Resist Hysteria During Market Stumbles

Bulls should be “as confident as ever,” writes columnist Nir Kaissar in a recent Bloomberg article. Emphasizing that “panicking is never a good plan when it comes to investing,” Kaissar writes, “but it’s particularly silly now, because nothing truly eventful has happened yet.” The economy continues to grow, he writes, and the market’s full valuations are supported by corporate earnings expectations as well as low interest rates. The recent sell-off, he adds, will “undoubtedly make the… Read More

Bloomberg’s Kaissar Weighs-In on Morningstar Fund Ratings

In a recent article, Bloomberg columnist Nir Kaissar challenges the rationale of a Wall Street Journal article suggesting that Morningstar mutual fund ratings lead investors to “assume erroneously” how those funds will perform in the future. “That analysis is flawed,” Kaissar writes. “Morningstar awards stars for beating peers, not the market. Given that the vast majority of funds lose to the market, highly rated funds may not be delivering any value to investors. Buying the… Read More

Ritholtz & Kaissar on Passive Versus Active Management

 In a recent online debate concerning active vs. passive investing, Bloomberg columnist Nir Kaissar and Ritholtz Wealth Management’s Barry Ritholtz offered a range of arguments and insights. Here are some highlights: Cost and performance: While Ritholtz believes investors should allocate a “big chunk” of their portfolios to index investing because of lower costs and better performance, Kaissar argues that active (primarily for those focusing on value, quality and momentum) isn’t necessarily more expensive than passive.… Read More

Picking Stocks is Hard, But Picking Growth Might Be Harder

In a recent article for Bloomberg, columnist Nir Kaissar discusses the ongoing debate regarding the challenge of stock picking. He cites a study conducted by University of Arizona professor Hendrick Bessembinder that found, for the period between 1926 and 2016, “only 4 percent of stocks accounted for all the wealth created,” and “50 of those stocks accounted for 40 percent of that wealth.” That basket of 50, writes Kaissar, resembled a growth stock portfolio (and… Read More

Kaissar: U.S. Investors’ Home Bias Not Justified

“Despite all the attention heaped on U.S. stocks this year,” writes Bloomberg’s Nir Kaissar, “there’s been more to cheer overseas.” Kaissar explains that, even though data shows that overseas stocks are outperforming, U.S. investors suffer from “home bias”—that is, they are more comfortable with companies “in their own backyard than in far-off locales, so that’s where they park their money.” These investors focus on domestic market gauges (such as the Dow and the S&P 500),… Read More

Market Timing, Even by Experts, Pays Off Only Modestly

The advice typically given to investors is to “ignore the level of the stock market and never attempt to time it. Meanwhile, “writes Bloomberg columnist Nir Kaissar, “the industry’s brightest lights are doing just the opposite.” Kaissar cites participants in the recent CNBC Institutional Investor Delivering Alpha Conference who argue that a market correction is in the offing. These include Paul Tudor Jones, Jeffrey Gundlach, and Howard Marks, to name a few. “So, which is… Read More

Yale’s Actively Managed Fund Performance Waning

The majority of the Yale University endowment fund is invested with active managers but, if you compare its returns to low-cost active strategies rather than to passive indices, “Yale’s active managers don’t look so special,” writes Bloomberg’s Nir Kaissar. In its recently released 2016 annual report, the article says the esteemed university’s endowment rebutted “fee bashers” by arguing, “The important metric is net returns, not gross fees.” Kaissar points out, however, that Yale’s attempt to… Read More

Stock-Pickers Beware: Bots Are Here

BlackRock’s March announcement that the firm had reduced its staff of stock pickers to increase its focus on quant strategies may support the consensus that “active management is dying,” but Bloomberg columnist Nir Kaissar argues that “the problem is not that active managers fail to outperform the market; it’s that they keep that outperformance for themselves through high fees.” “Smart beta” index funds, on the other hand, have been able to beat the market at… Read More

Harvard Endowment Goes Back to Basics

Last year, Harvard University allocated 14 percent of its $35.7 billion endowment fund to hedge fund strategies, but managed these internally rather than through outside managers. This according to a recent Bloomberg article by Nir Kaissar. The article explains that this departure from the traditional endowment model (used by peers such as Yale and Columbia universities) represented an effort by Harvard to retain the typical management fees (2 percent) for its own coffers. Unfortunately, however,… Read More

Bloomberg’s Kaissar on Dow Milestone

Before the fanfare of the Dow Jones Industrial Average hitting 20,000 (which occurred on January 25th), Bloomberg columnist Nir Kaissar asserts, “it’s not clear whether that milestone will be cause for celebration or concern.” The index stands at 20,093 today. Kaissar speculates that when the Dow first hit 100 (in 1906), “investors were drunk with profits and expecting the party to continue. What they didn’t know was that it would take the Dow 36 more… Read More