Index investing is all the rage now with over a trillion dollars invested in the SPY and VOO ETFs alone. The expectation is that low fees coupled with broad market exposure is better for your portfolio than an actively managed strategy with higher fees. One could argue that as the components of the indices attract […]
An article by Scot Billington, Covenant Capital Management Unfortunately, most traditional hedges fail to deliver in several key areas. Buy and hold investing has been wildly successful since 1982; however, its adherents have had to endure two 50% drawdowns, a 25% down day, and 14 years of zero return. Long-term wealth is significantly impacted by […]
I have spent over a decade in the futures industry so I am accustomed to the blank stare when I tell people what I do. Most immediately assume it is too complicated to even try to understand. The ironic thing is that we all intuitively understand them already. We trade them all the time. We […]
Market sentiment is a broad term that encompasses the prevailing feeling that investors have about a market. Measuring this “feeling” can be accomplished in a variety of ways. CNNMoney has a Fear and Greed Index that displays this in a simple format showing when investors are most willing to take on risk or hunker down. […]
Investors are always faced with choices. My experience tells me that these choices are often driven by simple quirks of human behavior. Two of these that seem to be big drivers seem to be recency bias and a desire for simplification. Both of these naturally make us poor investors. For example, in March of 2020 […]
Duncan Coker — Rivercast Capital Management — January 2020 Congratulations if you are reading this article you are a survivor! Granted on some days nothing seems to go right but compared to the alternative life is good. It tends to give us an optimistic outlook as it should. Optimism is a great thing and without […]
The investment community has heard and is following the siren call of Alternative Investments. Their seductive return properties and the mystique surrounding how they make money has tantalized investo
Conventional wisdom says that once any stock-picking strategy nears “sure thing” status it should be doomed. If everyone knows the secret to vast riches, how could the strategy possibly work anymore? But there is a successful strategy that has been followed — and widely discussed — for decades, yet somehow persists as a relatively reliable […]
If we review the first quarter financial performance, the dominant macro theme was the change Fed policy actions. The same could be said about the EU. No increase in rates and no strong trend to normalization. The new macro focus is on the choice of Fed governors.
Is the Fed independent? Should it be independent? Has independence been an important topic in the past? More specifically, should new Fed governors be biased to economic growth, consistent with current fiscal policies over expected inflation, focus on price stability? The current discussion associated with new Fed governors is nothing new. The Fed has always fought for as much independent as possible, yet the Fed is a creature of Congress.
Selected alternative risk premia showed strong performance during the first quarter. There is significant tracking error with the HFR risk premium indices versus individual bank risk premia swaps, but they can provide some suggestive rankings. This strong performance should not be surprising given the large reversal of with equity beta and the strong moves in global bond markets. A couple of major themes emerged for the first quarter centered around positive equity beta risk and falling volatility.
An analysis of the first quarter tells us a lot abut factor investing in the short-run. Foremost, the worst factors last year are the best for this year. Factor risks change with the market environment as shown through the global factor indices from S&P Dow Jones. Factor rotation occurs, but not clear that it is predictable. Factors effects also can be swamped by the impact of large macro events.
Bill Gross has retired and there already has been research to see if he was the Warren Buffet of bonds. His fixed income track record over the long-run cannot be easily be matched, but a careful study of his portfolio suggests that his gains were generated differently than the classic stock-picker. He may have generated alpha but he did it the old fashioned way in fixed income, he took on more sector risk. See “Bill Gross’ Alpha: The King Versus the Oracle” by Richard Dewey and Aaron Brown.