World Beta

One of the more interesting debates regarding stock valuations is the state of profit margins. One one side you have Hussman and GMO lining up, and on the other Jeremy Siegel and Redleaf. Im on the side of the former, and this is one of the reasons we have moved the majority of our equity allocations to foreign markets (valuations being another).

Investment styles go through cycles of performance. I was chatting with a friend the other day about the relative underperformance of trendfollowing funds the past few years, and remarked that we'll know we are near a bottom when some CTAs start going out of business. I was bummed to see the news the other day that John Henry's funds are closing shop. (JWH was one of the pioneers in the field, although I don't think he has been that involved for quite some time.)