What Success Looks Like
14 Aug 2015
A while back, a colleague recommended that I listen to a podcast on Bloomberg called Masters in Business with Barry Ritholtz. On the podcast, Ritholz interviews luminaries from the investment industry (and a few others) and talks about my favorite topic. Although I had listened to one featuring AQR co-founder Cliff Asness, I really didn’t take interest because I had seen Ritholtz on CNBC and didn’t think he was particularly… Read More
Buffett Bags an Elephant
11 Aug 2015
Warren Buffett wrote in Berkshire Hathaway’s 2010 annual report that they ‘will need both good performance from our current businesses and major acquisitions. We’re prepared. Our elephant gun has been reloaded, and my trigger finger is itchy.’ At that time, he was just coming off his largest deal ever, purchasing the railroad Burlington Northern Sante Fe for $26.7 billion in 2009. In 2013, it appeared that he had bagged his… Read More
The Secret to Stock Buyback Returns
05 Aug 2015
As I wrote earlier this week, the plunge in oil prices has dramatically cut profits for energy firms (see the article here). Some of those companies have been using their excess cash over the last few years to buy back shares of their own stock, which reduces the number of shares outstanding held by investors. Last year, I looked at buybacks versus dividends (read the article here) and today I… Read More
Greek Stocks Fall 16% in One Day; Markets Still Efficient
04 Aug 2015
Thankfully, Greece has been out of the headlines for a few weeks as the Mediterranean country continues to negotiate their third bailout in five years. In the meantime, some of the capital controls are beginning to lift: banks reopened on July 20 (although withdrawals are still severely limited) and yesterday, the Greek stock market opened again, albeit -16 percent lower. Obviously, that’s an enormous decline – the S&P 500 has… Read More
When the Index is Wrong
29 Jul 2015
When you buy an index fund, it’s natural to expect that your fund will earn basically the same return as the index. In a perfect world, you should expect an index fund to earn the index returns minus the cost of the index fund. If an index fund charges 0.1 percent annually and an index earns 10 percent, you should expect to earn 9.9 percent. There are other reasons why… Read More
Diversification in Today’s Market
27 Jul 2015
One of the bedrock ideas behind Modern Portfolio Theory (MPT) is that diversification lowers risk. A simple view of that concept is that a portfolio of many stocks is less risky than a portfolio that contains one stock because the impact of a failure like Lehman Brothers or Enron won’t blow apart your whole portfolio. Of course, all stocks can go down substantially, like they did in 2008, so diversification… Read More
Portfolio Insights
15 Jul 2015
We are pleased to provide a digital copy of Portfolio Insights, our quarterly newsletter. Table of Contents: Protect Yourself From Fraud Inside the Economy Stock Market Summary Maximizing Social Security Is Janet Yellen Bluffing? Click here to read this issue: 2015 Q2 Portfolio Insights
When Bubbles Burst: China Edition
08 Jul 2015
While Greece is getting all of the headlines, the bubble in mainland Chinese stocks that I wrote about in April and June is now bursting (click here or here for refreshers). The Shenzhen index is down -38.5 percent from its peak on June 12th through yesterday and the Shanghai index is down -27.9 percent over the same time period. The following shows these two indexes in yellow and orange compared to the S&P 500 in blue… Read More
How Investors See the Greek Problem in Two Charts
07 Jul 2015
While I’m dying to take a break from the ongoing financial crisis in Greece, I also want to show how the calamity isn’t destabilizing markets so far. Importantly, US stocks barely budged yesterday in response to the news, although stocks overseas didn’t fare as well. The FTSE Developed Markets ex North America index fell by -1.61 percent while the FTSE Emerging Markets Index dropped -1.98 percent. While prices tell us… Read More
Doing Well by Doing Good
02 Jul 2015
The end of the second quarter is always a relief for me because for the past six years, it has meant that we are finally through getting our CEFEX certification. As you probably already know, we serve our clients in a fiduciary capacity, which means that we are required to act in the best interest of our clients. You may think that everyone in the financial services industry has to… Read More