30 May 2017

Bond Market Views on Growth and Inflation Today

Almost a year ago, the yield on the 10-year US Treasury hit an all-time low, falling to 1.36 percent, just below the previous all-time low of 1.39 percent, set in 2012. After the yield on the 10-year bottomed last summer, the yield drifted slowly higher until the election when, boom, it shot dramatically higher overnight.  Investors were optimistic that the Trump administration might bring faster economic growth through a combination of… Read More

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22 May 2017

Quants and the Media

Yesterday, the Wall Street Journal (WSJ) printed four articles in what appears to be a 17 article series on what they call ‘the quants.’  I was so excited to see these articles because I think you could fairly describe some of the strategies that we pursue as quantitative in nature. Unfortunately, I was turned off immediately.  The second paragraph of the first article talked about how the quants use ‘high… Read More

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15 May 2017

Watching for Traps, Growth & Value

Last week was particularly tough on retailers thanks to a report that showed online spending increased 1.4 percent while it declined -0.50 percent for brick and mortar stores.  Department stores like Nordstrom’s and JC Penny both fell more than -10 percent on earnings and forward guidance news. Even though we don’t own either of these two retailers, we own others and the bad news made its way into the stocks… Read More

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8 May 2017

Woodstock for Capitalists

This past weekend was the ‘Woodstock for Capitalists,’ otherwise known as the Berkshire Hathaway annual meeting, where each year, tens of thousands of shareholders descend on Omaha, Nebraska to hear from the Oracle of Omaha, Warren Buffett. I’ve never attended myself, but I’ve read the book and watched the documentary (a trailer can be seen here).  Before Airbnb, it was next to impossible to find a place to stay and… Read More

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1 May 2017

Remembering Dan Esser

On the morning of Tuesday, April 18th, Acropolis received the terrible news that Dan Esser passed away earlier that morning. It’s always upsetting when someone young dies unexpectedly, and Dan was just 57.  He had been in the office the day before, following three weeks of recovery from a routine surgery.  He was in good spirits and, by all outward appearances, seemed fine. Acropolis is a tight-knit place, in part… Read More

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17 Apr 2017

The Fed’s Next Move

During the 2008 financial crisis, the Federal Reserved used a variety of tactics to stabilize the economy and financial system.  First they cut interest rates, but when they got to zero and couldn’t cut anymore, they started buying bonds in the open market in a process call quantitative easing (QE). The program was controversial because a lot of people thought that it would stoke inflation.  While that didn’t come to… Read More

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10 Apr 2017

Markets are Quiet, Enjoy Them for Now

The stock market has been unusually quiet this year.  For example, the S&P 500 didn’t fall by more than one percent until March 21st, just before the quarter ended. The Chicago Board of Options (CBOE) Volatility Index (VIX), which measures expected volatility, had the second lowest average reading for the quarter since the index was created in 1992. The chart below plots the VIX over the last three quarters in… Read More

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3 Apr 2017

A Long View of Non US Stocks

For what feels like the first time in forever, foreign stocks are outpacing US stocks so far this year.  The table above includes the MSCI All Country World exUS index, which combines all developed and emerging markets.  As of Friday, the MSCI ACWI is outperforming the S&P 500 by 1.79 percent. That contrasts with the results over the last five years ending in March, when the S&P 500 earned 13.3… Read More

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20 Mar 2017

A Fund Struggles and I Can’t Look Away

There are a fair number of reasonably well known investors that I keep my eye on even though I know that we won’t ever invest in their funds.  One of the most fascinating investors in my opinion is Bruce Berkowitz, manager of the Fairholme Fund (ticker: FAIRX). Berkowitz caught my attention at an investment conference bank shortly after the 2008 financial crisis because he had a booth that was swarmed… Read More

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13 Mar 2017

Meet the Fed’s FOMC

The Federal Reserve will obviously be in focus this week and we talk about the Fed and its members a lot and I suspect that not everyone quite knows how the Fed works.  Today is a quick primer. The Federal Reserve System was created by the Federal Reserve Act in 1913 to serve as a formal lender of last resort to banks during panics and times of a liquidity crisis…. Read More

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