27 Jan 2014

Emerging Markets Tail Wags Dog

Concerns about a slowdown in China’s economy appears to be the ‘go-to’ rationale for the selloff, although there hasn’t been any new data since the Purchasing Index Managers (PMI) report that we discussed on Friday. A secondary, but possibly more plausible explanation is that investors are looking at the weakness in Emerging Markets currencies and are concerned about the end of the Federal Reserve’s quantitative easing program. We noted the… Read More

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27 Jan 2014

Time to Exit Emerging Markets?

Emerging markets (EM) had a tough time last year, down about five percent while US markets rose by basically one-third.  Given that the losses are extending into 2014, it’s natural to wonder whether we should remain invested in EM. The short answer is that we certainly don’t intend to withdraw or reduce our position there, and, in fact, we are actually considering increasing our allocation slightly. Acropolis has held EM… Read More

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21 Jan 2014

Acropolis vs Harvard Endowment

I didn’t apply to Harvard because I was certain that they would not admit me. My grades were fine and scores were so-so, but at that time they were accepting only nine or ten percent of applications and I knew that the other kids had top grades and scores AND were fluent in four languages, captain of multiple teams and fought poverty on the side. Or, worse yet, their parents… Read More

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17 Jan 2014

How We Use Past Performance

Yesterday’s insight about the Morningstar Manager of the Year generated a lot of interest and feedback from readers.  Thank you!  I appreciate your replies and make it a point to respond to all of them. While we’re on the subject, I also want to thank you for completing the satisfaction survey that we sent 10 days ago. I am pleased to report that when you were asked whether you would… Read More

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16 Jan 2014

Morningstar’s Manager of the Year

Markets were higher today on upbeat earnings and manufacturing data.  The S&P 500 closed at an all time high and is now up 0.07 percent for the year!  Who knew such a little return could be so exciting. Much of the excitement about earnings came from Bank of America (BAC), which posted its highest annual profit since the financial crisis.  Back in 2007, when BAC had a market capitalization of… Read More

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13 Jan 2014

Bond Yields – Spread ’em

Stocks were almost back to even for the year when investors pulled back yesterday beginning after the lunch hour.  There was no obvious single driver sending prices lower, although it appears to have started in consumer discretionary stocks, where losses were the heaviest, down -1.94 percent on news from the retail sector about a slow Christmas. The nervousness among stock investors has sent bond prices higher with the yield on… Read More

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13 Jan 2014

December Jobs Data Disappoints

Markets were slightly higher on Friday despite the surprisingly weak employment situation that was well below expectations. Bonds rallied sharply on the report with the yield on the 10-year US Treasury bond dropping almost one tenth of one percent, from 2.97 percent to 2.88 percent on Friday.

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10 Jan 2014

Are You Liquid?

US stocks were narrowly lower yesterday as markets effectively stood still in front of the employment report coming out this morning.  Bond prices have gained ground as the 10-year Treasury note yield fell to 2.98 percent. Earnings season officially started yesterday with Alcoa, the aluminum maker, whose earnings were poor on two impairment charges for acquisitions made a decade ago.  At the same time, Alcoa reported a settlement with the… Read More

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9 Jan 2014

Inflation Measurement or Manipulation?

  US stock markets were almost absolutely flat yesterday, as seen investors digested the Federal Open Market Committee (FOMC) December minutes. Recall that this was the meeting where the Fed decided to slow down their monthly bond-purchasing program to $75 billion per month, so the minutes were particularly interesting. There were no major surprises (hence the stock markets collective yawn), but it was good to see that there was widespread… Read More

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8 Jan 2014

Growth vs Value in 2013

Looking back at the year that was in 2013, one of the most interesting questions in my opinion is which style won: growth or value?  Before answering the question, let’s take a quick minute to discuss these two styles. In short, value is the tendency for cheap stocks to outperform expensive stocks.  Simple enough, right?  It sounds like something legendary investor Ben Graham or his prodigious student Warren Buffet might… Read More

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