Category Archives: Equities

Alternative Futures: Fund Management and Indexing

In the last two weeks two mainstays of the British and global business press – The Economist and the Financial Times have argued strongly that indexing as an investment approach will overtake active management. The Economist (articles here and here) and the FT in its FTfm  section on fund management (here and here) point to the lower fees typically Read more […]

Sectors: A tale of American Culture

The makeup of the S&P 500 reflects the U.S. overall big-cap public market, and while it’s relevance to investing is well known, it is also a reflection on the changes in U.S. culture. Last December Facebook was added to the S&P 500, signaling the importance of social media. The prior month J.C. Penney was removed, Read more […]

Volatility, ya right

The market was up 0.7% this morning, and down 0.7% in early afternoon trading, and is currently trending up from the red. So I keep hearing that volatility has returned to the market. Maybe, if you just started trading. Daily volatility, as measured by the daily high price divided by the low price, has increased Read more […]

Don’t Put All Your Eggs In One Basket

It’s a little late for an Easter post but this saying is about one of the key investment principles, diversification.  Simply put, diversification happens when assets inside your portfolio move in opposite directions. The investment measure of diversification is correlation and it can range from -1.0 to +1.0. If correlation is -1.0 between two assets, Read more […]

Defining a fast growing investment trend: ‘Smart Beta’

If finance were high fashion, ‘smart beta ETFs’ would be the showcase of this year’s Spring collection. They are receiving a lot of press attention and surveys of institutional investors show that they plan to increase their adoption of smart beta ETFs. In this article, we answer the question: What specifically are smart beta ETFs Read more […]

An Immediate Risk Measure

Volatility and correlation are history. In fact this is a consequence of their definitions.  The calculation of volatility and correlation – the preeminent measures of risk – requires multiple observations.  Quite a few periods are needed if the resulting estimates are to be relied upon as robust.   Because of this, volatility and correlation are not Read more […]

Internet Intercedes in the Market

The last month has been marked with worries that the stock market is about to (finally) have a correction and drop some 10% or more.  While it is impossible to tell if, or when, this might happen; a few numbers may explain some of the recent action. Stocks were seized with a bit of mania Read more […]

Right Conclusion (maybe), Wrong Reason (definitely)

This morning’s Wall Street Journal joined (actually, re-enlisted in) the chorus of those arguing that 2014 would be a time for stock pickers to “shine.”  The lynchpin of the Journal‘s case will be familiar to advocates of a “stock-picker’s market.”  That argument is that since correlations in the U.S. equity market are declining (perhaps as Read more […]

S&P 5-YEAR DIVIDEND SNAPSHOT (and know when your paycheck comes in)

March marked the fifth anniversary from the Bear market low. Dividends have not only recovered from their bottom, but are setting new records. Yields are less, but relative to other instruments they remain competitive, and have a much lower tax rate. Two observations that became apparent are the risk-reward trade off and the yields. For Read more […]

U.S. Domestic Dividends Set Record Increases

Data is for U.S. Domestic Common Stock, not just the S&P 500 U.S. domestic common issues set a first quarter record for dividend increases, as the ‘shareholder’ return theme continued. Increases have been made easier by record earnings and record cash holdings. Additionally, many issues (especially large-caps) have heard the knocking at the boardroom door Read more […]