Donald Trump is for real. When he first declared as a candidate, charging that Mexico was sending us its thieves and rapists, everyone laughed at his political naivete. Then when the primary season began no one thought that he had a chance against the mainstream favorite, Jeb Bush. And now that he has become the […]
News & Insights
What you should know about stock returns…
What really drives stock returns? 1) Well first it is not GDP growth. This one may come as a surprise. Many people think GDP growth is key to stock returns but as shown in Chart 1, from Ben Inker of asset manager GMO, there is no discernible relationship between a country’s GDP growth and its […]
The Next Tool in the Tool Chest
Historically, the U.S. economy has grown about 3% a year. But since 2008, there has been a marked downshift to the 1%-2% range. How best to get the patient up and out of bed? Growing the nation’s workforce would spur economic growth but the prospects here appear limited due to our low birth rates and […]
The 2-Minute Thought: Do Liberal Arts Majors Become Great Investors?
Is liberal arts education good preparation for becoming an investor? Perhaps . . . George Soros majored in philosophy. So did activist investor Carl Icahn. Larry Fink, the CEO of BlackRock, majored in political science. Peter Lynch studied history, psychology, and philosophy. Stephen Schwartzman, CEO of the Blackstone Group, had his own interdisciplinary major incorporating […]
The 2-Minute Thought: Older White Men Are Preferred As Financial Advisors
Wealthy investors are most likely to prefer having older white males as their financial advisors. That’s according to a study done by Spectrem Group, a researcher focused on the investment industry. The study asked affluent investors to look at the photograph below and make a snap judgment about which of the eight financial advisors they’d […]
The 2-Minute Thought: Value Investing Isn’t Dead
Historically, value investing has outperformed. It hasn’t done so year in and year out – and it can certainly underperform over shorter periods of time. But over longer multi-year periods, it has outperformed. The evidence in its favor holds across markets, countries, and eras. Yet value investing has had a terrible period of underperformance the […]
Yeah! Let’s Hear It – We’re #81!
This is China’s world ranking in soccer (“football” to the rest of the world). China, you might remember, is the country that won the most gold medals, 51, at the Beijing Olympics. And yet in the world’s most popular sport, China is just barely ahead of Jordan and Equatorial Guinea and still trailing Zambia (#78) […]
We Are Sometimes Accused of Being Too Optimistic
Not this time. Let’s get right to what could cause the next crisis. China. Time Magazine pointed out in January that the problems of the Great Recession were never really fixed. Financial crises are most often caused by the rapid build up in debt. We saw this with our housing debt blow off in 2005-2008. […]
Can This Kingdom Modernize?
Up to now, Saudi Arabia has survived on oil. Half its GDP and 80% of its exports are from hydrocarbons. But Saudi Arabia is no Norway. Rather than build for the future, it has used oil wealth to fund cushy public sector jobs and generous cradle-to-grave welfare. That’s resulted in a frail private sector that […]
Companies That Earn Their Keep
As Value investors, we spend our time looking for good companies that sell at a discount to their fair market value. Defining a “good” company is the first step in this process. Factors such as a strong market position and capable management are hallmarks of a quality company but can be subjective and hard to […]
The 2-Minute Thought: Richard Yamarone Says These Five Indicators Point To Recession
Bloomberg economist Rich Yamarone says that a U.S. recession is coming. He won’t say when or how — just that too many things don’t look right. Speaking to the San Francisco Chartered Financial Analyst (CFA) Society yesterday, Yamarone said we are in “Bizarro World.” That is a world where 13 countries have negative yields on […]
The 2-Minute Thought: The Golden Era of Investment Returns Is Over
Investors should set their sights lower, according to a recent study by McKinsey Global Institute called “Diminishing Returns.” The report says that 1985-2014 was a golden era for investment returns that is unlikely to be repeated and that investors will need to get used to a world of lower returns. That’s because the confluence of […]
