The Trouble with Hedge Funds
15 May 2015
Yesterday, in my article about activist investors, I referred to a Yale academic who said that one hedge fund index showed that activists had sluggish performance, but then said that this index series is widely known to be troublesome without any explanation for what makes them problematic. Hedge fund ‘indexes’ are well known to overstate performance and understate risk, making them appear more appealing to investors than they really are. The… Read More
Estimating the All-In Costs
05 May 2015
While I was in New York over the weekend, my sister walked me past a six-story townhouse right off of Fifth Avenue that now belongs to one of my (very few) high school girlfriends. It’s a pretty nice house with views of Central Park and apparently cost them a cool $26 million (not including any renovation and decoration costs). This woman married her college boyfriend who is now the… Read More
Attention Gold Bugs: Don’t Worry, Be Happy
28 Apr 2015
Last week, I wrote that it was difficult to find ‘alternative’ investments that were truly diversifying and that, as a whole, alternatives provide basic broad market exposures that you can find less expensively elsewhere. Click here to refresh your memory. A client wrote in after that email to ask if we would ever consider gold. I wrote about gold a little more than a year ago (twice because it’s such… Read More
Flash Crash Surprise, Five Years Later
27 Apr 2015
It’s been almost five years since the ‘flash crash,’ when markets fell by about nine percent in less than 40 minutes in the middle of a trading day. Some well-established companies like Procter & Gamble fell by 40 percent within one minute while others like Sam Adams traded for just one penny per share even though it was selling for around $60 per share minutes earlier. I remember it vividly… Read More
New Thoughts on the Active Passive Debate
24 Apr 2015
Wednesday night, I was reading a new paper by some of the principles at AQR titled, ‘Fact, Fiction and Value Investing.’ You can find a copy here and this follows on a paper that they wrote last year called, ‘Fact, Fiction and Momentum Investing (which you can find here).’ Now that you’ve read our primers on value and momentum investing, no further explanation is required, although if you want a refresher, you… Read More
Momentum: A Moving Body in Motion
21 Apr 2015
In recent weeks, I’ve written about two well known risk factors, the size premium and the value premium. Today, I’ve got a more difficult topic to cover: momentum. Virtually everyone agrees that you can find evidence of momentum in the data, but there’s a lot of disagreement about why it exists and how it should or shouldn’t be applied in the real world. In short, momentum is the tendency for stocks that… Read More
Finding True Diversification in Alternatives
20 Apr 2015
They say that the only free lunch in finance is diversification. With stocks trading at lofty valuations and bonds yields historically low, it’s sensible to look at other alternative strategies that could potentially lower risk or increase return (or better yet: do both). Over the last five years, investors have flocked to ‘alternative’ investments, although the definition of alternative is pretty broad and can include things as generic as REITs… Read More
Portfolio Insights
15 Apr 2015
We are pleased to provide a digital copy of Portfolio Insights, our quarterly newsletter. Table of Contents: The Trouble with Forecasting Inside the Economy Stock Market Summary Bond Market Review Choosing a Trustee Best Execution for Clients Click here to read this issue: 2015 Q1 Portfolio Insights
Behavior Beats Strategy
15 Apr 2015
In the past two weeks, I’ve written primers on two of the strategies that we use, over-weighting to small cap stocks and investing in cheap, value stocks. One of the Portfolio Managers here at Acropolis correctly reminded me that all of the best strategy in the world can be undone with poor investor behavior, so I thought I would try and put some numbers on that idea. To demonstrate how… Read More
A Value Investing Primer
14 Apr 2015
Value investing is perhaps the oldest and best-known investment strategy, which basically suggests that cheap stocks tend to outperform expensive ones. The strategy was first popularized by Benjamin Graham, teacher and mentor to Warren Buffett, who also co-wrote one of the most important books in finance, Security Analysis, with David Dodd in 1934. Graham introduced the idea that stocks have an ‘intrinsic’ value that can be roughly estimated with a… Read More