29 Feb 2016

Applied Investment Rigor

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

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8 Dec 2015

When Trends Reverse

Last Thursday, Mario Draghi, the President of the European Central Bank (ECB) disappointed markets by not increasing their current bond buying program. It was a shock to markets, although you wouldn’t really know it from looking at the stock market.  The S&P 500 lost -1.44 percent, and while that’s a fair amount, it definitely falls in the normal category and not in the shocking category. The real action was in the… Read More

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30 Nov 2015

Performance Fees Get Exposure

The California Public Employees’ Retirement System (Calpers) is back in the news again (I’ve written about them previously here and here). This time, they’ve decided to disclose how much they’ve paid in performance fees to private equity fund managers and the number is a whopper at $3.4 billion. Private equity, hedge funds and some other kinds of private funds are paid on what is known as a ‘2 and 20’ schedule which… Read More

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8 Oct 2015

Who is to Blame for the August Market Selloff?

When markets fell sharply in late August, a number of traditional managers pointed their fingers at a relatively new breed of asset managers pursuing a relatively new strategy and blamed them for the spike in market volatility. There are a lot of articles covering the public blame game; here are a few from the Financial Times, the New York Times, the Wall Street Journal, and Barron’s. The new strategy in question… Read More

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17 Sep 2015

Puzzling Hedge Fund Returns

We all know that stocks had a tough August with the S&P 500 down -6.03 percent.   Things weren’t better in other parts of the world either as the MSCI ACWI ex US index, which is basically the rest of the world outside of the US, fell by -7.59 percent. Even the bond market, as measured by the Barclays Agg lost money, fell -0.14 percent. If stocks and bonds lost money,… Read More

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4 Sep 2015

Oil as an Inflation Hedge

Watching the bottom fall out for oil prices is really one of the most dramatic things that I’ve witnessed in several years.  Thankfully, it hasn’t had too much direct impact on us because we don’t have straight exposure to commodities, click here for the details on why we’ve avoided commodities). Of course, we’re all affected by the price drop.  The good news is easy to remember because I get a reminder every… Read More

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21 Aug 2015

Emerging Market Currencies Roil Stocks

In addition to the growing concerns about global economic growth, the Chinese stock market sell off and yuan devaluation and falling oil prices, markets are increasingly spooked by other emerging market currencies and stock prices. An average of 15 emerging market currencies is down about 10 percent so far this year while countries with large commodity exposure are suffering even more.  For example, so far this year, the Russian ruble… Read More

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31 Jul 2015

Acropolis Dodged a Bullet

One of the hottest trends in investing over the past five to ten years has been investing in master limited partnerships (MLPs). As the name states, an MLP is a limited partnership that is somehow engaged in the natural resources business.  MLPs engage in the exploration and development (upstream), processing and transportation (midstream) and distribution and marketing to end consumers (downstream) of products like timber, coal, minerals, oil natural gas… Read More

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18 May 2015

Nobody Knows Nothin’

The Wall Street Journal ran an interesting article over the weekend, ‘How Much Should a Currency be Worth?  No One Really Knows.’  Click here for the article, though a subscription may be required.     We don’t have any direct investment in currencies, but the headline caught my attention because I have the view that no one really knows what anything is really worth.    The article focuses on the… Read More

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15 May 2015

The Trouble with Hedge Funds

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

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