22 May 2017

Quants and the Media

Yesterday, the Wall Street Journal (WSJ) printed four articles in what appears to be a 17 article series on what they call ‘the quants.’  I was so excited to see these articles because I think you could fairly describe some of the strategies that we pursue as quantitative in nature. Unfortunately, I was turned off immediately.  The second paragraph of the first article talked about how the quants use ‘high… Read More

15 May 2017

Watching for Traps, Growth & Value

Last week was particularly tough on retailers thanks to a report that showed online spending increased 1.4 percent while it declined -0.50 percent for brick and mortar stores.  Department stores like Nordstrom’s and JC Penny both fell more than -10 percent on earnings and forward guidance news. Even though we don’t own either of these two retailers, we own others and the bad news made its way into the stocks… Read More

17 May 2016

PIMCO Shows that Discipline Can Pay Off

Lately, I’ve been interested in looking at strategies that have struggled in the past, in part because some of our strategies are struggling right now. Take value, for example, the strategy of buying cheap stocks with the idea that they outperform the overall market over time.  It’s a tried and true approach dating back to the 1930s, but the last year has been so rough that the 10-year track record… Read More

10 May 2016

Is Acropolis Contrarian?

Today I attended a session on Contrarian Value Investing. During the speakers prepared remarks I began to think about whether our investment philosophy here at Acropolis could be characterized as contrarian. It’s easy to say that we are value investors. We have value biases in many of our stock asset classes, and by a slightly different definition we invest fixed income dollars with a value bias too. But are we… Read More

5 Apr 2016

Capital Markets in Perspective

We all know that the first quarter was a wild ride as the S&P 500 fell -10.29 percent through February 11th and then rocketed back over the rest of the quarter and finished in the black. When I tallied up the results for the first quarter, I have to admit that I was surprised by the range of returns within the major asset classes, from the -5.4 percent decline in… Read More

26 Feb 2016

Is Value Investing Dead?

Value stocks are undoubtedly having a tough time these days.  As I first wrote last November (click here for the article), value stocks are undergoing their worst period of underperformance since the tech bubble during the late 1990s. For the 10 years ending January 31st, the Russell 1000 Value index is up 7.03 percent compared to 7.92 percent for the Russell 1000 index of large cap stocks and 8.68 percent… Read More

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

29 May 2015

Finding the Best Ratio to Value Stocks

For a few years now, I’ve been pondering why academics always evaluate the cheapness or expensiveness of stocks based on the price-to-book (PB) measure.  Even more oddly, they call it book-to-market, but that’s a mystery that won’t be solved. In case it’s been a while since you’ve had an accounting class, the book value of a company is equal to the assets minus the liabilities, or equity of a company…. Read More

29 Apr 2015

Twitter is the Perfect Growth Story

The social media company Twitter (ticker symbol: TWTR) announced yesterday that first quarter revenue grew less than expected and told investors to expect lower sales growth in the near future as well.  As a result, the stock was down almost -20 percent in late trading. When I first saw the headlines, my immediate thought was, ‘this is why you don’t buy growth stocks – when they disappoint on growth or… Read More

14 Apr 2015

A Value Investing Primer

Value investing is perhaps the oldest and best-known investment strategy, which basically suggests that cheap stocks tend to outperform expensive ones. The strategy was first popularized by Benjamin Graham, teacher and mentor to Warren Buffett, who also co-wrote one of the most important books in finance, Security Analysis, with David Dodd in 1934. Graham introduced the idea that stocks have an ‘intrinsic’ value that can be roughly estimated with a… Read More