Category: Markets

  • Who is Driving the Bus?

    | | Markets

    Nobody likes paying for insurance.  It is intangible as you pay up front for an unknown risk that may or may not materialize.  Many of us feel that we overpay, until we really need it.  It is perhaps not surprising then that many investors spend little effort protecting against sudden and unexpected drops in the market.  After all, it is much like insurance.  Intuitively you may know you need it but premiums can be tough to pay no matter what.  But if we insure our vehicles, which represent a small part of our wealth, why wouldn’t we spend even more … Read more Who is Driving the Bus?
  • When Good News is Bad

    | | Markets

    My favorite analogy for passive investing describes two men sitting at a bar. One is drunk and the other sober.  When the night is over the sober man leads the other home to make sure he gets there safely. Historically, hedge funds and active investors pored over financials, looked at P/E ratios, and listened to earnings calls to decide when to invest.  Passive investors just went long an index fund and hoped that the others did a good job leading prices to their logical equilibrium point.  Thus the active investors could lead them home safely.  Today, “the drunks” are leading … Read more When Good News is Bad
  • July Performance Shows Risk-On Appetite

    | | Markets, Performance

    First look at the data to see what weighted market opinion is telling us. July marks a reversal to more risk-on behavior with strong gains in large cap US stocks as well as international and emerging market equities. While small cap, growth, and value indices all did well, the broader international concerns affecting risk behavior have abated. This positive global view was also seen in the international bond markets. The dollar rise from a desire for safety was contained and more range bound. Along with international bonds, credit markets improved with tightening spreads. The only losers for the bond sector were long-duration Treasuries and commodities … Read more July Performance Shows Risk-On Appetite
  • Change in Mood Reflected in Asset Markets

    | | Markets

    Markets have seen a significant change in economic sentiment over the first quarter of 2018. Market views have moved from euphoria concerning tax cuts and global growth,  to the fear of a volatility shock, to a revised view of growth,  and finally to growth fears under the concern that a trade war is around the corner. Overall, major assets, both equities and fixed income were negative for the quarter. Large cap firms that engage in global trade were hurt in March while bonds rallied as the safe asset. US small cap equities did better given their focus on domestic growth. Emerging markets gained on the dollar decline and the continued belief that EM markets have room for independent growth … Read more Change in Mood Reflected in Asset Markets