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

By David Ott Tags: ,
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

By David Ott Tags:
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

By David Ott Tags:
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

By David Ott Tags:
28 Apr 2015

Attention Gold Bugs: Don’t Worry, Be Happy

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

By David Ott Tags:
20 Apr 2015

Finding True Diversification in Alternatives

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

By David Ott Tags:
11 Mar 2015

Currencies and Candy

The falling euro appears to be the primary culprit for yesterday’s market jitteriness and clearly seems headed for ‘parity’ with the US dollar, which means an exchange rate of 1:1 between the two currencies. The euro traded at 1.2 US dollars per euro at the beginning of the year and now trades at around 1.07 dollars per euro. Moving to a dollar per euro would represent a 20 percent decline… Read More

By David Ott Tags:
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

By David Ott Tags:
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

By David Ott Tags: ,
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

By David Ott Tags: