In his recent memo entitled, “Investing Without People” Oaktree co-founder Howard Marks argues that passive and quantitative investing will all help keep markets efficient and reduce costs for investors. This according to an article in The Wall Street Journal. But while active managers have underperformed their benchmarks for years while charging high fees to investors, Marks doesn’t think the strategy is “dead,” adding, “I doubt computers can do what the very best investors do.” The… Read More
By Jack Forehand (@practicalquant) — Howard Marks’ memos provide some of the deepest and most thought provoking insights in the investing world today. They are on par with Warren Buffett’s annual letters as one of the few must reads in investing today. Marks just recently posted a new memo, and the topics he covered were very close to home for me as someone who believes in quantitative and factor-based investment strategies. The memo was titled Investing… Read More
By Justin J. Carbonneau (@jjcarbonneau) — Sometimes someone says something that hits you like a ton of bricks. Well, in early January Warren Buffett was on CNBC and one of the topics he was discussing was tax reform and its impact on the value of stocks (see full video here, pick it up at the 17 min mark). In classic Buffett fashion, he makes a few very salient points that are worth digging into. Buffett… Read More
A recent Bloomberg article shares market insights from six of the world’s top fund managers, four of which are “asking their clients to be cautious in 2018.” The four with cautious outlooks are: Scott Minerd, chief investment officer at Guggenheim Partners (manages $240 billion), is betting that the next recession is most likely going to occur in late 2019 to mid-2020. Minerd’s firm argues that current macroeconomic conditions are similar to those that existed 18-24 months prior… Read More
In a September memo, Oaktree Capital’s Howard Marks outlined six investment options for a “low-return world.” In a follow-up article from Bloomberg, author Ben Carlson presents the pros and cons related to what he views as the best three on the list: Invest as you always have and settle for today’s low returns– Pro: It’s simple for investors to stay the course and adjust expectations. Con: The low returns resulting from this strategy means that… Read More
By Jack M. Forehand — I have raced sailboats since I was 12 years old. It has always been a passion of mine. The combination of being on the water while doing something competitive at the same time has always been a big draw for me. Over Labor Day weekend, I competed in the Stamford Vineyard Race on a friend’s boat Threebeans. The race includes many exhilarating moments, but also significant down time, and during… Read More
By John P. Reese — The waning days of August leave many parents looking forward to the start of school and many investors bracing for September, the month that is historically the worst of the calendar year for stocks. Add the increasing uncertainty coming out of Washington and stock valuations that look increasingly overheated, and it’s enough for a few prominent investors to warn that a pullback is probably on its way. That may not… Read More
By John P. Reese In 2006, Oaktree Capital co-chairman Howard Marks wrote a memo titled Dare to Be Great in which he delivered a simple but provocative statement about investing: “This just in: you can’t take the same actions as everyone else and expect to outperform.” Being different, he argues, is “absolutely essential if you want a chance at being superior.” Going against the herd, however, runs counter to human nature and can be exceedingly… Read More
Global macro hedge funds choose positions in various equity, fixed income, currency, commodities and futures markets based primarily on the economic and political views of various countries or their macroeconomic principles. According to last month’s Barron’s, they’ve suffered poor performance of late. Last year, the article notes, the benchmark HFRI Macro Index returned only 1.29%, trailing the overall hedge fund index’s return of 5.51%.”Their relatively good performance amid the financial crisis in 2008 and 2009… Read More
In last week’s Barron’s, Oaktree Capital’s Howard Marks reflected on the presidential election and offered a wealth of insight regarding both its complexities and its multi-layered and far-reaching implications. With specific regard to the markets, Marks posed the question: “How could the expectation of a Clinton victory make stock prices rise, and then the reality of her defeat make them rise further?” He explained: “The market often fails to act rationally in the short run,… Read More