Jim Grant on Upside-Down Interest Rates

In an article for Barron’s last month, Grant’s Interest Rate Observer founder and editor James Grant offers insights regarding the repercussions of an ultra-low interest rate environment. Grant quips, “You can as easily imagine a five-pawed St. Bernard or a suitable candidate for public office as you can the situation of a lender paying a borrower for the privilege of extending a loan.” He points out that such an interest rate environment means that saving… Read More

Buffett’s Formula Still Works

The performance of Berkshire Hathaway shares over the past 32 years has been “nothing short of phenomenal” notwithstanding industry noise that Warren Buffett’s legacy is being challenged. This according to a recent article in MarketWatch. “Buffett has done what few investors of any size have been able to accomplish,” the article argues, adding, “He has beaten the S&P 500, including dividends, for many decades and by many, many percentage points.” A track record that statistical… Read More

David Tepper Leaves Big Shoes to Fill

An article by Bloomberg columnist Nir Kaissar highlights the recent exit from the hedge fund industry of star manager David Tepper, who last month announced that he plans to return money to outside investors and focus his attention on managing his own fortunes and running his Carolina Panthers football team. Noting that Tepper is the latest in a long line of managers who have chosen different paths, Kaissar writes, “It’s hard to blame them. They… Read More

Poker Prowess Offers and Edge in Investing

A new study suggests that hedge fund managers that are good at poker may have an edge when it comes to investment decision-making, according to an article in Bloomberg. “On one hand, there’s skill overlap,” the article argues, adding, “Both activities demand aggressiveness, accurate calculations under pressure, keen behavioral insight and shrewd risk-taking. On the other hand, poker seems like a risk-seeking activity, suggesting reckless and overconfidence managers.” The article outlines the findings of a… Read More

The Size Factor: A Case Against Small Caps

Although investors expect to be compensated for the higher inherent risk associated with small cap stocks, historical returns haven’t supported this thesis, according to an article in CFA Institute that analyzes whether different size metrics might have generated better performance. “Market capitalization is the prevailing metric for weighting stocks in equity indices. But it’s not the only way to measure the size of companies,” the article argues, outlining four alternative metrics that CFA Institute applied… Read More

Five Questions: Investing in Human Freedom with Perth Tolle

The primary focus of most investors is generating returns. And that certainly makes sense given that we all have future goals we are trying to attain, and our portfolios are the major tool we have to achieve them. In recent years, however, there has been another goal that has been rising in importance. Many investors now also want to use their portfolios to express their values. They want to use them to help produce positive… Read More

Tiny Activist Fund Making Big Impact

Ben Axler’s hedge fund firm Spruce Point Capital is making a name for itself as a short seller—as well as some handsome returns—through deep-dive research. This according to a recent article in Bloomberg. The article reports that the Manhattan-based firm is on a “hot streak,” with its Spruce Point Research Activism Partners fund ($182 billion under managements as of YE 2018) returning 24 percent last year and becoming the top performer tracked by BarclayHedge. Josh… Read More

The Next Bear Market Could See a 35% Dip in Dow

In a recent article for MarketWatch, columnist Mark Hulbert explains that the severity of the next bear market has become a pressing question of late, “since Wall Street has shifted from whether a U.S. recession will occur in the next 12-18 months to when.” To determine whether the severity of the next bear market could be predicted, Hulbert analyzed all 36 bear markets since 1900 (data from Ned Davis Research). His findings are charted below:… Read More

Factor Investing is Falling Short

The attempts by pension funds and endowments to earn equity premiums by incorporating factor-based funds into their portfolios has fallen short, instead leaving them with uncompensated risks. This according to a recent article inInstitutional Investor. The article cites data from Northern Trust Asset Management’s (NTAM) analysis of 500 complex institutional portfolios over the past five years. The study found that “institutions weren’t getting the results they wanted,” for a number of reasons: ·      “Targeted factor exposures… Read More

On Telling Luck from Judgement

A recent article in the Financial Times cites the example of Neil Woodford, once a darling of the investment community, whose recent years of underperformance represents a cautionary tale regarding the respective roles of luck and skill in the investing world. Woodford’s story is not unique, the article notes, and while successful people can begin performing poorly due to overconfidence or laziness, variances in investing performance often occur when “good ideas don’t work forever because… Read More