What Me Worry?

U.S. Stocks are up by about a quarter since the start of the year with 472 of the 500 stocks in the S&P 500 up since December 31st, 2012.  IPOs are getting attention following the successful launch of Twitter.  And more commentators and gurus are arguing for further gains, a coming collapse or both. Should Read more […]

Strong as Steel: Impacts of New Futures

This morning I was interviewed for CCTV2 on the impact of new futures markets with a focus on iron ore. Although Iron ore is not in the major indices, the DJ-UBS and S&P GSCI, it is an economically significant commodity that is the main input for steel. I thought you might be interested in the Read more […]

Coupon Type Counts In Regard To Preferred Index Performance

Preferred indices started the year with some very strong returns. First quarter 2013 saw the S&P U.S. Preferred Stock Index (TR) return 3.13%. By the end of April, the overall index was up 4.40% year-to-date while the floating rate component of the index, as measured by the S&P U.S. Floating Rate Preferred Stock Index (TR), Read more […]

QE and Asset Prices

In an earlier post on this blog, Bluford Putnam (of the CME Group) correctly points out that the Fed’s much-discussed three rounds of Quantitative Easing (QE 1-2-3) haven’t created either jobs or inflation.  While job growth has picked up somewhat this year, both payroll employment and the unemployment rate have not recovered to their pre-crisis Read more […]

5 Risks Associated With Investing in Preferreds

Due to their hybrid nature, the potential risks of preferred securities are related to the interest rate environment, issuer’s credit quality and liquidity. Interest Rate Risk: Due to their bond-like fixed dividend payments, preferreds are vulnerable to changes in interest rates.  There is an inverse relationship between preferred prices and changes in interest rates.  In Read more […]

How Much Popularity Can Low Volatility Stand?

The low volatility anomaly — i.e., the tendency for low-volatility or low-beta portfolios to outperform market averages — has been the subject of at least 40 years of academic research.  Given its challenge to what “everyone knows” about risk and return, it’s a fertile field for both professors and practitioners, some of whom recently characterized Read more […]

The Fed’s QE Dilemma

The US does not have any measurable inflation pressure now nor has it had any over the last 20 years.  The core personal consumption price index, used as the benchmark for inflation by the Federal Reserve (Fed) has been in the 1.25% to 2.5% zone since 1994, averaging about 1.75% for the last 20 years, Read more […]

Not ALL Weights are EQUAL: Why Brent isn’t Heavier than WTI

2014 is just around the corner now and the new weights for both the DJ-UBS CI and S&P GSCI have been announced. While the index weightings follow the methodologies, there are questions around the weights of two particular commodities, Brent crude oil and WTI crude oil. The interest comes from the fact that they are Read more […]

3 Reasons Companies Issue Preferreds

Companies may issue preferred stocks for a variety of reasons.  The three reasons below are the most common. Preferred stock issuances give companies a relatively cheap way to acquire additional capital.  The preferred market is dominated by banks and related financial institutions, which are required by regulators to have adequate Tier 1 capital to support Read more […]

Core / Satellite Investment Strategies: Don’t Forget The Beta!

Traditional Core/Satellite investment strategies typically combine a diversified asset allocation framework with a smaller alpha-seeking segment of the portfolio.  With an increased emphasis being placed by many investment advisors on so-called “tactical” managers, as well as other “alpha-generating” trades, it’s not surprising, though somewhat disappointing, that simple beta often gets ignored.  In a year when Read more […]