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

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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

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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

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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

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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

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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

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30 Dec 2014

Insider Trading Made Easy

Just before the 2008 financial crisis, a Wall Street insider tipped off the Securities and Exchange Commission (SEC) to insider trading at a large, successful, but largely little known hedge fund, the Galleon Group. The founder, Raj Rajaratnam, had a vast network of contacts that he would pay in exchange for confidential information about a company that would affect its stock price when the information became public. Ultimately, he was… Read More

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9 Dec 2014

Forecasting Oil Prices

After falling interest rates, the biggest surprise of 2014 is the dramatic selloff in oil prices. One of the great things about having a Bloomberg Terminal, is that you can go back in time and look at forecasts as of some date in the past. So, I entered my time traveling machine to see what the professional forecasters had to say about what oil prices might do in 2014. Spoiler… Read More

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24 Nov 2014

Why Invest in Commodities?

I was emailing a friend who works in the industry on Friday about asset classes that are giving us trouble this year. We both have diversified portfolios for our clients and when you’re truly diversified, something is always giving you a headache. For us, for example, micro cap stocks as measured by the Russell Microcap index are a real aggravation this year, down -1.85 percent this year through Friday compared… Read More

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14 Oct 2014

Crude Oil Falls: A Tax Cut for Everyone

At this point, the S&P 500 is still positive for the year, unlike all of the other (smaller) US asset classes or developed markets overseas, which are all down. Emerging markets and REITs are also up this year, but emerging markets are recovering from a loss of -3.86 percent last year and REITs are benefitting from the surprise drop in interest rates. When we think about asset class results, like… Read More

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