The Information Factor in Stock Prices

The manner in which financial markets incorporate information is a function of the positioning of information as well as whether or not its current, according to research reported in the Harvard Business Review by Ph.D. candidate Anastassia Fedyk. Fedyk argues that, while freely available information lays the foundation for “efficient and transparent markets”, putting news […]

Hedge Funds Hungry for Quants

If you’re looking to land a job at a hedge fund, polish up your algorithm building and data mining skills to get to the front of the line. This according to a recent Bloomberg article that explains how hedge funds are hiring quants “like never before in search of an answer to lackluster returns.” King […]

Is Value Investing Getting Short-Changed?

A report published last month by investment management firm Research Affiliates, LLC addresses the question of why value investing (a smart-beta strategy using value indicators such as CAPE or price-earnings ratios) has “fallen out of favor in institutional portfolios,” according to an article in Chief Investment Officer. The authors of the report argue that value […]

Zweig on the Impact of Index Funds

Last month marked the fortieth birthday of the first index fund (launched by John Bogle, founder of the Vanguard Group) and the anniversary has triggered a lot of discussion and reflection on the trajectory this class of funds has traveled since. Jason Zweig of the Wall Street Journal shares some thoughts on the subject and […]

Are the Markets Really Efficient?

Warren Buffett has always been open about his approach to investing, singing the praises of focusing on business fundamentals to find strong stocks at good prices. However, in a recent BloombergView article, columnist Noah Smith outlines some reasons why the Buffett philosophy actually contradicts the efficient market hypothesis (EMH), an investment theory that says it’s […]

Investing Principles Part V: Buying Small Cap Stocks

In our final installment of discussion of the Tweedy Browne publication What Has Worked In Investing, we’ll take a look at the relative performance of small-cap versus large cap stocks. We addressed this subject in a recent article for Forbes that discussed the potential relative performance of small and large cap stocks in general terms […]

Want Private Equity Like Returns? Try a Levered Small Cap Stock Approach.

One young hedge-fund manager says that an investor can enjoy the same hefty returns touted by private-equity firms (through the purchase, turnaround and resale of troubled companies) through buying highly leveraged small-caps stocks. That manager, Dan Rasmussen, is profiled in a recent article by Forbes’ Daniel Fisher. Rasmussen makes the bold argument, Fisher writes, that […]

Jack Bogle on the Future of Index Investing

When Jack Bogle created the first index mutual fund for individual investors (Vanguard 500) forty years ago, he probably didn’t imagine that it would grow to 20 million investor-clients and more than $3 trillion. In last week’s Wall Street Journal, columnist Holman Jenkins, Jr. shares some of Bogle’s insights and opinions as he marks his […]

Buffett Revisited

The Oracle of Omaha is an investment legend whose tireless work ethic and down-to-earth philosophy has helped him grow Berkshire Hathaway into one of the largest companies in the world. In a recent article for Nasdaq, Validea CEO John Reese digs into Buffett’s stock selection method and offers five stocks picks that make the grade […]

Investing Principles Part II: Identifying Value in Earnings

This section of the Tweedy Browne publication What Has Worked In Investing referenced in yesterday’s blog describes the investment approach related to low price in relation to earnings. Legendary value investor Benjamin Graham’s focused on what he called the “margin of safety” (the difference between a stock’s price and the company’s underlying value) and gravitated […]

Evaluating Portfolio Managers: The Luck Factor

We are constantly singing the praises of examining fundamentals when choosing stocks, but a similar process applies when evaluating the performance of portfolio managers,¬† says Jacques Lussier, CFA and CEO of Ipsol Capital. In a recent Take 15 interview for Enterprising Investor, Lussier shares his insights about the value of “factor-based benchmarks” when distinguishing effective […]

Morgan Housel’s Farewell to Motley Fool

In his final column for the Motley Fool (posted August 30th), Morgan Housel reminisces about his early days and what he has learned in nine years with the multi-media financial services firm: Investment fees are falling. Investment costs are not. Housel writes that index fund fees now “round to zero. That’s a big win for […]

Investing Principles Part I: Identifying Value based on Assets

This describes the first investment approach outlined in the Tweedy Browne Company publication entitled¬†What Has Worked In Investing referenced in yesterday’s blog post. The net current assets approach was developed and tested by Benjamin Graham between 1930 and 1932 and is described by Tweedy as the “oldest approach to investment in groups of securities with […]

Investing Principles: What Has Worked

For the next several weeks, our daily blogs will include information from a 1992 publication by the investment firm Tweedy, Browne Company LLC entitled What Has Worked in Investing: Studies of Investment Approaches and Characteristics Associated with Exceptional Returns. The booklet includes data from over fifty studies of share performance woven together with insights based […]

The Weakest Link in Today’s Market

Expending more than you take in works for a diet, but it doesn’t for the stock market. That’s the upshot of a recent Wall Street Journal article by Steven Russolillo, who writes that today’s ultra-low interest rate market is allowing share prices to “stay higher for longer than under more normal circumstances.” What could “end […]

To Diversify, Look Past your Borders

If you’re holding primarily domestic stocks, you may not be as diversified as you think. So writes Jeffrey Kleintop, chief global investment strategist with Charles Schwab & Co., in a recent Barron’s article. Kleintop argues that investors tend to hold mostly domestic stocks, “even when their country is the home of only a small portion […]

Low Volatility Makes Chasing Yield Risky

In the current low-volatility, low-yield environment, investors are attempting to recoup lost revenue by betting that things will stay calm. This according to a recent article in The Wall Street Journal that says investors are “desperate to sell insurance” in the form of options to earn whatever premiums they can. Buyers of options insulate themselves […]

Stock Fundamentals from Buffett, Graham and Greenblatt

Amidst the tumult of today’s markets and economy, making investment decisions can be challenge. A wise approach, according to a recent Forbes article by Validea CEO John Reese, is to turn off all the noise and circle back to fundamentals. He highlights focusing on the numbers, staying disciplined in your investment approach, and guarding against […]