If you are worried that gold prices are falling, the prognosis could be much worse for gold miner stocks. Although many investors believe the performance of gold miners is just like the performance of gold, this is not quite the case. If investors look at correlations alone to determine they are getting their gold exposure Read more […]
In terms of fixed-income investing, 2013 is a year for the history books. Consequently, the question of what will 2014 bring for the fixed income investor arises. Some significant understanding of future fixed-income investing can be inferred from the recent past. The equity market had a very successful 2013 as the S&P 500 Index returned Read more […]
Investors have long regarded the market’s overall level of volatility as an indication of its riskiness. The S&P 500 VIX Index, in particular, is often referred to as a “fear gauge” for U.S. equities since it tends to rise when investors are nervous and to fall when the markets are quiescent. Although S&P 500 VIX Read more […]
My colleagues, Daniel Ung and Xiaowei Kang, recently published an article on alternative commodity strategies. Below is an intro and some highlights: “Ever since the publication of Professor Harry Markowitz’s work in 1952, modern portfolio theory has been one of the cornerstones of asset allocation and portfolio construction. Until recently, the principal building blocks used to Read more […]
Volatility can feel like an earthquake. As many investors can painfully testify, the chart below is typical of volatility. A period of relative calm is disturbed first by a few small tremors, then by a precipitous rise. At this point, risk breaks all connections with its normal level and climbs rapidly to a crystalized zenith Read more […]
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 […]
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 […]
This morning’s Wall Street Journal cites an adviser who opines that “the current stock market environment favors…active fund managers, who pick individual stocks in an attempt to beat broad market indices.” This immediately raises the question of how to define a stock picker’s market, and how to determine whether today’s conditions are more auspicious for Read more […]
In major cities at this time of year, an army of street vendors bristling with umbrellas await their chance to emerge in entrepreneurial fervour, providing tourists and commuters alike with immediate respite from unanticipated rain. It’s a viable business strategy: the chaotic nature of weather means that occasional rainfall remains practically impossible to predict*, hence Read more […]
Most people think of VIX as simply an index. This makes sense — the “I” in VIX stands for that very word. But VIX is more useful than your average index. It could easily be grouped with economic indicators, like the unemployment percentage or new home sales. Why? Because the VIX level — not just Read more […]
