• May 17, 2017
    Active vs. Passive, Risk Management

    So indexing is passive, aye? While we have nothing against passive investing – we don’t believe that active vs. passive is a mutually exclusive decision; there are good reasons to employ both approaches to accomplish investor goals – we can’t help wonder whether this has gotten out of hand. Thanks to the folks at Bloomberg for putting this little chart together; we had no idea the creative process had reached such extremes.

  • Much ink has been spilt of late ruminating on the cause of the low volatility environment in which we find ourselves. Indeed, on May 8th the VIX closed at its lowest level since December of 1993. Curious to be sure, given the laundry list of geopolitical and market related concerns facing investors. And while searching for the cause could be instructive, the fact is that volatility will not remain at these levels and investors need to prepare for a return to something resembling normality at some point in the not too distant future.

  • When AMD missed earnings earlier this week, the stock had a bad day losing nearly a quarter of its value. (Don’t cry for shareholders as they are still up five fold from the 2016 lows.) But there was some chuckling going on toward the largest buyer of stocks in the market, the S&P 500 Index Fund, which just recently added the stock to its portfolio on March 20th. So while the Index missed the big move in the stock for the previous year, it unfortunately did catch this week’s sharp decline. That got some in the market thinking, do the indexes tend to be top tick buyers? Given the cap weighted nature of many indexes, do they tend to buy stocks after a big increase in market cap?

  • May 03, 2017
    Alpha, managed futures

    A recent article on the Pensions and Investments website (Crisis Alpha Everywhere) written by Katherine Kaminsky, the Director of Investment Strategies at Campbell & Company, looked at “crises” across various assets, noting that one can usually find a crisis somewhere within the investment landscape at any given time. “Crisis” was defined by Kaminsky as the 10 worst quarters (independently viewed) for an asset between 1990 and 2016. The conclusion was that trend-following tends…

  • April 26, 2017
    Active vs. Passive, Investor Behavior

    Signs of detachment from economic and market fundamentals are piling up. For one, the lack of market volatility is staggering. The S&P 500 just finished its least volatile quarter since 1968 and the NASDAQ 100 posted its most extreme percentage of positive days in a quarter since the inception of the index; it was in positive territory 71% of the days in the first quarter, something that wasn’t even achieved during the Tech Bubble.

    Granted the lack of volatility doesn’t necessarily have anything to do with market fundamentals, but when paired with the following observations, it sure makes us feel uncomfortable.