Category Archives: Equities

Stocks and Houses

When tech stocks collapsed in 2000 and the market fell 50%, investors put their faith in houses:  maybe too much faith.  Then house prices collapsed from mid-2006 as mortgage excesses took down the economy. Stocks fell 50% again.  The subsequent recovery in the economy, houses and stocks disappointed at least two of the three: the Read more […]

Stock Picker’s Market?

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 […]

You Take My “Breadth” Away

An overview of the market shows that breadth, the number of issues up compared to the number down, is running very strong this year.  Year-to-date (YTD), 451 of the S&P 500 issues are up (47 down), which on an annual basis is the best since 458 issues increased in 2003.  The 2003 number is also Read more […]

A Simple Hedge Strategy

Alternative investments for high net worth investors are like the weather — everyone talks about it, but no one does anything about it.  In fairness, alternative investments — hedge funds, private equity, and the like — are often hard to access and complicated to explain.  But if they can deliver on their promise of uncorrelated Read more […]

Money Grows on THESE Trees

My parents used to tell me that money doesn’t grow on trees, but they didn’t know about the Eucalyptus trees in Australia like the one shown below. The science journal, Nature Communications, reported Eucalyptus trees in western and southern Australia absorb gold through their roots and transport it up all the way through their leaves. Read more […]

Passive Risk Management

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 […]

The Shrinking Supply of Alpha

Recently we attended a conference at which many hedge fund representatives were present. Not surprisingly, there was much discussion of the ability of hedge funds, and by extension active managers generally, to generate alpha. This raises an obvious question: what is the market’s capacity to produce alpha?  Is there a natural limit to investors’ ability Read more […]

Jekyll & Hyde: The U.S. Preferred Stock Market

Preferred stocks have a split personality, part equity and part bond. The bond characteristics of preferred stock has, at least for the time being, become the ‘Mr. Hyde’ of the asset class.  The high dividends that preferred stock owners enjoy can be compared to future interest payments of bonds. Like bonds, the prospect of the Read more […]

Active vs Passive Investing – Looking at 2013 Mid-Year Results

The past 12 months ending June 30 saw an impressive rally in the domestic equity markets with S&P 500, S&P MidCap 400 and S&P SmallCap 600 posting double digit gains.  During that period, the majority of active managers in all the categories except small cap growth underperformed their benchmarks.  The SPIVA 2013 mid-year report shows Read more […]

Who’s Calculating Your Index?

Most investors assume that ETFs are passive investment tools tracking independently calculated indices, that premise has arguably been one of the key factors driving the popularity of ETFs.  In the past investors and advisors could be confident about their understanding of an ETF by reviewing the rules governing the underlying index.  To a large extent Read more […]