTalk (yes, that’s what I do in my ‘off’ time). The host, economist Russell Roberts interviews well known economists about a whole hos to economic subjects, from the broad theory to the day-to-day application. The episode that I was listening to (but haven’t yet finished), featured Gene Fama, the University of Chicago Booth School of Business professor who came up… Read More
Markets closed lower on Friday, but were up strongly for the week. The S&P 500 was up 1.38 percent, the Russell 2000 was up 1.04 percent, the MSCI ACWI ex US was up 0.23 percent and the Barclays Aggregate bond index was up 0.18 percent last week. Please note that I’ve made an index change from the MSCI EAFE to the MSCI ACWI ex US index starting today. The reason… Read More
A lot of our attention at Acropolis is focused on asset classes like US large or mid cap stocks, emerging markets or bonds. We also spend a lot of time researching and trying to optimize strategies like value, momentum, size and quality. Another dimension that factors into our decision making process are stock sectors (bond sectors too, but I’ll save that for another day). Within the S&P 500, there are… Read More
During the tech bubble in the late 1990’s, I had the feeling that seeing five years of 20 percent plus returns was a one in a lifetime type event and that was going to be it for me. Looking at the data today, that was a pretty good bet since there have only been a few times when the average return for five years has been greater than 20 percent. … Read More
Stocks were basically flat yesterday after Tuesday’s strong rally. Some smaller economic releases like the ADP private payrolls report and the ISM services data were softer than expected, but the news from the Fed’s ‘beige book’ was modestly positive. All of the reports included the negative impact of this winter’s cold weather.
