16 Jun 2015

A Wall Street Creation Working FOR Investors

The investment management industry has been dominated by just a small handful of trends over the last decade: the growth of passive versus active funds, the birth of alternative strategies in mutual funds, the explosive proliferation of exchange traded funds (ETFs) and the overwhelming acceptance of target-date funds. Of those topics, the only one that I haven’t already covered (as denoted by the blue hyperlink) is the overwhelming acceptance of target-date fund (TDFs)…. Read More

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13 Apr 2015

Old Advice, as Valuable as Ever

When my wife and I got married more than 15 years ago, we had a lot of things in common including the fact that we had both inherited stock in GE.  In fact, it was about 10 percent of our combined net worth.   I don’t remember the exact numbers anymore, but the cost basis on the stock was low for both of us because each of us had separately… Read More

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24 Mar 2015

ALM Insights – March 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: At Least We Aren’t Europe Bond of The Day – When Does 2% ≠ 2%? More Problems… Read More

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10 Mar 2015

A Bear Market Strategy

When I was a senior in college, and just starting to take some finance classes, my professor expressed deep concerns about the stock market’s valuation at the time. Of course, at the time I had no idea what he was even talking about, let alone an opinion about whether he was right or not. Using my trusty Bloomberg terminal, I can see that the price-earnings (PE) ratio for the S&P… Read More

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18 Feb 2015

Mutual Funds: Decisions, Decisions..

In a recent issue of one of our industry trade ‘rags,’ the following chart really caught my eye: The chart shows the number of mutual funds by category in the US, according to Morningstar. It’s hard to read, but back in 1990, there were 665 US stock funds, 123 non-US stock funds, 481 taxable bond funds and 686 funds that fall into the ‘other’ category (I am guessing that they… Read More

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11 Feb 2015

Black Box Investing

I am a big fan of quantitative investing, although that term is often misapplied in my judgment, so let me define what I mean by that term. When I say quantitative investing, I am simply referring to a process driven approach to evaluating securities and making decisions. ‘Quant’ investors typically rely on computers to organize and evaluate data that serves as input in the decision making process. The financial press… Read More

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4 Feb 2015

The Peril of Being Different

January was a tough month for value stocks, as the S&P 500 Value index fell by -4.57 percent compared to the S&P 500 index, which lost -3.00 percent. When stocks have a tough month, it’s axiomatic that mutual fund managers who invest in stocks also had a hard time. That was particularly true for one well-known value investor, Bruce Berkowitz, manager of the Fairholme Fund (FAIRX), which lost -9.83 percent… Read More

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12 Jan 2015

Finally, A Regulation You Can Opt-Out Of

In the December 2012 issue of ALM Insights, I wrote an article titled Basel III’s AFS Provision. At the time of the article, the provision detailing the effects of Accumulated Other Comprehensive Income (AOCI) on regulatory capital had been delayed due to a “wide range of views”, and the final outcome was still very much up in the air. Few in the banking industry thought that forcing banks of all… Read More

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19 Dec 2014

The Allure of Market Timing

The performance of the S&P 500 over the past two days has reminded me of charts that I have seen over the years that show the impact of missing the best days in the market. These charts offer a good message about remaining fully invested, which I wholly agree with, but the charts are also a little misleading in my view.  I decided to create one of my own to… Read More

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18 Dec 2014

ALM Insights – December 2014

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: King Dollar Finally, A Regulation You Can Opt-Out Of Reading The Tea Leaves

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