Good defense is more important than good offense not just on the football field, but on the investing field as well. Stocks experienced double-digit drawdowns in each of the last eleven decades, with the pain averaging -38%. Let’s take a look at some of the gains and losses to get a better feel of how…
The Growth of Alternative Indexes
Investors have become enamored with alternative ways to slice and dice the indices. According to Morningstar, “Strategic Beta” now accounts for 21% of total industry (ETP) assets, up from under 5% in 2000. As assets have exploded, so too has the number of strategic-beta ETPs, which have grown from 673 to 844 in the past year,…
Annual Stock Market Returns
After a strong year for stocks, does it make sense for investors to dampen their expectations? That’s what many investors, professional or otherwise, were saying heading into 2014, following a year when stocks made new all-time highs and gained ~30 percent. Looking at the data shows that stocks have actually performed better than average following…
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…
