By Justin Carbonneau (@jjcarbonneau) They say a picture is worth a thousand words. The pictures and charts outlined below may actually be worth much more: 30 million unemployed. $7 trillion on the Fed’s balance sheet. Just how much the Amazons, Googles and Large Cap technology stocks have delivered over other areas of the market like value. A 250% increase and a 50% decrease in Internet search trends and behavioral shifts. 40 years of falling interest… Read More
A Bloomberg article published on March 26th describes that the S&P 500’s sudden uptick as the “quickest three-day advance in nine decades. As absurd as it may seem, the Dow’s already started a fresh bull market—up more than 20% from the lows—after more than $2 trillion in value was created in three days.” The article notes that it’s difficult to determine whether the sudden rise is a sustainable rally or a “bear-market bounce,” adding that… Read More
The ETF landscape has been undergoing significant change in recent years. Although the lowest fee products and the largest providers continue to dominate, several new trends have the potential to shake things up in the coming years. Proponents of things like ESG think they will change the ETF space in major ways. And supporters of Direct Indexing think it has the potential to upend the ETF industry as a whole. But there have been many… Read More
The exciting frontier of quantitative investing, which has drawn huge inflows over the last ten years, is suffering a rough patch that is raising questions, according to an article in the Financial Times. The article reports that, according to Nomura, just 15 percent of quant mutual funds beat the US stock market last year, “a performance that trailed even behind traditional stock picking funds, which suffered their own poor run.” Nomura’s head of quantitative strategies,… Read More
A recent article in Bloomberg chronicles the past decade’s track record of a “mythical” hedge fund called Hindsight Capital LLC with a tongue-in-cheek account of its wildly successful trades. The article begins with an account of the “simple truths” grasped by Hindsight’s managers at the start of 2010: That the global economy would suffer “shock” so severe that inflation wouldn’t return. The Fed would not allow asset prices to fall. “The euro zone and its… Read More
The $380 billion California Public Employees’ Retirement System (CalPERS), the largest in the U.S., has fired most of its external equity managers, cutting their allocation from $33.6 billion to $5.5 billion. This according to a recent article in Chief Investment Officer. The news was reported in an October memo to CalPERS board members that noted only three of the 17 external equity managers survived the cuts and that the move is in response to the… Read More
A pattern has emerged over the last decade in which value share performance has increased when the yield curve has steepened, a relationship that represents changes in investor behavior. This according to an article in The Wall Street Journal. The discovery has answered investor questions as to why in September, when the overall market was calm, value stocks rallied versus growth. “That correlation, nonexistent 10 years ago, has become more pronounced,” the article reports, “especially… Read More
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
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 recent article in Bloomberg offers a compilation of what it calls “Wall Street’s chilling charts” that highlight ongoing concerns about high levels of corporate debt, volatile markets and the “ills in industrial sectors of the economy.” The charts are captioned by comments from industry professionals. Here is a sampling of the data and comments featured in the article: Quality: Jill Carey Hall of Bank of America Merrill Lynch says that quality has grown scarce… Read More