The podcast market has grown exponentially with one out of three people in the United States listening to at least one podcast in the last month. People are listening on their commutes, during their workouts, at the office and at home. So, we asked our 361 team for some recommendations and here is a list of our top picks.
- August 21, 2019
Our favorite reads of the week and the quotes that make them worthy…
“Self-driving cars, on the otherhand, do need to perform these calculations — and that’s largely by design. It would be extremely dangerous to let a predictive system like a neural net (infamously cryptic to debug and prone to confusion) take control of a self-driving car directly (the end-to-end learning approach).“
The current bull market is the longest in history. So too, is the U.S. economic expansion. As those record-breaking streaks continue, it is hard for investors to remember that big losses can — and do — happen. It’s even harder to convince investors to prepare for them in advance.
- August 07, 2019361 Team
The market’s recent sharp movements remind investors that the only certainty about future market direction is uncertainty. Stocks sold off in October (2018), dipped again in December, enjoyed their strongest January (2019) in 30 years and then worst day in 2019 on August 5th. Whipsawing markets have alternately punished and rewarded both long-only strategies that benefit from a broad rise in stocks and alternative strategies that capitalize on market declines.
We’ve written extensively this year about building portfolios that can withstand multiple market conditions and how the next ten years may look very different than the last. While building the overall asset allocation is going to have the largest impact on your client’s ability to reach their investment goals over time, individual investment selection, particularly within alternatives, is a vital component of the overall success. The reason this is so critical in alternative categories is that dispersion is often much wider than in traditional asset classes.
Businesses delivered another quarter of strong earnings results but the mood on Wall Street remains glum; In June, analysts revised earnings estimates downward at the highest rate in more than three years.
If you are invested in managed futures, you know how difficult the past decade has been. Low interest rates, low volatility have led to very muted returns. However, it has not changed the historical profile of the strategy being additive as an uncorrelated component of an investor portfolio. But dispersion in the managed futures category is wide and could have made your experience much more tolerable or exceptionally painful. Here we’ll talk about the category and provide some things to consider as you are choosing a managed futures fund.
As an asset manager that specializes in alternatives, we receive a lot of questions from advisors on the subject. With uncertainty rising in the markets, now may be a great time to freshen up on your alternatives knowledge. Below are some frequently asked questions we’ve received from advisors on alternatives, along with some of our recent blog posts and other resources that may help provide answers.
The steady, upward trajectory of U.S. large-cap equities over the past decade has left many portfolios overexposed to the asset class. But rebalancing presents a conundrum: How can advisors decrease allocations to one of equity markets’ least-risky segments—and capitalize on more attractive valuations elsewhere—without upsetting a portfolio’s overall risk profile?
- June 19, 2019Toller Miller, CIMA®
Congratulations to Gary Woodland for winning his first major championship on Sunday. What he showed us on Sunday was nothing short of daring, confident and determined. It was clear from his first tee shot, that Gary was there to WIN, and nothing else was an option. He took a stance, planted his flag firmly in the ground and was committed to his belief in himself. Too often in the investment world, there’s a temptation to chase hot money and we are intimidated to take a stance and plant our flag in the ground.
- June 13, 2019Hayley Hammonds
Given the current long-running bull market, with equities up over 15% annually and lower than historical levels of volatility, many advisors who allocated to alternative strategies post financial crisis have been frustrated. After many failed to deliver what people wanted in 2018, we’ve noticed advisors abandoning the space altogether. Given common behavioral biases, we certainly understand that sentiment, but on the other hand, we see larger institutions maintaining or in some cases even increasing their exposure. For example, a new report by Preqin, noted that 26% of institutional investors said they expect to commit more capital to hedged strategies in the next 12 months.
As alternative mutual funds proliferate, Morningstar faces a classification conundrum: How can single categories include funds with entirely different characteristics?
The question has deep implications for advisors, who will have to look beyond star ratings or past performance and get a deeper sense of an alternative strategy’s inner workings before deciding whether it matches a client’s objectives.
Summer is here and that means many of us will be hitting the out of office button for a mid-year break. Whether you are heading to the beach or having a stay-cation, it’s a good time to do some summer reading. So, we asked our 361 team for some recommendations to add to your shopping cart.
- May 22, 2019Andrea Coleman, CAIA
Recently, I was doing one of my favorite weekend activities, walking my dog and listening to podcasts (I like a simple life). A recent episode of an NPR podcast came on and it was a very charming piece about James (uncle Jamie) Holzhauer and his incredible Jeopardy! run. I was listening to this story unfold and was surprised when a few topics connected the story to the investment world—which I suppose I should have expected given the title of the podcast is “Planet Money”!
