Small Companies on the Decline, says Zweig

The number of publicly-traded companies has declined by half over the past two decades, with most of the decrease attributed to the smallest companies, writes Jason Zweig in last week’s Wall Street Journal. Zweig questions, however, whether this is making it more difficult for “stock pickers to beat the market and for investors to forecast […]

Validea Hot List Newsletter: Mid-Year Review

Our June 30th issue of the Hot List Newsletter provides an overview of the market and economy for the first half of the year. Here are some highlights:   The bull market is getting long-in-the-tooth, but what was characterized as a “Trump Bump” early in the year is now mired in uncertainty that stands in […]

Index Fund Pioneer Warming to Computer-Generated Trading

Princeton economics professor Burton Malkiel, who started the first passive index fund for Vanguard in 1976, has experienced a “remarkable change of heart,” according to a recent article in the New York Times. Referencing Malkiel’s revolutionary notion that dart-throwing monkeys could pick winning stocks as well as market “experts,” the article says the “index-fund evangelist” […]

The Genesis of Market Bubbles

The concept of market bubbles and how they come about is addressed in a recent report authored by Morgan Housel of Collaborative Fund. In the report, Housel supports the following arguments: Bubbles are an “unavoidable feature in markets where investors with different goals compete on the same field.” Bubbles are more closely related to “shrinking […]

Be Like Buffett and Avoid Pessimism

The human brain is hard-wired to hold on to negative ideas and events more than positive ones, which can manifest itself in investor behavior, explains Validea CEO John Reese in a recent article for Forbes. Reese cites comments by different market experts that advocate patience and warn against “knee-jerk” investment decisions. Using stock screening models […]

Quant Strategies Dominating the Market

The growing popularity of quantitative over traditional investment strategies is causing the “largest gap on record between humans’ and computers’ gross exposure to U.S. equities,” according to a recent Bloomberg article (data provided by Credit Suisse Group AG). The article also provides data from JP Morgan Chase & Co. showing that passive and quant investors account […]

Bill Gross Forecasts Below-Par Economic Growth

In a recent article for Barron’s, fund manager Bill Gross argues that investors have “resorted to ‘making money with money’ as opposed to old-fashioned capitalism when money and profits were made with capital investment in the real economy.” This, he argues, will suppress real economic growth going forward. Gross explains that factors such as the […]

Warren Buffett Has Been Busy

The Oracle of Omaha has had a full dance card lately, as reported by CNBC and The Wall Street Journal: A CNBC article reports that, as of June 22nd, Buffett’s bets on four major airlines came in for a major landing, gaining $174 million from the market’s close the day before (according to SEC filings). […]

Investors May Be Overconfident

Investors are expressing concern about the level of debt companies are carrying rather than focusing only on growth, according to a recent Bloomberg article. The junk bond market, however, doesn’t share the same concern. Analysis by Societe Generale SA shows that, “amid rising interest rates and growing corporate leverage, investors have cast aside debt-riddled companies in […]