11 Apr 2016

Watching Your Fellow Shareholders

When you own individual stocks and bonds, you don’t have to pay too much attention to what your fellow shareholders (or bond holders) are doing. A mutual fund is a little different, though, because the actions of your fellow shareholders can affect your returns, especially on an after-tax basis. Morningstar reported last week that of their 500 most widely followed mutual funds, 168 have seen outflows of more than 10… Read More

31 Mar 2016

When to Head for the Exits

Back in November, I wrote about the Sequoia fund (ticker symbol: SEQUX) on the losing side of a big bet on Valeant Pharmaceuticals (ticker symbol: VRX). Sequoia is a well-known fund, in part because when Warren Buffet unwound his hedge fund in the late 1960s, he recommended that his clients go to Sequoia, which was run by his friend Bill Ruane.  Sequoia had good results and wasn’t afraid to take… Read More

23 Nov 2015

A Free Lunch for Thanksgiving

Back in May, I wrote about the 13D Activist fund (ticker: DDDIX), which buys stocks that are popular among activist hedge funds like Nelson Petlz and Bill Ackman (click here for my article). Although I did say that it wasn’t a great fund for Acropolis, I thought it was interesting because it had actually delivered alpha – returns that couldn’t be explained by factors like value, momentum, size and quality…. Read More

3 Nov 2015

Value Stocks Don’t Party Like it’s 1999

I haven’t seen or read much about it, but this is a very tough time for value investors.  In fact, to my surprise, it hasn’t been this bad for value investors since the late 1990s tech bubble. Although you can find the same thing if you look at commercial indexes from companies like S&P, Russell and MSCI, the following data from academic Ken French tells the whole story.  While useful,… Read More

9 Oct 2015

The Right Time Horizon for Stocks

When people ask me how long their time horizon ought to be when investing in stocks, I usually say 10 years.  It occurred to me the other day that either I’ve never really looked into this in a very detailed way or I’ve forgotten about it.  In either case, it’s now time to look. To answer this question, I looked at rolling returns for the S&P 500 since 1926 for… Read More

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

21 Sep 2015

Bonds Funds at 84 Cents on the Dollar

One of the smaller, but still very interesting types of securities are closed-end funds (CEF).  While traditional mutual funds (technically called open-ended funds) are much larger, the CEF market dates back to 1893 – 30 years before the first mutual fund. The major distinction between the two fund types (ignoring exchange-traded funds, or ETFs) is that mutual funds continuously create new shares as new investors come into the fund and shares… Read More

3 Sep 2015

The Chart That Made Me Laugh Out Loud

I think you know by now that I love charts.  I am definitely not saying that I am a chartist – I don’t think I have ever made an investment decision for me or anyone else based on a chart.  I simply think that if a picture tells a million words then a chart must at least tell 1,000 (roughly matching my wordcount) When I saw a blog titled ‘econompic,’… Read More

19 Aug 2015

High Yielding Asset Classes

Given the low interest rate environment that we’ve endured over the last several years, a lot of our clients ask how we can increase the yield of our portfolios. While yield is an important component of total return (which is income and appreciation/deprecation together), we sometimes see investors stretch for yield without fully understanding the consequences of their decisions. The table below shows the SEC-yield (which is a whole story… Read More

25 Jun 2015

ALM Insights – June 2015

ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: Is Bond Market Liquidity Gone? Is Janet Bluffing? Looking at Deposit Alternatives