Thoughts

The pendulum always swings too far.

T

In 2007, the performance of the USA was well behind the Rest of the World over 1, 3, 5 7, & 10 years. No advisor looking at this performance table would have steered any clients in the USA’s direction. Unless they’d remembered performance tables are always history. ETF assets at the time – $0.8trn. Roll … Read on

Investors cling to past performance because it offers hope

I

And what’s life without hope? But unless the future is exactly the same as the past, it’s surely false hope. Even more so when the current environment is the complete opposite of the past. Like now! For the March quarter, Netflix’s revenue growth accelerated from the prior 2 quarters to 24% EPS was the highest … Read on

It’s what happens at the end that really matters.

I

Bernie Madoff has died in prison, remembered not as the “investor” who churned out a monthly +1% without fail, but as the world’s greatest fraudster “losing” investors $65bn. He lived a life of lies, turned in by his sons, one of whom died by suicide two years later. A tragic story on a personal & … Read on

You want Value, but Active or Passive?

Y

Consider this, JP Morgan (JPM) is the 2nd largest holding & #1 bank in the S&P500 Value index @ a 2.7% weighting. Goldman Sachs (GS) is 29th at 0.68%. It’s quarterly earnings time. JPM reported revenue growth of 14% & an ROE of 23%, flattered by credit loss provision reversals. Strip provisions out from both … Read on

The American Association of Individual Investors reported last week that, “Optimism among individual investors about the short-term direction of the stock market jumped to its highest level in more than three years.”

T

56.9% of respondents were bullish, a higher level has only occurred 4.7% of the time since 1990 (red line). But is there any predictive value in these readings? My scatterplot below shows the Bullish % & the subsequent 3-month returns of the S&P500 since Nov 1990 (source: AAII & Bloomberg). Over the entire period, positive … Read on