Hedge Fund Managers See Crisis Brewing

A recent Bloomberg article reports that there is a growing contingent of hedge fund managers who see market chaos on the horizon. The article reports that in May, billionaire George Soros “warned of a looming financial crisis and an existential threat to the European Union.”   But betting on a crash has been a “painful strategy for years as central banks across the globe bought assets to prop up markets,” the article says, offering a… Read More

The Double Edged Sword of Avoiding Value Traps

By Jack Forehand (@practicalquant) —   Value investing is full of pitfalls. It is easy to think that as a value investor all you need to do is buy cheap stocks and eventually the market will come around to your way of thinking, but that just isn’t the way things work in the real world. Many value stocks are cheap because they deserve to be. Some of them no longer have sustainable businesses, and as a result… Read More

Federal Debt on a Suicide Mission, Says Gundlach

In a recent webcast, the founder and CIO of DoubleLine Capital says the federal deficit is putting the U.S. on a “suicide mission.” This according to an article in Advisor Perspectives. Jeffrey Gundlach warned that “The federal debt is exploding,” citing Congressional budget Office projections showing that by the year 2030, the country’s federal debt-to-GDP  ratio will steadily rise from its current level of 80% to 125%. To see such a deficit expansion so late in… Read More

Value Investing Advice from Mohnish Pabrai

Sumzero, an online research platform for professional investors, recently conducted an interview with noted value investor and author Mohnish Pabrai, founder of Pabrai Investment Funds (a group of hedge funds modeled on Buffett’s original partnerships), which manages over $800 million. Here are highlights of the interview: Current state of value investing: According to Pabrai, the principles and approach of value investing will not change significantly. That said, he pointed out that markets will go through… Read More

Artificial Intelligence and Stocks

Yin Luo, head of quantitative research, economics and portfolio strategy at Wolfe Research, is a longtime champion of artificial intelligence (AI) and its potential to transform investing, according to a recent interview with Barron’s. While Luo but doesn’t think that robots will replace money managers soon, he does believe that machine learning can give investors an edge. Here are some highlights of the interview: Machines investing on their own, says Luo, is a outlandish concept.… Read More

Investors are Behaving Less Badly

New evidence suggests that investors may be shifting their habit of buying high and selling low, according to a recent article in The Wall Street Journal. The article reports that a Morningstar study published in June found that the average mutual fund gained 5.79% annually over the 10 years ended March 31st while the average investor gained 5.53%–the 0.26 difference representing a much narrower gap than in the past. Over the decade ending 2013, for example,… Read More

Small School Endowment at Top of Class

Quinnipiac University is “beating the biggest names in higher education at investing with the help of an unlikely force: the stock picker.” This according to a recent article in The Wall Street Journal. Of the U.S. schools ranked by the National Association of College and University Business Officers and Commonfund, Quinnipiac’s returns—6.1% annualized for the ten years ended June 30, 2017—ranked in the top 10%. John Lahey and Mark Varholak, the administrators overseeing the $530 million… 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] If You Take Risk, Get Compensated for It [2] Wall Street Looks to Superforecasting [3] Small Cap Premium at Historic High [4] Morningstar on Investment Truths ——- Photo: Copyright: arcady31 / 123RF Stock Photo  

Lower Returns from Sustainable Investing?

A recent Barron’s article debunks the argument that sustainable, or ESG, investing leads to lower returns for investors. “When critics beat up on ESG, they are often right—but the problem is simply bad implementation,” the article explains, adding that ESG investing requires understanding about how companies are “adapting to transformational change.” It cites examples, including that of European electric utility companies that missed the boat on renewables and “lost half a trillion in market capitalization… Read More

Small Cap Premium at Historic High

A recent article in Indexology Blog reports that, for the first half of 2018, small caps are outperforming large caps by the largest margin in eight years. In the past four months, it adds, the outperformance has reached 10.1%, “contributing to the 5th biggest realized small cap premium in the first half of any year in history.” Smaller cap stocks the article explains, “are less sensitive to international relations generally from the higher percentage of revenue… Read More