Jason Zweig on Potential Quantitative Model Crisis

A Ph.D. in Economics and former senior risk manager for Bridgewater Associates, Richard Bookstaber argues that while human judgment along with quantitative modeling can lead to better results than either alone, “when humans put blind faith in quantitative models, that’s dangerous.” This according to Jason Zweig in this month’s Wall Street Journal. The article discusses […]

Grantham Says Higher Valuations Will Remain

“The market can stay irrational longer than the investor can stay solvent”, writes Jeremy Grantham in a recent Barron’s article. Grantham addresses the fact that, since 1996, the market mean PE ratio has risen by 65% to 75%. He covers various periods in history, respective rises and crashes, showing that while there are always oscillations […]

ETFs Have Become Portfolio Mainstay

After taking about 20 years for exchange trade funds (ETFs) to gain popularity, they are “quickly displacing mutual funds as the mainstay of the average investor’s portfolio because of the many benefits they offer,” including lower fees, liquidity and diversification. This according to Validea CEO John Reese in a recent issue of The Globe and […]

Europe Still Has Room to Run

Despite fretting over the French election, first-quarter European market data surged and the European Commission’s consumer sentiment survey is near its 2007 peak, according to a recent article in The Wall Street Journal. The question, it says, is “how good can it get?” While Eurozone gross domestic product expanded by only 2% in 2015 and […]

Equity Investors Should Look to Europe

To get the most out of the global recovery, equity investors should look to Europe. This according to a recent Bloomberg article. In an interview last week, Bjorn Lind, a portfolio manager at Sweden-based AMF Fonder AB, said: “Earnings growth will be better in Europe in the coming years and, most importantly, longer.” Lind says […]

Buffett Says Berkshire Stock Will Rise After He Dies

At Berkshire Hathaway’s annual meet last Saturday, CEO octogenarian Warren Buffett assured shareholders that they’ll be fine if he were to pass on, according to this week’s Bloomberg. “If I die tonight,” Buffett said, “I think the stock would go up tomorrow.” He added, “And there’d be speculation about breakups and all that sort of […]

Value Indexing: Don’t Chase Performance

In a recent interview conducted by Alex Bryan of Morningstar, Research Affiliates’ John West, head of client strategies, discussed a different approach to value investing in which holdings are weighted based on fundamental metrics such as book value and sales rather than market capitalization. West shared insights concerning the motivation behind the process and how […]

Buffett Has Sold Large Portion of IBM Stock

Prior to the Berkshire Hathaway annual meeting held on Saturday, Warren Buffett disclosed that he sold about a third of his 81 million shares in IBM during the first half of this year, according to last week’s Bloomberg. In April, the company reached its 20th straight quarterly revenue decline that, the article says is because […]

Secrets from the Richest Man in History

At the time of his death in 1525, German banker Jacob Fugger was worth $400 billion, which represented a whopping 2% of Europe’s GDP at the time. This according to a recent article in MarketWatch. The article outlines some of the billionaire’s secrets: Invest when others fear. In backing Archduke Sigmund of Tyrol when the […]

Nasdaq 6000 Surge Attributable to Five Stocks

Of the Nasdaq’s run-up above 6000, 40% is attributable to only five stocks: Apple Inc., Facebook, Amazon.com Inc. and Alphabet (parent of Microsoft and Google)— which comprise only 10.3% of the index’s market capitalization (according to S&P Dow Jones Indices). This according to a recent article in The Wall Street Journal. “A rally driven by […]

The Math of Stock Picking Works Against Active Managers

The concentration of gains in a minority of index fund holdings—a statistical concept called positive skew—makes it extremely difficult for active managers to beat benchmarks, according to a recent Bloomberg article. Research conducted in 2015 found that “the distribution of returns in the stock market is bizarrely lopsided,” the article argues. “It’s a pattern of returns that […]

Best Earnings Season Since 2011

As of last week, the majority of companies that reported earnings have beaten estimates, making this earnings season one of the best since 2011. This according to an article in last week’s Barron’s. The upbeat results, in many cases, apply to both the top and bottom lines, the article says, with much of the outperformance “driven […]

Jeremy Grantham on the Next Big Investment Drivers

In a recent interview with Wealth Management.com, the founder of management firm GMO shared his insights on how the market has changed and where opportunities are going forward. Between 1935 and 2000, says Grantham, the market was “orderly” and experienced “mean reversion,” but it has since become more complicated. “Since 1998, price-earnings ratios have averaged […]