A Junky Rally

Stocks are continuing to rally from deeply oversold conditions. While the rebound is welcome, it’s worth taking look under the hood to see whats driving the recent performance. Here are the YTD returns for the six strongest stocks in the S&P 500 today: FCX: -45% JOY: -63% CNX: -66% WYNN: -52% SNI: -28% GNW: -36%…

Inside the Market of Stocks

Over the last five and ten years, less than twenty percent of large-cap managers beat their benchmark. Should we be surprised to see that eighty percent of these funds fail to deliver returns above the S&P 500? Let’s turn to the data. On average, 50.6% of stocks beat the market in any given year. This…

How to Win in Wall Street: by a Successful Operator

One of my favorite investing books ever is The Money Game, by Adam Smith. This book absolutely nails Wall Street and what’s so fascinating is that it was published in 1967.  “Adam Smith” probably wouldn’t be surprised to know his book is still just as relevant fifty years later because in The Money Game, he references…

Ben Carlson joins Ritholtz Wealth Management

I’m beyond excited to share the news that Ben Carlson is joining Ritholtz Wealth Management to lead our Institutional Asset Management. I have followed Ben’s work since he began writing at his blog- and now a book– A Wealth of Common Sense in February, 2013. Ben has rapidly grown into the Jason Zweig of my…

The More Things Change…

“There can be few fields of human endeavor in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the…

DIY Financial Advisor

I’m a big fan of the Alpha Architect team. What really struck me when I first met these guys is how knowledgable, yet humble they are. Like many quants, they understand the limitations of the human brain, which has led them on their search for evidence-based investing. Nobody pumps out more quality data-driven stuff on…

Addicted to the Game

Last night Ray Dalio of Bridgewater, a hedge fund managing roughly $170 billion, was asked if he was stepping back. He clarified what he meant, stating that he will take a lesser managerial role. However, when it comes to being involved in the markets, here was his response: “I’m an addict, I can’t stop. I…

Too Many Maybes

The SPIVA U.S. Scorecard results are out and as is usually the case, active managers had a difficult time keeping up with their respective benchmarks. Before we examine some of the results, it’s worth mentioning that SPIVA accounts for the entire opportunity set, which eliminates survivorship bias. Being that 23% of domestic equity funds were…

Is High Frequency Trading Socially Useful?

This was a question asked of Jim Simons a few weeks after the “Flash Crash” of 2010. In just a few minutes, investors were given a taste of what could go wrong in today’s world where high frequency trading is responsible for ~50% of all daily trades. Here is some of what Simons had to…

It’s A Revolution

As the revolution in “smart beta” rolls on, what’s important for investors to know is that many of these products are just factor investing in disguise. Run a regression on many of these strategies and what you will find is they are overweight value stocks and small stocks, strategies that have been known and in…