Five Challenges Facing Big Data
Data, though abundant, is an ever-present challenge. Why? Consider the following five key data questions.
The Illusion of the Value Factor and Alpha
Despite decades of academics and practitioners promoting the “value factor,” it generates marginal to no long-term alpha. Four reasons have slowed the transition from the accepted “value” regime (low price to something) towards a more robust and realistic true value regime (worth measured independent of market price and focused on the value of future cash flows).
Chance versus Design in the Discipline of Investing
Endeavors in the financial markets do not fall firmly on, but move fluidly between, extremes on the chance and design spectrum. At times, investment outcomes are a product of chance and design engaging in a competition. And at other times, they are a product of the two working together.
The College Tuition and Admissions Probability Estimator
College is expensive. We all know that – and that is why parents come to financial advisors to talk about how they’ll pay for it. What you and your clients’ families may not be aware of is that the posted tuitions are rarely the price anyone pays. College tuition discounts vary widely and the methodology used to calculate tuitions is not disclosed by any college.
Is Grave Digging Extremely Dangerous
We have argued recently that since almost nobody is worried about inflation, there are wonderful opportunities for investments which would benefit from the crowd being wrong.
Long Live the Bull Market
Last December, almost 12 months ago, we set our year-end 2019 target for the S&P 500 at 3,100. Many thought we were way too bullish, but our model for the stock market suggested 3,100 was well within reach. We believed the bull market had plenty of room to run.
Is It Time to Worry about Debt?
The economic calendar is normal with a focus on housing. Some will be parsing the Fed minutes while others watch the impeachment hearings. This week’s topic may not be a media focus for the week ahead, but it gets constant attention. With a government shutdown and the debt ceiling on the agenda, let’s seize the moment and ask: Is it time to worry about debt? I suspect that many readers believe it is way past time!
The Surprising Results from S&P’s Latest SPIVA Analysis
S&P’s SPIVA scorecard provides persuasive evidence of the futility of active management. But its most recent scorecard illustrates something else – why active managers underperform even in the best performing asset class.
Is the Shift to Passive Investing Increasing Risks?
Earlier this year, passive management was attacked in two high-profile articles. Those criticisms were proven to be false – and driven by active managers seeking to protect their livelihoods. But that still left the question, which I now examine, of whether flows to passive funds have increased certain risks.
Non-Transparent, Active ETFs Get Regulatory Nod
The menu of types and styles of exchange-traded funds available to investors keeps growing. The Securities and Exchange Commission just approved four proposals for a new type of exchange traded fund: non-transparent, active ETFs
What's With All the Mass Protests? (Hint: It's Not About Income Inequality)
The media’s inequality narrative completely ignores the fact that the global demonstrations are, at the end of the day, in response to government incompetence and failed socialist policies.
The Road to Default
We will spend the latter part of the 2020s going through a kind of worldwide bankruptcy. We won’t call it that, and it will take a lot of argument because we won’t have a court to take charge. But we will collectively realize the situation can’t go on and find a way to end it. I’ve taken to calling this “the Great Reset.”
Monthly Municipal Market Update, October 2019
A brief monthly update on what's happening in the municipal bond market.
Completing Your China Exposure: Small Companies Help Capture China's New Growth Drivers
As China's economy continues its shift toward services and consumption, small and medium-sized businesses are accelerating this transformation.
Are VIX ETPs Effective at Protecting Downside Risk?
A long-sought goal of advisors is a cost-effective way to hedge one’s equity holdings. I previously wrote about why put options fail to achieve this goal. In this article, I consider whether volatility-based products are any better.