27
Jan
2015
Currency Traders Beware
When the Swiss National Bank (SNB) broke their peg to the euro, the Swiss franc shot up 17 percent overnight. Investors that owned Swiss francs had a fantastic return and those that had bet against the franc, or gone short francs, lost an equivalent amount (more details here). That shock caused several currency brokers around the world to fold, although the biggest firm, FXCM managed to stay afloat thanks to… Read More
26
Jan
2015
When a Strategy Stumbles
Last year was tough for some of our stock strategies. For example, we take a portion of our large cap portfolio and invest in ‘value’ stocks. Another, equally sized percentage is invested in a strategy that buys ‘momentum’ stocks. I’m going to oversimplify here, but value stocks can be thought of as ‘cheap’ stocks. For a stock to be cheap, the market value of a company has to be low… Read More
23
Jan
2015
The ECB Strikes Back
After years of stalling, the European Central Bank (ECB) finally launched a meaningful quantitative easing (QE), or bond-buying program. ECB President Mario Draghi announced that the ECU will buy €60 billion, which at today’s rate is roughly equivalent to $69 billion dollars. The program will begin in March and is expected to last through at least September 2016, which means that the ECB is expected to spend close to €1… Read More
22
Jan
2015
Burgernomics
The Swiss National Bank (SNB) revaluation of the Swiss franc caused me to look at The Economist magazine’s ‘Burgernomics’ website (which can be found here). While it may not be popular with high minded economists, the Burgernomics site attempts to put a fundamental value on currencies from around the world by looking at the cost of buying a Big Mac in each country. In theory, a Big Mac ought to… Read More
21
Jan
2015
Are New Taxes Coming?
It seems like only yesterday that the tax issues were finally settled after years of uncertainty, although it was actually 2012. Judging from the President’s State of the Union address last night, it appears that taxes may be in flux again. First, a quick and dirty background on the estate tax law as it stands today. For those that pass away in 2015, there is no federal estate tax unless… Read More
20
Jan
2015
CalPERS Scales Back Private Equity
Over the summer, the California Public Employees Retirement System (CalPERS) announced that it was eliminating its exposure to hedge funds. CalPERs is making headlines again by saying that they are going to substantially cut their exposure to private equity, the other major strategy that falls under the ‘alternative investment’ umbrella. I’ve made the case for a decade that we can do almost anything a very large institution can do on… Read More
16
Jan
2015
Central Bank Shocker
In September 2011, Switzerland’s central bank, the Swiss National Bank (SNB) decided that it didn’t want the Swiss franc to become too valuable against the Eurozone common currency, the euro. For better or for worse, the Swiss franc has been considered a safe haven and during the sovereign debt crisis a few years ago, money poured into the franc. That was a concern for the SNB since it could have… Read More
15
Jan
2015
Portfolio Insights
We are pleased to provide a digital copy of Portfolio Insights, our quarterly newsletter. This issue is particularly exciting because it features an entirely new look and feel for the same great content that we’ve been creating for the last dozen years. Table of Contents: Evaluating Global Stock Exposure Predicting Interest Rates Review of 2014 The Allure of Market Timing New at Acropolis Six Financial Planning Myths The US Dollar… Read More
15
Jan
2015
How High Should Interest Rates Go?
As recently as Christmas Eve, the market believed that there was a 92.4 percent chance that the Federal Reserve would raise interest rates in 2015. The probability is based on prices for Federal Funds futures price contracts at the Chicago Board of Trade (CBOT). In the first few weeks of this year, I started hearing market chatter that the Fed may have to push off raising interest rates until 2015… Read More
14
Jan
2015
Two Questions for Bond Investors
Last year, the Barclays Aggregate bond index (the Agg) gained 5.97 percent. Overall, our bond portfolios earned less than that – not a lot less, but less (it varies among clients, so I will be intentionally vague here). Also, while our returns were less on a relative basis, we are happy with the absolute number – mid-single digit returns are not too shabby for bond investors in the current interest… Read More