23 Jun 2016

REITs: An Asset Class or Just Another Sector?

Back in March of last year, S&P and MSCI jointly announced that they would reorganize the Global Industry Classification Standards (GICS) so that REITs will be its own stand-alone sector instead of a component of financials. Most of the time, S&P and MSCI are competing index providers, but for reasons that I don’t know, they have worked together defining sectors (10), industry groups (24), industries (68) and sub-industries (156) around… Read More

By David Ott
22 Jun 2016

Bullard’s Errant Dot Matches Market

In the market summary section above the performance table yesterday, I mentioned that St. Louis Fed President James Bullard had broken ranks with his fellow Fed members and his previous statements and said that he expected rates to stay even lower for longer. I made a quick reference to the famous ‘dot plot’ and said that his dots were pretty far from the consensus.  I thought today I would show the dot… Read More

By David Ott Tags: ,
21 Jun 2016

Bond Market Continues to Surprise

Even though I was on vacation, I couldn’t resist checking market results right before bed (and sometimes during the day).  I was shocked by two benchmark yields: the German 10-year below zero and the US 10-year at 1.57 percent. German 10-year yields have never been negative and the US 10-year has was just 0.18 percent off its all-time low of 1.39 percent, set back in July 2012.  At one point,… Read More

By David Ott Tags: , ,
16 Jun 2016

Financial Times Recognizes Acropolis

I am pleased to announce that for the second time, Acropolis has been named a top Registered Investment Advisor (RIA) by the Financial Times (FT). The FT starts by looking at firms with more than $300 million in assets under management, which is about 1,500 RIAs.  They invite firms to fill out a questionnaire and then evaluate the companies based on six key attributes: assets under management (AUM), asset growth,… Read More

By David Ott Tags:
3 Jun 2016

Small Caps Simultaneously Over- and Under-Perform

You may have noticed that the small cap index in the table above, the Russell 2000, has been gaining ground recently on the S&P 500, the benchmark index for large cap stocks. The chart below shows the return for the Russell 2000 (in orange) as nearly caught up with the S&P 500 (in blue).  The return difference, as we can see in the table is just one-third of one percent,… Read More

By David Ott Tags: , ,
31 May 2016

Lessons from Lawn Care

Three or four years ago, I gave up cutting the grass, which I wasn’t too happy about because I really liked seeing a physical change to my yard after a few hours of work. I love my job, but at the end of a year, the numbers on a screen may have changed, but they are still numbers on a screen.  It’s simply not as inherently satisfying. In any case,… Read More

By David Ott Tags: ,
20 May 2016

Know A Banker? Love a Banker?

Yesterday, Ryan Craft and Cliff Reynolds sent out their email newsletter, ALM Insights.  If you don’t know what ALM stands for, it just means that you’re not a banker (it stands for Asset Liability Management). As you know, banks take deposits from folks like you and me and lend the money out to consumers and businesses.  But they can’t loan out all of the money that they take in, they… Read More

By David Ott Tags: ,
19 May 2016

Fed Minutes Suggest Markets May Wrong

The FOMC minutes release was the macro focus of the day.  The minutes said that most participants judged that if second quarter data showed a pickup in economic growth, then a rate increase might be appropriate. Given the weak first quarter and that live tracking estimates of current growth are much better, the statement strongly implies a June hike. The FOMC members observed that the labor market continues to improve… Read More

By David Ott
17 May 2016

PIMCO Shows that Discipline Can Pay Off

Lately, I’ve been interested in looking at strategies that have struggled in the past, in part because some of our strategies are struggling right now. Take value, for example, the strategy of buying cheap stocks with the idea that they outperform the overall market over time.  It’s a tried and true approach dating back to the 1930s, but the last year has been so rough that the 10-year track record… Read More

By David Ott Tags: , ,
16 May 2016

Buffett Considers 2nd Tech Investment

Last December, I wrote that fading internet stock Yahoo was trading below the sum of its parts. You can read the whole article here, but the basic idea was that when you looked at the component value of Yahoo’s major parts, the market was saying that the core business was worthless. At that time, Yahoo owned stock in Alibaba worth $32 billion, stock in Yahoo Japan worth $8.5 billion and cash… Read More

By David Ott Tags: ,