Month: February 2016

If you’re a U.S. investor, there are at least two biases that feature prominently in your portfolio: 1) Home bias: the tendency for individuals and institutions in most countries to hold only modest amounts of foreign equity. 2) Recency bias: the tendency to think that trends and patterns we observe in the recent past well […]

The Hedge Fund Myth

Reading through some of the mandates for hedge funds via Bloomberg can provide instant comedic relief… “Its strict requirement is that funds must have at least three years of 15 percent returns. The ratio of annual returns to maximum drawdown must be at least 1.5.” “The expected return of the manager is typically between 12 percent […]

Should Investors Fear New 52-Week Lows?

For only the 3rd time since March 2009, the S&P 500 closed last week at a new 52-week low. Naturally, the chatter among so-called “traders” was that this was an ominous sell signal. Indeed, from Investopedia we find the following: “A popular strategy used by stock traders is to buy when price exceeds its 52-week high, or […]

The Easy Money Game Has Changed

  • Fed, Markets
  • Charlie Bilello

Why you should hope the Fed hikes again in 2016… Like Pavlov’s dog, market participants seem to salivate with any mention of quantitative easing (QE). For good reason, I suppose, as they have been conditioned to believe that quantitative easing means higher stock prices. Indeed, since QE1 was launched in December of 2008, all of […]

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Silver Linings Playbook

Last July, I wrote the following: “Collectively, these factors [negative earnings/sales growth, widening credit spreads, flattening yield curve, weakness in cyclicals, etc.] point to an equity market that is increasingly fragile and in the past one that was about to become much more volatile. The response from market participants today: “no one cares.” Volatility is low, […]