Ask Which Market Your Fund is Beating

In a recent Wall Street Journal article, columnist Jason Zweig highlights and questions the fee practices of a Putnam Investment mutual fund, noting that the interests of fund managers and investors can sometimes become “misaligned.” Zweig writes that the Putnam Capital Spectrum Fund, launched in 2009, touted “unusual objectives and fees”: It could buy any securities its manager (David Glancy, who has since left Putnam) found attractive and charged a “fulcrum” fee that matched downward… Read More

Ray Dalio Explains Changing World Order

Billionaire investor Ray Dalio’s upcoming book, “The Changing World Order” attempts to explain how “money, credit and debt work” by sharing his work with historians and political experts to “connect pieces of the  past  together to better understand the future.” This according to a recent article in Bloomberg. Dalio delves into the meaning and impact of money, arguing that most currency has no intrinsic value, does not represent wealth, and typically ends up getting devalued… Read More

The Misuse of Market Valuation

By Jack Forehand, CFA There is perhaps no piece of information that is more misused in equity investing than the valuation of the market. Whether someone has an agenda to show that the market is expensive, or that it is cheap, it is usually very easy to find data or a chart to prove their point.  Even for those who don’t have an agenda, it can be very easy to fall into the trap of misusing… Read More

Validea Webinar: A live walk-through of the tools & research found on Validea

Learn how investors utilize our guru and factor strategies, model portfolios, stock screens and other stock research and analysis tools on Validea. When: Tuesday, May 12th @ 1pm EST Host: Justin Carbonneau Features We’ll Look At: Guru Analysis, Model Portfolios, Stock Screners, Stock & ETF Factor Reports, ETF Model Portfolios, Trend Following and More. Estimated Time: 45 Minutes Q&A Session at End: Yes Register Today For Validea’s Live Webinar

Excess Returns, Ep. 23: The Challenges of Multi-Factor Investing

The basic theory of multi-factor investing is pretty simple. It has been widely proven that factors like value and momentum can outperform the market over long periods of time. But no reward comes without risk. In this case, the risk is the significant periods of underperformance that the factors can endure. That is where multi-factor investing comes in. It offers investors an opportunity to blend factors together to reduce risk and smooth out those bad… Read More

CalPERS’ Untimely Tail-Hedge Unwind: The Inside Story

After “cutting its crash-hedging program as part of a cost-curtailment effort and because of a lack of understanding of how tail hedges work,” the California Public Employees’ Retirement System (CalPERS) missed a payout of more than $1 billion when markets crashed in March. This according to a recent article in Institutional Investor. Last October, facing mounting pressure from investors worried about the bull market ending, CalPERS decided to curtail the costly hedging initiative which the… Read More

The Reason for Bear Market Rallies

A recent article in Forbes offers perspective on bear market rallies and why they occur, drawing on historical data going back to the 1930’s. “One question I often get from my articles about bear markets is why bear market rallies occur at all?” it says, adding, “That is, what makes them an essential part of the bull-bear stock market cycle.” The author explains: “In my observations, the key function of a bear market rally is… Read More

The Virus Fight and Wall Street Quants

A “motley crew of quants” is taking the virus fight to a whole new level, according to a recent Bloomberg article. “Hedge fund managers, market academics and risk experts are channeling their data-mining smarts to the world of clinical sciences to model the trajectory of this once-in-a-century pandemic,” the article says. A team of data scientists at  the Australian credit fund Coolabah Capital, for example, developed a proprietary model (based on regression analysis) to map… Read More

Whether to Wade in or Dive in on Buying Stocks

The question faced by investors interested in buying stocks right now is whether to dip in a toe or dive in headfirst, and the answer depends on market volatility and “how nervous a swimmer you are.” This according to a recent article in Barron’s. “Research shows that, mathematically speaking, a lump-sum investment is probably the way to go,” the article notes, explaining that the sooner money is in the market, the more likely an investor… Read More

Bonds Versus Stocks: Question Everything You Know

As of the end of March, bonds had outpaced stocks over the last twenty years, according to a recent Bloomberg article by columnist Nir Kaissar. “While everyone was consumed with the coronavirus, something remarkable happened in the U.S. markets,” the article says, noting that investors would have “made more money and lost less sleep if they had just stuck with boring old bonds.” This runs contrary to what investors are typically told, the article says:… Read More