Intangible Assets Are Affecting Investment Returns

A recent article in the Financial Analysts Journal suggests that, even if investors were perfectly informed, could accurately forecast corporate earnings and invest at optimal times, their excess returns would be lower than expected due in large part to the treatment of intangible assets. This according to a recent article in The Economist. The authors argue that hypothetical returns have been falling because of the rising importance of intangible investments (such as trademarks and software… Read More

Tax Bill Delivers Hit to Debt-Heavy Firms

The new tax legislation will limit a company’s ability to write off interest paid on debt, and that could hurt more leveraged firms–this according to a recent article in The Wall Street Journal. The article states, “Full deductibility of interest has long made borrowing more attractive for companies when they needed money, instead of raising capital through selling equity,” and adds that the new tax law will limit deductible interest payments to 30 percent of… Read More

Mark Hulbert on the Reality of Buybacks

The new tax legislation will encourage companies to repatriate much of the cash they now hold outside the U.S., much of which could find its way to stock repurchases, writes Mark Hulbert in a recent Barron’s article. But the expected surge in buybacks, he argues, “isn’t going to extend the bull market’s life longer than it would have lasted otherwise.” Hulbert cites the first research regarding share repurchases (published in the 1990s) which found that… Read More

High Mutual Fund Fees Discussed

A New York Times article from late last month discusses the high fees charged by many mutual funds. “In a global economy where competition and Amazonian price destruction have forced companies to cater to cost-wary customers, the mutual fund industry is a rare outlier. Fees on most actively managed mutual funds, which house the retirement savings and other assets of millions of Americans, have barely budged.” The article highlights the fund family of billionaire Ronald… 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] You Can’t Time The Market – But Many People Should [2] Stock Market Lessons Learned in 2017 [3] Bloomberg on Overbought Market [4] One Bitcoin Hedge Fund Has Returned 25,004% ——- Photo: Copyright: arcady31 / 123RF Stock Photo  

Should Index Funds Rule?

In a recent Wall Street Journal article, columnist Jason Zweig suggests that investors think outside the box when it comes to index investing. Zweig argues that even if you invest primarily in index funds, “you may well buy a few stocks on the side,” citing a 2008 study showing that “wealthier individuals who directly owned only one or two stocks outperformed those who are more diversified by about percentage points annually—and up to nearly six… Read More

One Bitcoin Hedge Fund Has Returned 25,004%

Since its launch in 2013, the Pantera Bitcoin Fund–one of the first in the world to dedicate itself to cryptocurrencies—has returned a whopping 25,004 percent to investors, with a compound annual return of about 250 percent. This according to a recent article in The New York Times. The article cites comments by the fund’s founder, Dan Morehead, who says it has been attractive because it allows investors to bypass Bitcoin exchanges such as Coinbase that… Read More

Hedge Fund Passport Bets on Bitcoin

John Burbank and his hedge fund Passport Capital plans to “launch a new arm that focuses only on cryptocurrencies” in an effort to match his financial crisis-era success. This according to an article in The Wall Street Journal. Burbank became well-known by purchasing credit default swaps ahead of the financial crisis, which led to a more than 200% gain for his main fund in 2007 (and personal profits of $370 million).  Since that time, however, the… Read More

Where Are the U.S. Market Bears?

As the bull market trudges toward its ninth year, “daring, animal spirits and greed have supplanted fear,” and “bears that once roared at any sign of trouble now seldom make a peep.” This according to a recent article in Bloomberg. Citing findings from a recent survey by the National Association of Active Investment Managers, the article reports that “even the most pessimistic mutual fund overseers are fully invested in stocks,” adding that equity exposure rose to… Read More

You Can’t Time The Market – But Many People Should

By Jack Forehand, CFA (@practicalquant) — There are few topics that are more controversial in the stock market than market timing. Most long-term investors will tell you that market timing is impossible. Given that in order to time the market, you not only need to know when to get out, but also when to get back in, you can see why they think that. And on top of that, many market declines are just corrections… Read More