This is the Small Cap Secret No One Ever Told You

This is the small cap secret no one ever told you; You’ve probably heard about the small stock premium, the idea that over long periods of time, small stocks outperform large stocks. There are a bunch of different theories as to why this is the case. Some believe the additional returns are compensation for decreased…

Then, As Now

The Great Crash 1929 by John Kenneth Galbraith was poetically published in 1954, the first year that stocks would eclipse their 1929 highs. One of the most enjoyable aspects of reading about events that shaped history is getting a better sense of what actually happened. Ninety years later, the stories tend to morph into something…

Historic Underperformance

If Donald Trump were to weigh in on value stocks this year, he’d call them ugly losers. Growth stocks on the other, in particular the “FANG” names, have been been extremely rewarding to investors.  Netflix is up 110% this year, Amazon is up 95%, Google is up 35% and Facebook is up 32%. What’s so impressive…

A Ninety Percent Decline

From 1929 through 1932, the Dow Jones Industrial Average would lose nearly ninety percent of its value. In this four year period, there were several nasty bear market rallies, lifting the hopes of the hopeful, only to be met with tidal waves of selling. Corporations were collapsing and individuals didn’t fare much better. Unemployment in…

A Timeline of Some of The Best Investment Books

“You don’t have to burn books to destroy a culture. Just get people to stop reading them.” Ray Bradbury Below is the list of all the books seen in the chart, as well as a few more that I just couldn’t fit. I’m sure I left a few out, but if you’re looking for some…

Coin Flippers Drenched in Alpha

Are the owners of great track records incredibly skilled, or incredibly lucky? This is one of the oldest questions in finance. To explore this further, I’m going to borrow from Scott Patterson and Jack Schwager, the authors of two fantastic books, The Quants and Market Wizards. Here is Gene Fama, Nobel Laureate, the father of…

10 Poor Investment Theses

Brattle St Capital is one of my favorite follows on Twitter. He’s constantly sharing interesting data, quotes and other valuable investing insights. The fact that he’s doing so anonymously, in which he receives no personal recognition, makes it that much more awesome.  Yesterday, he offered some lousy investment theses, learned through experience, which I wanted to…

The Fourth Factor

Fama and French wrote “The Cross-Section of Expected Stock Returns” in 1992, unveiling their three-factor model. They expanded on CAPM, which boils down stock returns to just one factor, beta. Fama and French took this a step further, finding that the vast majority of a stocks returns can be explained not just by beta, but…

Here’s Why Trading Stocks Is So Hard

The last few days and weeks are a great reminder of how difficult it is to successfully trade stocks. There’s a reason why there aren’t many traders that are household names. Even people in the business would likely find it difficult to rattle off ten legendary traders. One of those legends, Paul Tudor Jones had…

Dry Powder

At sub two percent on the ten-year treasury, many investors are questioning why bother owning bonds at all. As ninety percent of the returns are derived from the starting interest rate, it’s fair to assume that bonds will indeed offer measly returns going forward. While it’s not realistic to expect the returns of the last…