19 Nov 2015

Injured Unicorns Spotted in Silicon Valley

As opposed to the horse with a single, spiraling horn projecting from its forehead, today’s unicorn describes privately held start-ups that are worth more than $1 billion: think Uber, AirBnB, Snapchat or Pinterest (actually, these are all considered ‘deca-corns’ because they are worth more than $10 billion). Current estimates suggest that there are now 143 unicorns in existence today and are supposedly worth half a trillion dollars, but it’s actually hard… Read More

By David Ott Tags:
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

By David Ott Tags: , ,
9 Oct 2015

Visualizing Stock Returns

A great way to visualize asset class returns is to put them into what the industry calls a ‘periodic table,’ which I’ve done below.  The basic idea is to order the returns of asset classes in each calendar year from best to worst. In the chart below, 2006 is the first year and the best performing asset class in gray was 35.9 percent.  At the bottom of the column is… Read More

By David Ott Tags:
1 Oct 2015

What If I was Japanese?

Stocks enjoyed a positive finish to a tough quarter, as the S&P 500 gained 1.91 percent yesterday but was still down -6.44 percent for the quarter. It was the worst quarter for most markets since 2011 during the first phase of the European debt crisis. Somewhat surprisingly, markets shook off weak purchasing manager data from Chicago and the onset of Russian airstrikes in Syria. Some investors believe that more stimulus… Read More

By David Ott Tags: ,
29 Sep 2015

Can One Stock Foil the Market?

The selloff in stocks yesterday was a little different than what we’ve seen so far this month, both in terms of its magnitude, but also its suspected causes. Last month stocks sold off more sharply than they did yesterday, but things had quieted down a little bit, as you can see in the chart below. When stocks fell last month, the concerns were macro in nature: the slowdown in China,… Read More

By David Ott Tags:
16 Sep 2015

The Secret Sauce Behind Value and Momentum

One of the interesting market developments so far this year is the relative performance of momentum versus value in large cap stocks. Earlier this year, I wrote a primer on each strategy (found here and here) and at the end of the momentum article, I pointed out that value and momentum work especially well together. While both strategies have enjoyed higher returns than the overall market, they do so at different times, which… Read More

By David Ott Tags: , ,
14 Sep 2015

St Louis Stocks Shine

The other day, Michael and I were talking about stocks based in St. Louis and I remembered that Bloomberg had created an index of St Louis stocks. When I loaded the track record on the screen, Michael and I were pretty impressed: St. Louis stocks have done extremely well!  The chart below shows the growth of $1 invested in the Bloomberg St. Louis index compared to a $1 invested in… Read More

By David Ott Tags:
2 Sep 2015

Downside Protection That Doesn’t Protect

After reading my article last week (that can be found here) that discussed how we use limit orders to protect us from wild price fluctuations (among other reasons), one of my favorite readers wanted to know why we don’t use stop-loss orders. A stop-loss order is different from a market order, which says ‘do my trade at any price’ and a limit order, which says ‘do my order at a… Read More

By David Ott Tags: ,
24 Aug 2015

This is Investing, So Stick With It

Part of what made last week’s market selloff particularly unsettling was the speed of the decline.  So far this year, stocks had been relatively quiet. For example, the S&P 500 had stayed within a range of minus three percent back in January to plus four percent in July.  Then, all of a sudden, stocks fell from the top of that range to the bottom over the course of four days… Read More

By David Ott Tags: ,
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

By David Ott Tags: , , ,