Investor Lessons from the Summer of ’69

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

Some Thoughts on Howard Marks’ Most Recent Memo

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

Big Oil and Big Tech Offer Different Opportunities for Investors

“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

The Tarnishing of David Einhorn

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

CalPERS Urged to Exceed 7% Return Projections

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 Caps Outpacing Multinational Peers

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

Swedroe Addresses Indexing Concerns

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

Most Read Posts on Validea’s Guru Investor

Below are links to our most popular posts for this week on Validea’s Guru Investor blog. [1] Common Mistakes in Factor Investing [2] How Companies Fool Investors with Profits Fad [3] Indexing Will Fail Investors in Coming Decade [4] Factor Performance in First Quarter ——- Photo: Copyright: arcady31 / 123RF Stock Photo  

Will a Stock Exodus Follow Rate Hikes?

In a recent Barron’s article, financial analyst Mark Hulbert wrote that many of the investment advisors he monitors on a regular basis are concerned that high interest rates will entice investors to move their dollars from equities to bonds. He cites the so-called “Great Rotation” theory that emerged in 2011 and predicted a huge shift from bond funds into equity fund as “investors came to appreciate the near certainty that interest rates would eventually rise… Read More

Private Equity Market is Consolidating, Data Shows

According to a white paper by advisory firm Triago, private equity firms have acquired their peers in more than 150 deals since 2005, with 65% of the deals occurring in the past five years and a record of more than 25 in 2017. This according to a recent article in Institutional Investor. The paper suggests that the consolidation is a sign that the market has “grown up,” reflecting firms’ efforts to expand their strategies and… Read More