Bloomberg’s Kaissar Weighs-In on Morningstar Fund Ratings

In a recent article, Bloomberg columnist Nir Kaissar challenges the rationale of a Wall Street Journal article suggesting that Morningstar mutual fund ratings lead investors to “assume erroneously” how those funds will perform in the future. “That analysis is flawed,” Kaissar writes. “Morningstar awards stars for beating peers, not the market. Given that the vast majority of funds lose to the market, highly rated funds may not be delivering any value to investors. Buying the best poorly performing fund is cold comfort,” he writes. Kaissar suggests that a more helpful exercise would be to gauge whether funds with high ratings […]

Ritholtz & Kaissar on Passive Versus Active Management

 In a recent online debate concerning active vs. passive investing, Bloomberg columnist Nir Kaissar and Ritholtz Wealth Management’s Barry Ritholtz offered a range of arguments and insights. Here are some highlights: Cost and performance: While Ritholtz believes investors should allocate a “big chunk” of their portfolios to index investing because of lower costs and better performance, Kaissar argues that active (primarily for those focusing on value, quality and momentum) isn’t necessarily more expensive than passive. Rather, Kaissar says, many active managers have outperformed passive but “kept the profits for themselves” by charging high fees. Both agree, however, that “expensive and […]

Picking Stocks is Hard, But Picking Growth Might Be Harder

In a recent article for Bloomberg, columnist Nir Kaissar discusses the ongoing debate regarding the challenge of stock picking. He cites a study conducted by University of Arizona professor Hendrick Bessembinder that found, for the period between 1926 and 2016, “only 4 percent of stocks accounted for all the wealth created,” and “50 of those stocks accounted for 40 percent of that wealth.” That basket of 50, writes Kaissar, resembled a growth stock portfolio (and included four of the five FANG stocks), and while 7 of those 50 no longer trade, the other 43 “fetch prices befitting the most sought-after […]

Kaissar: U.S. Investors’ Home Bias Not Justified

“Despite all the attention heaped on U.S. stocks this year,” writes Bloomberg’s Nir Kaissar, “there’s been more to cheer overseas.” Kaissar explains that, even though data shows that overseas stocks are outperforming, U.S. investors suffer from “home bias”—that is, they are more comfortable with companies “in their own backyard than in far-off locales, so that’s where they park their money.” These investors focus on domestic market gauges (such as the Dow and the S&P 500), a bias which Kaissar argues is supported by the financial media. Such a home bias, Kaissar argues, can become costlier as the years go by. […]

Market Timing, Even by Experts, Pays Off Only Modestly

The advice typically given to investors is to “ignore the level of the stock market and never attempt to time it. Meanwhile, “writes Bloomberg columnist Nir Kaissar, “the industry’s brightest lights are doing just the opposite.” Kaissar cites participants in the recent CNBC Institutional Investor Delivering Alpha Conference who argue that a market correction is in the offing. These include Paul Tudor Jones, Jeffrey Gundlach, and Howard Marks, to name a few. “So, which is it,” writes Kaissar: “Should investors attempt to time the market or not?” He outlines a few considerations to focus on: Most investors are “horrible” at […]