Listening to “Armageddonist” Predictions Can Prove Costly

A recent MarketWatch article shares the findings of one industry executive who had reportedly had enough of end-of-days-like market predictions and did some calculations of his own. Michael Cembalest, chairman of market and investment strategy for J.P. Morgan Asset Management, “rounded up apocalyptic predictions from a range of commentators, including famed investor George Soros, bond-market giant Jeffrey Gundlach, activist Carl Icahn and New York Times columnist Paul Krugman,” the article explains. Cembalest calculated the consequences… Read More

Dimensional Changes investment Process

After years of research, quant investing pioneer Dimensional Fund Advisors added a new source of return to its investment process, according to a recent article in Institutional Investor. “Dimensional is adding a new factor based on the behavior of companies with high levels of investment.” The firm’s head of research, Savina Rizova and co-author Namiko Saito published new research that examined the behavior of stocks with high investment—as measured by asset growth—and “whether it could… Read More

Ten Companies with the Most Cash

“American companies are sitting on piles of cash, frustrating investors and leading some on Wall Street to wonder why they aren’t spending,” according to a recent CNBC article. Microsoft tops the list with about $136 billon in the coffers as of last quarter (data from FactSet), followed by Berkshire Hathaway, Alphabet and Apple. “Companies can spend through traditional means like capital investment and acquisitions, as well as by returning money to shareholders through buybacks and… Read More

“Golden Cross” Price Pattern Forming Small Caps

A MarketWatch article from earlier this month discussed the possibility of a “golden cross” price pattern to emerge in the Russell 2000 index, the benchmark of small cap stocks, which could lead to “more than a small victory for small-caps.” “Many market technicians believe that when the 50-day moving average crosses above the longer-term 200-day moving average, this relatively rare golden cross marks the point where a shorter-term rebound morphs into a longer-term uptrend,” the… Read More

Emerging Markets a Bargain or Fool’s Gold?

A recent Financial Times article debates the long-standing assertion by GMO that emerging market shares are a good deal, citing the firm’s comment that “EM equities are as appealing as ever, given they are as cheap as they have been since the heady days of the tech bubble.” The article rebuts, “Yet take a look beneath the surface of index-level data and you could argue that emerging market stocks are hardly the baring that they… Read More

Prepare for Long Period of Low Returns

A recent article in CFA Institute offers insight from AQR’s Antti Ilmanen on how investors can adapt to a low-interest rate environment. The article reports that at a recent conference in Denmark, Danmarks Nationalbank Board of Governors chair Lars Rohde said it would be wise for “the financial sector and investors to prepare for a long period of very low interest rates.” “Past this point,” the article notes, “a brave new world awaits, one in… Read More

Investing Lessons from Hedge Fund Star Jim Simons

An article in MarketWatch argues that, while it’s impossible for the typical individual investor to trade like quant legend Jim Simons, “there are lessons every investor can learn from Simons’s successes and failures:” Go long— Since Simons has not been successful at generating hefty profits on long-term bets, the article notes, which “creates an opening for investors willing to hold shares for a year or longer, who don’t need to worry about facing off against… Read More

JPMorgan: Value Rotation Will Continue

Marko Kolanovic, JPMorgan’s global head of macro quant and derivatives strategy, says the “massive rotation into value stocks that rocked investors two months ago is going to extend to 2020,” describing it as a “once in a decade” trade. This according to a recent CNBC article. Kolanovic reportedly believes the rotation has more life due to an improving macro environment, writing in a recent note to clients: “Since September, we had further easing of monetary… Read More

Buffett’s Bid for Tech Data Thwarted

Berkshire Hathaway’s $5 billion offer ($140 per-share) for technology distributor Tech Data Corp. was beat by private equity firm Apollo Global Management last month with an offer of $145 per share in cash. This according to an article in The Wall Street Journal. Tech Data is a wholesale distributor of products including computer hardware, software, consumer electronics and cellphones that reported net income of $91 million for the quarter ended October 31st. The article quotes… Read More

If You Think You’re Diversified, Think Again

Diverging performance doesn’t necessarily signal true diversity, says Nomura quant strategist Joseph Mezrich. This according to a recent article in Barron’s. While selecting stock groups based on different characteristics should offer adequate diversification, the article argues that investors should be more focused on whether those different stock groups are reacting to the same underlying driver, which would point to a lack of diversity. Mezrich recently published a research report asserting that, based on this criterion,… Read More