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

By David Ott Tags:
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

By Cliff Reynolds Tags: , , , , , , ,
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

By David Ott Tags:
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

By Cliff Reynolds Tags: , , , , , , ,
12 Dec 2014

Portfolio Construction: Get Your Yellow Hard Hat On

Sometimes I inadvertently slip into financial jargon that is meant to convey a very specific message but ends up being gobbledygook that is off-putting for a lot of people. Recently, I used the term ‘portfolio construction’ in a meeting and the client, understandably said, ‘Dave, I know you mean how it’s built, but what exactly are you talking about?’ It’s true, the term portfolio construction sounds obvious but isn’t necessarily…. Read More

By David Ott Tags:
12 Nov 2014

Finding Meaning in the Morningstar Star System

The Morningstar Star system is, by far, the most popular way for individual investors to assess a mutual fund or exchange traded fund (ETF). While the system is fairly straightforward in theory, it can lead to odd, and often confusing results. As always, it pays to understand how the system works to understand what the stars are telling you. The case in point is the Vanguard Total Bond Market funds… Read More

By David Ott Tags: ,
24 Oct 2014

Anatomy of a Short Squeeze

Although it’s come and gone, I am still thinking about the price spike in the 10-year US Treasury note that occurred last Wednesday. Someone from Blackrock told me yesterday that it was the most volatile day for the 10-year since 1980, which implies that it was more volatile than 99.91 percent of all of those trading sessions. You can see from the chart that all of wilding was in the… Read More

By David Ott Tags: ,
23 Oct 2014

You Can Be a Stock Market Genius

Years ago, before the crisis, I read a terrific book by investor Joel Greenblatt titled, ‘You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits.’ Usually a title like that is a turn off for me because it implies that investing is easy and that someone’s behind the curtain who knows the secrets to making money that no one else knows. Despite the title,… Read More

By David Ott Tags:
22 Sep 2014

What if You Called The Bond Market Perfectly?

It’s an interesting question. The ability to call the tops and bottoms with perfect accuracy is considered the “holy grail” of bond market investing. We spend a great deal of effort talking to clients about the risk of trying to make speculative calls – the risk of being wrong of course. Just as an exercise I thought it would be neat to imagine what it would be like if we… Read More

By Cliff Reynolds Tags: , , , ,
17 Sep 2014

ALM Insights – September 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: What if You Called The Market Perfectly? The Impact of Fed Tightening Why Aren’t Interest Rates Higher?

By Cliff Reynolds Tags: , , , , , , , ,