Recently, FiveThirtyEight posted a review of how accurate their models have been. The blog talks about calibration, which “measures whether, over the long run, events occur about as often as you say they’re going to occur.” As you could probably guess, their models are fairly well calibrated. This is not surprising given they are in the business of making predictions; and if they were bad at making predictions they probably wouldn’t still be around or be posting about it…The same could be said about us!
The room is surrounded with people and cameras and in the middle of it all sits an oval table with bright green felt big enough to sit nine people, a dealer, and two piles of poker chips. Before the cards are even dealt you have a good feeling about this hand, so you peek and see a 7 of clubs and a 2 of hearts. Despite knowing that this is statistically the worst hand in poker, you trust your “gut” and decide to call your opponent. To your delight, 7, 7, 2 comes on the flop, with these cards you know that you’ve gone from the statistically worst hand in poker to one of the best possible outcomes. Question: Did you make a good decision?
A year ago, we posted this piece showing the wide gap between the returns of the Russell 2000 Growth (RUO) and Value (RUJ) indices. At the time, RUO’s relative outperformance was approaching two standard deviations above average, measured on a rolling 52-week basis. The gist of the post was that it was a large difference, but not abnormal, with the implication that the trend should reverse, but not sure when. With another year of data, we can see how things have played out.
Fewer companies are delivering inspiring earnings results…and it’s not helping the mood on Wall Street.
In the last blog post of this series, we talked about how current market indicators are pointing to lower expected returns for multiple asset classes. To help solve these lower return expectations, we discussed lowering client expectations, increasing risk and incorporating alternatives into a portfolio, along with some other strategy suggestions. This post we will discuss the following topics: how much to incorporate in a portfolio, the comparison of returns over the longer term and the more recent time frame, and how much alternatives ‘cost’ investors.
Volatility has returned and if it seems like a jarring wake up; blame it perhaps on a market that lulled investors into a deep sleep.
By nearly any measure, stocks enjoyed one of their most tranquil periods in history between 2013 and 2017. A byproduct of the lullaby market is that many investors came out of it groggy and have been slow to react to the more normalized volatility regime that emerged last year. The good news: there’s still time to respond.
- April 03, 2019361 Team
After three months into 2019, the extreme volatility that occurred in 2018 might be easy to forget. However, it shouldn’t be so easily forgotten. Rather, it should underscore the importance of incorporating risk-mitigating strategies into your portfolio. As such, we have compiled some of our top long/short equity blogs to revisit the benefits of the strategy, and its critical place in a portfolio.
- March 27, 2019361 Team
In its 57-year history, the S&P 500 Index has become the center of the investment universe. In many cases, investors would be wise to resist its gravitational pull. Its ubiquity has also caused many investors and investment professionals to mistakenly apply the index as a mental benchmark for relative performance, even though the strategy it is compared with may invest in entirely different markets or securities.
Looking to win your office’s March Madness pool this year? Nothing busts a bracket quicker than letting behavioral biases guide the selection process. Use our 10-step tip sheet to remove behavioral biases from your own picks and perhaps capitalize on the biases of others.
Villanova over Georgetown in 1985, Bucknell over Kansas in 2005, and 16-seeded UMBC’s historic defeat over top-seeded Virginia last season…NCAA Tournament history is littered with unexpected upsets. It’s how March Madness got its name. If you’re trying to win a bracket challenge, we suggest you embrace the madness and call several upsets this year.
There are many parallels between sports and investing. Our recent blog raised the question as to whether LeBron James has lost focus since joining the Lakers and his comments about his team’s need to be more consistent. The blog raised some good questions about fund managers (e.g., do managers with historically good performance get a pass on future underperformance, etc.) and made us wonder if LeBron’s on-court performance has been consistent with year’s past.
In our latest Wall Street Mood Monitor™, Chief Investment Officer John Riddle, highlights the decidedly negative sentiment on Wall Street as part of our three-factor model of revisions, earnings trends, and correlations. Here, we take a deeper look at revisions, specifically within the small cap universe.
In one of our recent posts, we discussed building portfolios that can handle the inevitable ups and downs that investors experience in the markets. Today we will discuss an important step in that process, namely, understanding the current market environment and setting go-forward expectations.
Imagine last September you placed a $500 wager on the Saints to win the Super Bowl this Sunday. Further imagine your heartbreak as a human error resulted in perhaps the worst no-call in the history of sports, thereby thwarting your chance to cash a $6500 ticket. The joy and agony we all experience from our sports obsessions often hinge on the mistakes, biases, and mis-cues of the all-too-human participants.
Did you know the average person in the U.S. spends nearly half a day interacting with media?* This mass consumption creates information overload for many, and it’s a trend we’ve heard a lot about from our advisor clients. Many of our clients noted that investors are coming into meetings having consumed a lot of data points on investments, and are confused about the statistical terms commonly used. To help alleviate this issue, we’ve created the 361 University of Alts Educational Series.
