January 2018

Animal Spirits: Cash on the Sidelines

Ben came out of a fog machine at his speech in Italy.  U.S. Stocks Surge Back Toward Bubble Territory. January 2010! Even if you knew what earnings would be next year… A fair value P/E ratio of 15 makes more sense The pool of money that’s sitting in cash worldwide has never been greater. There’s…

Imagine

What will the headlines and articles be like if the S&P 500 goes flat on the year? If this were to happen, the index will be in a 6.45% drawdown. It’s easy to forget how normal this is when something that happens all the time hasn’t happened in a very long time. As you can…

Markets Can Never Be Perfectly Efficient

“Markets may be crazy, but this does not make you a psychiatrist.” -Meir Statman There are plenty of stories and anecdotes about how crazy markets can be, and I’m about to share one, but when we see these stories, it’s helpful to keep that Meir Statman quote in the back of your mind. This story from Chaos Monkeys about the Goldman Sachs…

These Are the Goods

Articles At Amazon Go, checking out feels like — there’s no other way to put it — shoplifting By Nick Wingfield Investing ultimately requires a nuanced relationship to fear and greed. By Graham Duncan Reaching for your smartphone has become our default action By Tadas Viskanta The irony of history is that it’s mostly the…

Euphoria

Finally. A day where the S&P 500 gained 1%. And with it, a streak was broken. The past few months have been unusual, as usual. It’s been a slow, long grind higher without any sort of buying panic. *Warning, if you don’t like cherry-picked data, this is your chance to leave. The last positive 1%…

What’s Wrong With Value?

It has been a tough decade for value investors. Over the last ten years, it’s trailed growth to the largest extent since the inflating of the dot-com bubble. The chart below shows that the Value stocks, as represented by the Russell 1000 Value Index, have underperformed growth stocks over the last ten years by 61%. I…

A Few Charts and a Few Thoughts

Amazon gained 56% in 2017. Google gained 33%. Apparently that wasn’t enough. Year-to-date they’ve tacked on another 12.5% and 10.6% respectively, adding a combined $147,782,647,497 in market capitalization. Amazon’s market cap was $70 billion in 2011. It just added the equivalent amount in fourteen days. That’s bigger than Colgate-Palmolive and General Motors and Marriott and…

These Are the Goods

Articles Bill Sweet is the man. By Barry Ritholtz Growth can always surprise to the upside, and high valuations can always go higher. By Jesse Livermore Scale brings a lot more of everything — the good and the bad. By Brent Beshore It now has 542,000 employees. By Nick Wingfield and Nellie Bowles You’ll never…

Animal Spirits: Nobody Wants to Listen to Your Podcast

Nobody Wants to Read Your Shit But here’s some advice if you want to write anyway.  Research Affiliates is not too keen on the 60/40 portfolio.  Two-year treasury now higher than S&P 500 dividend yield. What the finance industry was like when Peter Bernstein came into it.  The worse regular civilization does and the less…

As Good As it Gets?

We’ve heard about the death of the traditional 60/40 portfolio for a few years now. With the benefit of hindsight, and some valuation expansion, it appears it was buried alive. This boring, two holding portfolio (Barclay’s Aggregate Bond Index, S&P 500, annual rebalance) has had positive returns for nine straight years. $1 has compounded at…