Economic Forecasters Keep Getting It Wrong

Despite the word on the street, we’re not in an economic boom. This according to a recent article in The New York Times. “The economy has been mired in an extended funk since the financial crisis ended in 2010. G.D.P growth still has not reached 3 percent in any year, and 3 percent isn’t a very high bar,” writes columnist David Leonhardt. He offers data showing that the economy keeps performing more poorly than experts… Read More

Wealth Management in the Tech Age: Google and Amazon are Looming

An article in Financial Planning discusses the possibility of tech giants entering the wealth management arena, adding that “numerous studies show consumers are keener to trust Google or Amazon than UBS  or Merrill Lynch.” Of the tech giants, the article reports, Google is the “closest to customers. Every wealthtech mobile app is run on an operating system owned by Google,” and Google Assistant offers users the ability to check financial markets, manage investments, payments, charity… Read More

Quant Strategy for Picking Basketball Winners

An recent article in Bloomberg suggests that a factor investing technique might work well when picking winners in the March Madness brackets. The technique involves integrating traditional factor criteria with a five-star system for the bracket pools, as follows: Quality: One star for teams in the highest or second highest seed ranking according to ESPN’s Basketball Power Index; Size: Add a star for teams which were the most or second-most successful in prior NCAA tournaments… Read More

This Billionaire Hedge Fund Manager Bucked the Trend

A recent article in Forbes profiles Jeffrey Talpins, a 44-year-old hedge fund manager that has “bucked the trend” with his firm Element Capital, returning “about 21% annually net of some expensive fees since its inception in 2005—an incredible track record in any era.” “There are fewer hedge fund managers on The Forbes 400 list of richest American than there used to be,” the article reports, adding that Talpins is appearing on the list for the… Read More

In a Stock and Bond Twilight Zone, Balance is Key

Falling premiums on speculative-grade bonds against lofty equity valuations suggests that, “beneath the surface of the S&P rally that equity and debt investors are placing opposing bets on the business cycle,” according to an article in Bloomberg. The article reports that, according to Goldman data, U.S. firms with solid financials are trading close to the highest valuation relative to their “fragile peers since the dot-com era of 2003.” It’s unclear how long this divergence will… Read More

Buffett Annual Letter Offers Advice to Pensions and Endowments

In his annual letter to Berkshire Hathaway shareholders, CEO Warren Buffett tells pension funds and endowments to eliminate high-cost “helpers” that eat into returns, according to an article in Chief Investment Officer. Buffett illustrates his point with the example of his first stock purchase 77 years ago– three shares of Cities Service which he bought for $114.75: “If my $114.75 had been invested in a no-fee S&P 500 index fund, and all dividends had been… Read More

Bernstein Sees Buy Signals for Value Stocks

For the “quantitative whizzes” at Sanford Bernstein, the chasm that exists between the valuations of the cheapest and most expensive stocks around the world—which has now reached levels “rarely seen in decades of history– is a bullish omen for value stocks.” This according to a recent Bloomberg article. “Add easier financial conditions with stronger economic sentiment in Europe and Asia, and the stage is set for a tentative rebound in the investing strategy over the… Read More

Five Questions: An Inside Look at ETFs with Chris Hempstead

By Jack Forehand (@practicalquant) — ETFs are both the present and the future of asset management. The combination of lower fees relative to mutual funds, tax efficiency, transparency, and intraday liquidity that they offer has led to rapid growth in the space. Although ETF assets still pale in comparison to mutual funds, it is hard to argue that they aren’t on their way to surpassing fund assets in the future. Despite the popularity of ETFs,… Read More

New Metric for Financial Performance: Return on Integrity

A recent CFA Institute article discusses what integrity means in the financial industry and the role it plays in performance results. The article quotes Rob Lake, founder of London-based consulting firm Authentic Investor, who argues that integrity should be a central factor in today’s investment decisions: “Integrity for an investment professional now means paying full attention to the impacts of the way we invest—climate change, human rights, diversity—the whole agenda of ESG and the UN… Read More

New ETFs Face Nasty, Brutish and Short Lives

An article from Bloomberg columnist Barry Ritholtz shares insights he gathered from industry professionals at the Inside ETFs conference held in February. “New exchange-traded funds must endure a brutal Darwinian struggle for attention and assets,” he wrote, adding, “To attract enough capital to survive amid the competition, new ETFs need a good investment idea and a catchy marketing approach.” Ritholtz shares Bloomberg Intelligence data showing that, over the past five years, 1,050 ETFs have launched… Read More