Category Archives: Uncategorized

29 Days Later

On February 19th, the S&P 500® closed at an all-time high of 3386; last night, exactly one month later it closed at 2409, a 29% decline from the high.  Let’s take a moment to reflect on what’s happened over the last month. We should first start by putting the decline into historical context. The peak-to-trough Read more […]

With VIX Above 80, Expect 5% Daily Swings in the S&P 500

Volatility – it is sometimes said – takes the elevator up but takes the stairs down.  Like seismic activity, volatility can rise precipitously, but tends to decay more slowly; aftershocks and tremors continue to roil markets after any major repricing occurs.  The practical consequence is that, once the markets become volatile, they tend to remain Read more […]

The Darkest Hour

“It is always darkest just before the Day dawneth” -Thomas Fuller The bull market is over.  After 11 years of impressive and relatively steady gains, last week the S&P 500® slid into bear market territory, marking the end of the glory of the 2010s and the start of a new regime.  Volatility is back with Read more […]

From “Hard to Beat” to Nigh-On Impossible

Our SPIVA® reports have shown, year after year, that market-cap weighted benchmarks are, to put it kindly, hard to beat.  However, in 2019 a range of circumstances made “hard to beat” become nigh-on impossible for the S&P 500®. In general, there are three common ways by which an active portfolio can outperform its benchmark: over Read more […]

The Road Less Traveled

It is a truth universally acknowledged that liquidity is critical to market health; typically when liquidity falls, volatility rises.  The Financial Times recently cited claims that the increased use of passive investment vehicles had caused trading volumes in individual S&P 500 constituents to decline.  Should we be alarmed? In reality, the notion that single-stock traders Read more […]

Unicorns: Only in Fairy Tales

“A company for carrying on an undertaking of great advantage, but nobody to know what it is” -Description of company marketed during the South Sea Bubble (1720) Private companies, particularly those hailing from Silicon Valley and combining just the right mix of buzzwords, have captured both headlines and investor attention.  The media report breathlessly on Read more […]

Illustrating the Value of Liquidity

Let’s suppose for a moment that you are given a choice between two hypothetical exchange traded funds (ETFs) tracking the same index.  Fund A has an annual management fee of 0.4% while Fund B has an annual management fee of 0.1%.  At first glance, Fund B seems like the better option: it offers similar performance Read more […]

A Look at Index History Part 2

This is more an eyewitness account than an analytical review of the growth of indexing since I joined S&P in 1982. The growth in indexing in the 20 years from S&P 500 futures in 1982 to the bottom of the tech bear market in 2002 was just a warm up. Two trends encouraging index growth Read more […]

How Is Your Undefined Benefit Plan Going?

I have probably been receiving them for years, but lately I have noticed opposing position papers in my inbox. Some claim Americans need a revival of defined benefit (DB) plans because of a looming retirement crisis, while others contend that defined contribution (DC) plans are doing great and there is no cause for alarm. DC Read more […]