Tag Archives: U.S. Equity Market

Sep 15, 2020

Courage vs. Comfort

Philosophers have long argued that courage is the most essential human virtue, because without courage, all other virtues lie in jeopardy. Remarkably, the theorizing of ethicists has an implication for practical portfolio management. We can illustrate this with a simple example in Exhibit 1. It’s Dec. 31, 1999, and a professional investor is considering buying…

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Jun 1, 2020

The S&P Composite 1500®: An Efficient Measure of the U.S. Market

The S&P 1500 serves as both a benchmark indicator for U.S. equity market performance and as a basis for passively replicating investment products that aim to deliver a “market” return.  Our new paper examines the index from both these perspectives, and compares the S&P 1500 with other U.S. equity market indices.  Here are a few…

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Dec 4, 2019

Common Confusion

The critics of passive investing are nothing if not creative.  One of their objections to the growth of index funds stems from the putative problem of “common ownership.”  The argument is that index funds’ ownership of many of the competitors in most industries encourages or facilitates collusive behavior.  “[T]he fear is that by owning chunks…

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Sep 19, 2019

Have Passive AUMs Eclipsed Active?

“You all did see that on the Lupercal I thrice presented him a kingly crown, Which he did thrice refuse.” Julius Caesar, Act 3 This morning’s Wall Street Journal declared that “Index Funds Are the New Kings of Wall Street.”  The coronation, and similar notes of the “end of an era,” were prompted by Morningstar…

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Jul 29, 2019

Concentration Concerns

Readers of this morning’s Wall Street Journal learned (on the front page, no less) that many of the largest investors in the U.S. equity market hold similar portfolios.  “The overlap in the top 50 stockholdings between mutual funds and hedge funds…now stands at near-record levels, a study by Bank of America Merrill Lynch found.”  An…

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Feb 27, 2019

Can All the Children be Above Average?

February has been a great month for factor index performance: of the 17 S&P 500®-based factor indices reported in our quarterly factor dashboard, 11 have outperformed the “vanilla” S&P 500 so far.  Our indices focused on quality and shareholder return are having particularly strong months, with the S&P 500 Dividend Aristocrats®, the S&P 500 Buyback…

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Oct 30, 2018

Stocks On Pace For The 6th Scariest October Ever

The S&P 500 is down 9.4% month-to-date as of the close on Oct. 29, 2018, and is on pace to record its worst Oct. since 2008 and its sixth worst Oct. based on history since 1928.  The other years when the S&P 500 that lost more in Oct. than in Oct. 2018 (so far) happened…

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Jan 25, 2018

Small Caps Need No Style To Accelerate With GDP

The first estimate of US GDP for the fourth quarter is set to be released this Friday and the median forecast is 3.0% according to MarketWatch, which if met or exceeded will be the first time 3 consecutive quarters to show at least 3% growth since the first quarter of 2005.  While this is supportive…

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Jan 18, 2018

It May Not Be Time To Fear Stocks Yet, But Perhaps Real Estate

Euphoria seems to be taking over the stock market with frequent stories of new highs – but what is more important is how strong the stock market performance is relative to the bonds.  Month-to-date through Jan. 18, 2018, the S&P 500 is outperforming the S&P 500 Bond Index by 3.8%, the most since Dec. 2016, when…

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Oct 27, 2017

Getting What You Pay For

Earlier this week, the Wall Street Journal featured a long article arguing that Morningstar’s star ratings for mutual funds were a “mirage.”   Since these ratings exert a powerful influence over fund flows, their usefulness is obviously of keen interest to investors.  To its credit, Morningstar, although arguing that its ratings are a “worthwhile starting point,”…

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