King of Wall Street Remembered
10 Mar 2016
I read a newsletter on and off that always features an obituary. I know a lot of people read them every day, but I find that a little depressing. I wrote about David Bowie’s passing back in January, and at the risk of writing too many obits, I thought I would note the death of John Gutfreund yesterday, who was dubbed the King of Wall Street by BusinessWeek magazine. Gutfreund… Read More
Performance Transparency
02 Mar 2016
We have another special posting from Michael Lissner today, who will be writing Daily Insights more regularly. Also, there was a large typo yesterday, which said that we had traded $223.2 billion worth of stocks and ETFs. Far from it: we traded $223.2 million in stocks and ETFs, which is still a lot, but less than what I wrote, which makes more sense given our $1.2 billion in assets under management…. Read More
The Inside Story on Trading Costs
01 Mar 2016
Some things are easy to measure, like the internal costs of a mutual fund or exchange traded fund (ETF) or how much we spend in commissions at our custodian to buy or sell stocks, bonds, mutual funds and ETFs. It’s much harder to measure the market impact of your trading, or how much you pay as a price-taker (like us) between the price to buy a security (the offer) and how… Read More
Applied Investment Rigor
29 Feb 2016
Barron’s cover article this weekend featured AQR, one of the fund companies that we use. You can find the article here, but a subscription is required. The article was great, really explaining the firm and many of their processes – so much so that one of the online commenters asked, ‘what is this, an ad?’ My only disappointment was that the article really highlighted their alternative mutual funds, strategies like managed futures… Read More
Is Value Investing Dead?
26 Feb 2016
Value stocks are undoubtedly having a tough time these days. As I first wrote last November (click here for the article), value stocks are undergoing their worst period of underperformance since the tech bubble during the late 1990s. For the 10 years ending January 31st, the Russell 1000 Value index is up 7.03 percent compared to 7.92 percent for the Russell 1000 index of large cap stocks and 8.68 percent… Read More
An Unusual Energy IPO
24 Feb 2016
I’ll bet that when you think of IPOs, or initial public offerings, you think of hot tech stocks like Facebook, Tesla or GoPro (granted, some of these stocks are a little less hot these days). I do too, so I was a little surprised to read in the Wall Street Journal that the biggest IPO this year is essentially a blank check for what is known as a Special Purpose… Read More
Fed Policy: From ZIRP to NIRP?
16 Feb 2016
In the third quarter last year, I wrote at least two articles that used the acronym ZIRP, which stands for ‘zero interest rate policy.’ At the time, all of the conversation was about how the Fed was ending ZIRP with their first interest rate hike in seven years. Today is the two-month anniversary of the hike and the discussion has moved from ZIRP to NIRP, which stands for ‘negative interest… Read More
Interest Rates in Perspective
05 Feb 2016
So far, 2016 has been full of surprises, but most of the attention has gone to wildly volatile oil and stock prices. Less noticed, but equally important, has been the boost on bond prices, as seen by the dramatic fall in bond yields. The 10-year US Treasury note, the bellwether benchmark, started out the year yielding 2.27 percent, 10 basis points (a basis point is one hundredth of one percent)… Read More
Drawdowns Part Deux
27 Jan 2016
Yesterday’s insight on drawdowns was quite popular and enough people asked for the same thing, so I thought I would do an immediate update. (Click here for the original post.) The first request was for the full history of the S&P 500 since yesterday’s chart only went back 25 years. I picked 25 years somewhat randomly, but mostly because the other chart that went with it was difficult to read going… Read More
Drawdowns Help Visualize Losses
26 Jan 2016
Until I read the book ‘Hedge Hogging’ by Barton Biggs before the 2008 financial crisis, I had never heard the term ‘drawdown,’ which refers to the peak-to-trough decline of an investment or market. A drawdown measures the depth and length of a decline and illustrates how long it takes to earn back money lost from the last peak. It’s a commonly used term in the hedge fund community, partly because… Read More