My subject line is taken from an article written by the PhD Head of Investment Research at Dimensional Fund Advisors (DFA), but I cheated and left out the second half of the sentence. Here’s their full headline: We Found 30 Timing Strategies that “Worked” and 690 that Didn’t. I guess I’m not above clickbait, but I also don’t have enough space to get the full headline into the subject line…. Read More
Before the big rally last week, a client asked me whether bonds had become more volatile than stocks. Although he was partially kidding, his point was right on: bonds have been volatile this year, especially in recent weeks. And the rally last week still adds to volatility, it’s just easier to stomach when prices are rising. To illustrate the rise on bond volatility, I calculate the 20-day rolling volatility of… Read More
I think that most people in the investment business have at one point, or another wrestled with the question about whether the market is efficient and what you should do about it, regardless of your answer. In simple terms, an efficient market quickly incorporates news and information into prices. It’s easy to find examples of market inefficiency, like when companies added .com to their name in the late 1990s and… Read More
Earlier this year, when Congress seemed to come together and avoid a debt ceiling crisis, I listened to a podcast that said we would right back to the same problem in the fall. I didn’t pay much attention because I was annoyed with the government and the fall was months away. Although I am loving the cooler weather, I’m annoyed again because the deadline to deal avoid a government shutdown… Read More
Every investor suffered losses last year because the two most basic investment building blocks, stocks and bonds, both lost value. Many of the investment community’s intelligentsia are in a twist because the correlation between stocks and bonds is now positive for the first time in two decades. They say, full of sound and fury, that bonds offer less diversification now that the correlation is positive. My goal today, without getting… Read More
Cathy Woods is a fascinating character. Her ARKK funds were the darlings of the pandemic, focused on innovation, and were on fire. Not surprisingly, investors poured money into the funds, just in time for them to collapse. The fact that investors piled in and out isn’t Woods fault. She bought a portfolio of stocks that she believed in and stuck to her style through the boom and the bust. Last… Read More
When I was in high school, Japan Inc. seemed invincible. Their economy was booming, which pushed up their real estate and stock markets, and a handful of over-the-top events like the purchase of Rockefeller Plaza by Japanese investors and the sale of Van Gogh’s Portrait of Doctor Cachet sold for $82.5 million (or $189.5 million in today’s dollars). From 1970-1989, the Japanese stock market, according to MSCI, gained 16.9 percent… Read More
Last week, I was asked to consider writing an article about how the dollar’s strength or weakness impacts a portfolio. I’ve covered it a bit over the years, but I thought now would be a good time for an update, and I’m always interested in writing about what readers want to read about, so I try to address specific issues whenever possible. I will illustrate later how the dollar has… Read More
James Grant is one of my favorite market gadflies. He is the editor of the eponymous James Grant’s Interest Rate Observer, a columnist for Barron’s, and host of the Grant’s Current Yield podcast. Grant is intelligent, funny, and a long-term market skeptic. I’ve heard him say he doesn’t like being described as a perma-bear, but he’s been bearish for as long as I can remember and seems a true gold bug. So,… Read More
One of the things that I hear all the time these days is that the bond market and the stock market aren’t in agreement about whether a recession is coming. Usually, I hear this from someone who thinks that the bond market is right and that the stock market will correct sharply when the recession comes. And in fact, bond investors are giving strong signals of a recession from the… Read More