2018 was a strange year, and not just because Baby Shark was playing on constant loop, or because everyone became mildly obsessed with a Netflix movie heavy on blindfolds during the holidays. As far as markets go, it was one of the only two years since 2009 that a multi-factor portfolio delivered a negative return. Global multi-factor portfolios have been positive 8 out of 10 years, including 2011 and 2015 when the MSCI World was negative. 2018 was the only year in the last decade that multi factor portfolios and stocks broadly were down at the same time.
The return of volatility this year has brought opportunity—the opportunity to tactically increase allocations to an oversold asset class. This selloff has advisors and clients discussing how to nimbly take advantage if another correction looms. Before eyeing that entry point into a riskier asset class, however, advisors face a conundrum: How can they add a riskier — albeit attractively valued — asset class without upsetting the portfolio’s long-term risk profile?
- December 05, 2018Andrea Coleman
You may or may not recognize this photo; it was taken after Hurricane Michael hit Florida in October of this year. After the storm, a picture of this house kept appearing in various news articles because it was one of the only homes still standing in the hardest hit area—Mexico Beach, Florida.
After a somewhat calm third quarter, October and November have been rattled by 24 changes of at least 1% up or down in the S&P 500 Index. (For reference there was not a single 1% move up or down during the third quarter.) This uncertainty once again reminds advisors and investors that they should consider shifting their portfolios from participation mode to preservation mode.
The holiday season is upon us, and with that, many of us will be hitting the out of office button for a break. Whether you are heading to the airport for a holiday trip or having a stay-cation, it’s a good time to do some holiday reading. So, we asked our 361 team for some recommendations to add to your shopping cart.
The intent is always good, but sometimes it comes with unintended consequences, this is the lesson from the well-known Cobra Effect. Dating back to the British rule of colonial India, the British government tried to reduce the number of venomous cobra snakes in the country by offering a bounty for every dead cobra. While their intentions were positive, their efforts backfired, when people began breeding cobra to collect a bounty later. When the program sponsors got wind of this, the program was canceled causing breeders and would-be bounty collectors to release their snakes further increasing the cobra population.
“It was almost like being caught in an earthquake where you’re half in shock. There’s a sense of incredible disbelief.”
For some readers, that quote may ring true for various times throughout the history of the market, but for me, it refers to October 19, 1987…also known as Black Monday.
Domestic equity markets have not performed well in October. Through Monday October 29, the S&P 500 Index is down 9.36%, and the smaller-capitalized Russell 2000 Index is down 12.92%, on a price return basis. These declines have occurred against the backdrop of what appears to be—at least on the surface—a strong third quarter earnings season.
Consecutive quarters of record-breaking earnings strength haven’t improved the mood among Wall Street analysts. That negative sentiment spoiled an otherwise healthy backdrop for active managers in the third quarter.
We’ve been expecting interest rates to continue to rise for quite some time as the Fed shifts away from their quantitative easing policy. However, markets have recently been spooked by Fed Chair Powell’s comments last week that “we’re a long way from neutral at this point, probably” indicating that additional rate hikes are coming. Rising interest rates can be scary, but there are some treats to be found if you look carefully.
In a previous post, we discussed how the interactions between security analysts and the companies they follow often lead to a biased measure of consensus expectations. Here, we focus on what the term consensus implies, what it does not explain, and how it relates to earnings surprises.
We recently sat down with Harin de Silva, Ph.D., CFA, President and Portfolio Manager at Analytic Investors, sub-advisor of the 361 Long/Short Equity strategies, to discuss low-volatility equity investing. Specifically, why a dynamic approach to investing is necessary given potential fluctuations in factors that can be present in global equity markets.
361 Capital was very proud to sponsor and organize the 2018 9/11 Heroes Run this past Sunday benefiting the Travis Manion Foundation (TMF). Travis Manion was a Marine who lost his life in the war against terrorism. The Travis Manion Foundation helps veterans, families, and communities through various character building, mentorship, and empowerment programs.
It’s football season—and we’re excited to cheer on our hometown Denver Broncos. As we’ve all observed in the August preseason games, NFL coaches have been testing their teams and making roster changes to ensure that they have the best offense and strongest defense on the field when the regular season begins. Investors should be doing the same and evaluating their portfolios so they’re ready for whatever conditions lie ahead.
- September 03, 2018Andrea Coleman
We’ve written in the past about the long/short equity category and how the recent performance of several of these strategies has a lot to do with the fact they have high beta relative to the category, and lots of leverage. Today, we wanted to write about something else that has been slowly affecting the way performance of the category has looked relatively, and becomes even more impactful when Q3 2018 comes to an end.