The Danger of Learning From Your Mistakes

By Jack Forehand, CFA One of the major changes I have made in my life in the past few years is that I have significantly increased my focus on learning. In the past, I tended to focus too much on the things I knew, while not focusing enough on the things I didn’t. That changed for me when I realized that no matter how much I know, the number of things I don’t know will always… Read More

Excess Returns, Ep. 31: Can You Quantify Warren Buffett?

In this episode, we are going to try something a little different. Our goal at Validea is to capture quantitative strategies that work over the long-term. To do that, we go through books and academic papers to find factor-based models with results to back them up. We are going to periodically do some episodes for the podcast where we do a deep dive into these strategies and look at the factors behind them. In the… Read More

Jeffrey Gundlach on Covid and Market Risks

In a recent interview with Yahoo Finance, DoubleLine Capital CEO Jeffrey Gundlach shared a host of insights on market movements, the coronavirus pandemic impact and the outlook for the U.S. economy. Here are highlights from Gundlach’s comments: The Fed has “pulled out all the stops” in its efforts to thwart the economic volatility resulting from the coronavirus pandemic. Quantitative easing, he said, has been “more in 3 or 4 weeks of the pandemic than it… Read More

How A German Business May Have Snookered Berkshire Hathaway & Buffett

Within a few weeks after Berkshire Hathaway purchase of what appeared to be a solid German pipe making business, a whistleblower’s tip ended up uncovering fake sales and profit data and hacked computer systems. This according to an article in The New York Times. “What looked like a profitable German manufacturer of specialized pipes for the oil and gas industry was, in fact, nearly bankrupt,” the article reports. The acquisition of the company, “Wilhelm Schulz,… Read More

Man Group: Investors Should Explore the ‘Dark Side’ of ESG

Man Group’s CIO for ESG investing told Institutional Investor that responsible investing based only on avoiding certain stocks is a “narrow-minded way of looking at the world” and could cost them returns. Research conducted by Man Group found that exclusionary screening of companies, the most common approach for ESG investors, may not pay off as well as long-short strategies. “Long bets on companies with, say, strong board diversity may help increase gains” according to Man… Read More

Morningstar Forecasts Strong Economic Recovery over Long Run

According to a recent Morningstar article, the firm’s U.S. Market Index has “come thundering back since its late March nadir and is now down merely 7% year to date, even as the coronavirus pandemic persists.” The article argues that, while many investors are suspecting “irrational exuberance” on the part of investors, Morningstar believes the market’s bounce-back to be “broadly warranted.” “We expect the U.S. GDP to drop 5.1% in 2020 but surge back in 2021… Read More

Return Gap Between Value and Growth at 25-Year High

The coronavirus pandemic has only deepened the performance gap between value and growth investing, which is now at the widest point in 25 years. This according to a recent article in the Financial Times. Data cited from the wealth management firm Brewin Dolphin and Thomson Financial Datastream shows that value funds have returned 624% since 1995 compared to a 1,072% return from growth funds over the same period. The article notes that value investing is… Read More

Buffett’s Berkshire buys Dominion Energy

In its first major acquisition since the coronavirus pandemic struck, Berkshire Hathaway has agreed to purchase natural gas transmission and storage assets of Dominion Energy for $4 billion, according to an article in CNBC. Including the assumption of debt, the article reports, the deal totals almost $10 billion: “For Dominion, the move is part of its transition to a pure-play regulated utility company that focuses on clean energy production from wind, solar, and natural gas.”… Read More

Expected Wave of Corporate Failures Stays at Bay

As the coronavirus crisis continues to affect U.S. companies and trigger defaults and bankruptcy filings, a recent article in The Wall Street Journal reports that, for the most part, “the companies that have succumbed were already heavily indebted and in industries that were declining before the pandemic.” The hit to the top line due to the shutdown, the article says, “tipped them over the edge.” The outlook for healthier companies, however, has “brightened considerably over… Read More

Rob Arnott Expects Miniscule Returns in Next Decade

In contrast to the average 16% annualized returns the S&P 500 delivered over the past 11 years, Research Affiliates founder Rob Arnott expects paltry returns in the coming decade. This according to a recent article in Financial Advisor magazine. The article reports that, according to Arnott, “a traditional 60-40 portfolio is likely to deliver somewhere between zero and 1% over the next decade, a period when all baby boomers will have reached normal retirement age.”… Read More

The Stock Market Will Predict 2020 Presidential Winner

A study by LPL Financial shows that if the S&P 500 is up three months before election day, the incumbent party nearly always wins. This according to an article in Chief Investment Officer. The study shows that the phenomenon has held true 87 percent of the time since 1928 (when what is now called the S&P 500 index was formed) and in every election since  1984. “The market-election nexus theory makes some sense,” the article… Read More