By Jack Forehand (@practicalquant) — Howard Marks’ memos provide some of the deepest and most thought provoking insights in the investing world today. They are on par with Warren Buffett’s annual letters as one of the few must reads in investing today. Marks just recently posted a new memo, and the topics he covered were very close to home for me as someone who believes in quantitative and factor-based investment strategies. The memo was titled Investing… Read More
Featured
How Long is Long Term in Investing?
By Justin J. Carbonneau (@jjcarbonneau) — As investors, we are taught to try and think long term. The story goes something like this — invest in stocks, stay disciplined and patient and let your money compound over many years or even decades and you can growth your wealth. I strongly believe in that story, but the reality is for many investors the definition of “long-term” becomes too narrow and time focused. When thinking about long… Read More
Below are links to our most popular posts for this week on Validea’s Guru Investor blog. [1] Some Thoughts on Howard Marks’ Most Recent Memo [2] The Future of Factor Investing [3] Small Caps Outpacing Multinational Peers [4] Investor Lessons from the Summer of ’69 ——- Photo: Copyright: arcady31 / 123RF Stock Photo
A recent article in Advisor Perspectives offers a number of insights regarding factor investing: Data mining, it argues, represents a “huge risk” in factor-based investing. “Many factors have proven to not work in practice and even the most popular factors, like value and momentum, may prove less effective going forward.” With investing, the article argues, “true relationships can be hard to see because of randomness and noise in data, and there’s a risk we convince… Read More
A recent Barron’s profile of Vanguard founder and indexing pioneer Jack Bogle offers an overview of the industry legend’s career as well as the contributions—and controversy—surrounding his market views. The article includes an interview with Bogle in which the octogenarian addresses critic’s concerns about indexing, the “Age of the ETF” and the need for lower cost investing going forward. Here are some interview highlights: While some in the industry feel that index investors are not… Read More
According to BlackRock Inc. strategists, similarities between the late sixties and today are raising concerns regarding the implications of rising inflation expectations and bond yields, says a recent Bloomberg article. “The late sixties was when late-cycle fiscal stimulus contributed to runaway inflation, leading the Federal Reserve to aggressively raise interest rates, which was followed by an inverted yield curve and a recession,” the strategists argue, which led to a drop in both stocks and bonds. According… Read More
“There are two great times to make money in stock markets,” according to a recent article in The Wall Street Journal: “the post-crash rebound and the end-of-cycle excess. Oil and technology fit the pattern perfectly in the past two years.” But the sectors offer different opportunities for investors. Since January 2016, when oil prices hit a low, both the global oil and tech sectors have returned more than 80% (including dividends), “beating the wider market’s 53%… Read More
A recent article in Institutional Investor chronicles the fall-from-grace of hedge fund legend David Einhorn, billionaire founder of Greenlight Capital. “It takes a certain amount of self-confidence to think you’re smarter than everyone else,” the article says. “That’s especially the case when the markets are telling you something else—as has been the case for a decade with [David] Einhorn.” It describes Greenlight’s 14.9% loss through April– compared to a 0.4% loss for the S&P 500—as… Read More
Concerns that municipalities won’t be able to meet pension payment requirements has led the League of California Cities to urge the CalPERS Investment Committee to think “out of the box” to surpass its current 7% return projections. This according to a recent article in Chief Investment Officer. At a recent meeting with the investment committee, legislative representative Dane Hutchings cited a CalPERS report showing that 180 of 449 participating cities and towns had an individual… Read More
Small cap stocks are climbing, a departure from last year’s dip as investors channeled money into larger multinational companies poised to benefit from global economic growth. This according to a recent article in The Wall Street Journal. The article reports that, in recent weeks, data suggests that worldwide momentum might be faltering. “Growth in the eurozone appears to have slowed in the first quarter of the year,” it says, adding that Japan’s economy showed a contraction… Read More
In a recent article for ETF.com, Larry Swedroe breaks down concerns regarding passive investing, including the notion that it has “become such a force that the market’s price discovery function is no longer working properly.” Swedroe, director of research for the BAM Alliance, makes the following points: A recent Vanguard study showed that, as of October 2017, $10 trillion was invested in index funds. “While a large figure,” Swedroe writes, “it represents less than 20%… Read More