Dead ETFs Cause for Celebration

The number of defunct ETFs hit 1,000 this year and should be considered “healthy and natural in a thriving—albeit brutal—market.” This according to a recent Bloomberg article. “On the practical side,” the article explains, “the victims are often thinly traded products that tend to have wider spreads.” More broadly, however the ETF market has evolved into a meritocracy– in contrast to mutual funds, “many of which have props to help them grow assets: distribution fees,… Read More

When Warren Buffett Thanks You for “Client Alpha”

By Justin Carbonneau (@jjcarbonneau) Imagine for a moment you were one of the very first investors in Berkshire Hathaway in 1965 and you’ve stayed committed to Buffett all these years (54 years and counting be exact). You’re meeting him today to profusely thank him for producing the results he has. You say, “Warren, I want to thank you for producing the long-term outperformance over the market you have delivered on my investment. You’ve more than… Read More

Jeremy Siegel: “Fairly Valued” Market Presents Two Big Risks

A recent article in Advisor Perspectives summarizes an interview with Wharton professor, Wisdom Tree senior investment strategy advisor and author Jeremy Siegel. Here are highlights from Siegel’s comments: Valuations: While last year Siegel said that the market’s fair value was about 17- to 18-times earnings, he said “I’d notch that up a little bit because interest rates are much lower than they were a year ago, particularly long rates, which are so important for equity… Read More

Wheat and Oil to Spice Up Returns for Patient Investors

In a recent Wall Street Journal article, columnist Jason Zweig explains how investing in commodities can pay off. Even though assets like oil and gas, corn, wheat, hogs and nickel have been, in Zweig’s words, “stinking up the joint ever since investors raced to buy them during the financial crisis,” he adds that new research suggests commodities “may deserve a small place in the portfolios of iconoclastic investors  who have plenty of patience.” The article… Read More

Markets Have Lost Their Cool, and Here’s Why

A recent bump in market volatility underscores “why investors should mistrust serene markets,” according to a recent article in The Wall Street Journal. On Wall Street, the article explains, market calm can result from “swarms of investors betting against volatility” rather than from organic factors reducing volatility such as improved trade relations and/or geopolitical calm. Earlier this month, the article reports that the Cboe Volatility Index (VIX) hit an eight-week high after reaching its lowest… Read More

A Loser’s Game for Active Managers

“What is ironic is that active managers have been doing exactly what they needed to do to fight back, and it still hasn’t helped much. It might even be hurting,” says a recent Bloomberg article. The article outlines steps that active managers have taken to combat the exodus to passive investing: Fee reduction— According to Morningstar, “investors now pay half as much to own U.S. mutual funds as they did two decades ago. But with… Read More

Excess Returns, Episode 2: The Rising Bar for Active Management

The market has always been tough to beat, but the ability to investors to gain inexpensive exposure to factors like value and momentum has made the job of active managers even harder. In this week’s episode, we talk about why the pursuit of alpha has become more difficult over time. We discuss: Why cheap ETFs that capture factor premiums have commoditized sources of return that used to be considered alpha How to judge the past… Read More

A Refresher on Stock Investing Basics

In a recent Bloomberg article, columnist Nir Kaissar argued that profits, governance and price should always be front and center in the stock investment decision-making process. Kaissar used the missteps made by SoftBank CEO Masayoshi Son and the bank’s subsequent $6.5 billion quarterly loss as a cautionary tale. He writes, “One problem, according to Son, is he overlooked that startups need solid governance and a path to profits,” citing SoftBank’s investments in WeWork and Uber… Read More

How One Stock Fund Finds Winning Picks

A recent article in Barron’s profiles Grandeur Peak International Stalwarts fund lead manager Randy Pearce and the “small army” of investment analysts his firm uses to research and identify opportunities among the world’s 40,000 publicly traded stocks. Pearce explains, “the easiest thing to do is run a lot of money in a big-cap strategy with as few resources as possible,” adding that his firm (Grandeur Peak Global Advisors) has aggressively built out its analytics team… Read More

Fidelity Warns Baby Boomers to Lay off Stocks

According to a recent Bloomberg article, in its third-quarter retirement report Fidelity Investments said that Baby Boomers (those born between 1944 and 1964) are too heavily weighted in stocks. The report argued that Boomers have been “riding a 10-year bull market into retirement, steadily upping bets on stocks to boost 401(k) returns and exposing them to unnecessary risk.” It explains that the generation has exceeded Fidelity’s recommended allocation to stocks (70% for those 10 years… Read More