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…
Totally Absorbed
One of the many seductions of dabbling in the stock market is the potential for lottery winners. Look at the returns these stocks have generated since going public: Starbucks: ~18,000% Amazon: ~21,000% Apple: ~28,000% Microsoft: ~72,000% Disney: 128,000% What many investors don’t know or don’t seem to care about is that for every Apple, there…
Hear Me Now
I recently sat down with Aaron Watson to discuss how I wound up where I am today. Aaron had a similar experience to me in the insurance world and reached out to me for some advice. I met with Aaron and happily agreed to do a podcast with him. We spoke about my beginnings and…
Patterned By Birth
What if stocks experience their third separate bear market in under twenty years? What would that do to the psychology of investors? For the purpose of this exercise, please allow me to reach a little (I’ll explain later). If the S&P 500 were to fall 25% from its peak over the next twelve months (~16%…
Leaving Your Comfort Zone
“In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time – none, zero.” Charlie Munger I can think of few people I would rather emulate than Charlie Munger. So in an effort to walk the walk, I’m challenging myself to read things that…
The Great Jim Simons
I want to share a terrific video of Jim Simons speaking to an audience at MIT. Simons is a mathematician, hedge fund manager and now philanthropist so it’s no wonder that his firm is called Renaissance Technologies. In this talk, Simons shares stories about riding a scooter from Boston to Bogota, getting fired from the Institute…
Munger On The Circle Of Competence
I always enjoy taking a few minutes to flip through Poor Charlie’s Almanack. I found the following passage particularly interesting and wanted to share it (Emphasis mine). Munger discusses the importance of “The Circle of Competence,” which helps explain what has fueled Berkshire’s unrivaled performance over the last several decades. The cash register was one…
Have Bonds Failed?
The S&P 500 just experienced its worst month since September 2011, falling 6.3% in August. With such a steep decline, the investor in a classic sixty/forty portfolio might have expected bonds to provide protection to their portfolio. The negative 0.08% total return for the Barclays Aggregate Bond Index might lead them to think there’s something…
