11 Nov 2016

Small Cap Surge Continues

One of the interesting elements of yesterday’s trading was that small cap stocks continued to pop, jumping 1.59 percent. I don’t have a particular explanation for this movement, but it’s significant enough that I think it’s worth mentioning and it’s an example of positive volatility.  Too often we think of volatility to the downside, but the movement in small cap stocks in the past few days is a good reminder… Read More

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10 Nov 2016

Mr. Trump Meets Mr. Market

Most people probably caught the wild swings in the Dow and S&P 500, from a five percent drop in futures trading overnight to a 1.1 percent higher close, with most of the action in the 30 minutes before the market opened. Small cap stocks, which gained 3.1 percent during the trading session are particularly interesting because their relative performance to large cap stocks can be viewed as a signal of… Read More

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9 Nov 2016

What the Election Means for Your Portfolio

Just as markets were surprised when British voters elected to leave the European Union, markets wrongly expected Clinton to win last night. When it first became apparent that Trump had a credible path to victory around 10:30 pm CST last night, markets turned negative with futures on the Dow Jones showing a decline of -750 points. In addition to falling stock prices, bond prices rose sharply, with the yield on… Read More

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17 Oct 2016

Buffett’s Wild Ride

Warren Buffett is rightly considered the most successful investor of all-time.  Not only has his holding company, Berkshire Hathaway, grown at a much higher rate than the overall market, he’s managed to earn exceptional returns for much longer than others who have also earned high returns. I was only able to pull data from 1987, but the last 29 years have been extraordinary for Buffett and his fellow shareholders.  Over this… Read More

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25 Aug 2016

Dow Falls 1,000 (One Year Later)

Last year at this time, deep fears about China’s economy caused US markets to drop sharply.  The Shanghai market -8.5 percent one day drop spread to our shores and the Dow Jones Industrial Average (DJIA) fell -1,000 points in a single day. The week before, markets that had dropped by the massive one day plunge sent all of the stock market indexes into a correction, generally defined as a decline… Read More

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19 Jul 2016

Turkey’s Failed Coup and Your Portfolio

Personally, I was a little surprised that stocks held up as well as they did yesterday after the failed coup in Turkey. Even though the political regime ultimately didn’t change, I thought that tanks rolling through the capitol would be enough to remind everyone that emerging markets (EM) are risky. Instead, the MSCI Emerging Markets index gained 0.26 percent and the two main ETFs that track EM stocks both gained 0.88 percent… Read More

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12 Jul 2016

Currency Hedging after Brexit

After Andrea Leadsom withdrew herself from consideration and cleared the way for Theresa May to replace David Cameron as Great Britain’s Prime Minister, I was interested to see how British stocks were faring there after the Brexit. When I looked at the chart, I realized that I hadn’t been paying close enough attention because I was surprised that British stocks are actually up sharply this year – the chart shows a 7.9… Read More

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1 Jul 2016

The Market Hates Uncertainty

One of the phrases that I hear over and over, but simply don’t like, is that ‘markets hate uncertainty.’  Forget the fact that markets are just made up of people and don’t have independent emotions, I’m talking about hating uncertainty. From a theoretical standpoint, let’s think about how uncertainty affects markets.  Let’s start with the idea that the value of an investment is the present value of its future cash… Read More

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30 Jun 2016

Mr. Market Trades the Brexit

Legendary investor Benjamin Graham wrote in his 1940 classic book, The Intelligent Investor, about a fictional character named Mr. Market. Graham asks you to imagine jointly owning a business with Mr. Market, who frequently offers to buy or sell your shares.  The trouble with Mr. Market is that he’s manic depressive and the prices that he offers swing wildly over short periods. Even though the true value of the business… Read More

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28 Jun 2016

Currency Prices are Efficient Too (and sometimes wrong)

The Brexit has caused legions of analysts, economists, strategists and other pontificators to busily rework their assumptions about the world economy incorporating what seemed like an outside possibility last week to the new lay of the land. Markets fiercely incorporated their new assumptions into prices almost instantaneously – looking a chart of the British pound, you can see when the polls started to show that the Remain camp wasn’t a… Read More

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