The relative performance of emerging markets has been unremarkable over the past decade, however meaningful changes have taken place in the fundamental and financial construct of the asset class that are relevant for asset allocators. Most notably, the composition of the index has seen dramatic shifts in sector, country, and stock constituents...
In his recent article, Michael Edesess argued that multiple empirical “anomaly” studies and the wide use of regression are ruining finance research. While some of his points are valid, his conclusion that the entire set of academic studies should be discarded goes too far.
“There They Go Again . . . Again” of July 26 has generated the most response in the 28 years I’ve been writing memos, with comments coming from Oaktree clients, other readers, the print media and TV. I also understand my comments regarding digital currencies have been the subject of extensive – and critical – comments on social media, but my primitiveness in this regard has kept me from seeing them. The responses and the time that has elapsed have given me the opportunity to listen, learn and think. Thus I’ve decided to share some of those reflections here.
I’m in the process of writing another book, going into great depth regarding one of the most important things discussed in my book The Most Important Thing: cycles, their causes, and what to do about them. It will be out next year, but this memo will give you a preview regarding one of the most important cyclical phenomena.
In a recent article, Larry Swedroe argued that long-term investors should avoid all levered ETFs. He based this conclusion on a 10-year ETF return sample. It turns out that this is an unrepresentative sample for making such a sweeping statement. Other studies, based on longer time periods, come to the opposite conclusion.
Forty years of behavioral science research provides a more realistic framework for viewing investors and markets than does MPT.
My firm, AthenaInvest, has conducted extensive research on the use of behavioral factors to estimate expected returns and, in turn, to make market-rotation and beta-exposure investment decisions. The following article outlines our behavioral approach and compares the results to a passive benchmark.
In my 2016 year-end review, which went only to clients, I included a discussion of the use of subscription lines by closed-end funds in areas such as private equity, real estate, distressed debt and private credit. It’s my impression that their use has become fairly pervasive in recent years, and in response to clients’ requests and market trends, Oaktree has utilized subscription lines in some of its newer funds.
After lagging the market for years, US financial stocks surged after Donald Trump’s surprising win in the US presidential election. Investors can still profit from investing in banks; in our view, many of the best opportunities now lie in the micro-cap banks the rally left behind.
The opinions of experts concerning the future are accorded great weight . . . but they’re still just opinions. Experts may be right more often than the rest of us, but they’re unlikely to be right all the time, or anything close to it. This year’s election season gave us plenty of opportunities to see expert opinion in action. I’ll start this memo by reflecting on them.