Fund Architects Commentary
Positive portfolio performance results were lacking in third quarter 2014 (3Q14) as worrisome macro factors overwhelmed investors positioned for rising asset prices. Large capitalization stocks in the U.S. as represented by the S&P 500 were positive but mid and small cap stocks were noticeably lower. International equity indices including developed and emerging markets were considerably inferior as Europe is struggling to remain out of recession, Japan is experiencing difficulty in stoking long-term growth, and developing economies feel the effects of a stronger U.S. dollar and potentially rising U.S. interest rates. Long-term bonds performed positively for the quarter as investors sought safety from many risk assets, while short and intermediate categories were near flat. Commodities, in aggregate, struggled mightily during the period as has been the case for year-to-date and one-year measurements. Continue reading »
WHEN ONE DOOR CLOSES…
Another opens. So said Alexander Graham Bell a century and a half ago. We’d have to think the distinguished bond investor Bill Gross might agree. Seems the good Mr. Gross was stepping over the threshold at Janus Capital just as the Pimco door was slamming on his backside. Oh, the irony.
Janus is an ancient Roman god associated with beginnings, transitions, and…doorways
Reportedly, Pimco – the firm Gross founded in 1971 – was indeed about to give the heave-ho to one of the most influential bond investors of all time. Seems tensions had reached a breaking point in Newport Beach, in some part due to Gross’s ongoing battles with his heir apparent and management committee, but also due to the heavy outflows from Pimco’s flagship bond product. Oh, the recent under-performance. Continue reading »
ANOTHER BITE OF THE APPLE
As I was walking down the street one day…
If you missed all the hoopla Tuesday, our friends in Cupertino unveiled what they’re sure will be the next in a long line of hot-selling gadgets: the Apple Watch. According to company CEO Tim Cook, the new line of customizable smartwatches will include two sizes — huge and huger — and three versions: Showy, Showier, and Showiest. Continue reading »
HAVE IT YOUR WAY
By now, most everyone’s heard the report that Burger King intends to acquire Canadian doughnut-chain Tim Hortons. But don’t expect a Whopper-and-Timbits combo meal coming to a restaurant near you…our profit-minded friends from Miami are only cooking up the books.
Burger King began in 1953 as Insta-Burger King in Jacksonville, Florida
Tim Horton's Donut Shop (with apostrophe) opened 1964 in Hamilton, Ontario Continue reading »
FOOL ME ONCE...
Remember the Financial Crisis? Yeah, we do too. Heck, it’s only been seven years – even Wall Street’s memory isn’t that short. Or at least one would suppose. Um, one might be supposing wrong.
Shame on me.
At bottom, literally, of the near-collapse of the U.S. financial system back in ‘08 were loads of worthless mortgage bonds the Street’s worst and greediest had unloaded on investors, unsuspecting and otherwise. Essentially, this toxic waste represented the securitization of about $450 billion worth of non-performing home loans. Think anybody would ever be interested in that kind of wealth-busting garbage again? No way. Umm, way? Continue reading »
This just in: Bureaucrats discover that banks are in business to make money. Massive fines to follow.
True enough, the federal shakedown department, otherwise known as the Office of the Comptroller of the Currency, is grilling J.P. Morgan Chase & Co. about whether the big firm has been steering private-banking clients to its own investment products. Continue reading »
MICROSOFT OFFICE (SPACE)
So, there’s a new boss at Microsoft. Has been since February when the appetizingly-named Satya Nadella took over as CEO from Steve Ballmer. Mr. Ballmer, who’s now just rich for a living, took over the big chair from Bill Gates in 2000.
“Now we had a chance to meet this young man, and boy that's just a straight shooter with upper management written all over him.”
In his first major organizational move, the enterprising Mr. Nadella announced last week that pink slips are on the way to around 18,000 Microsoft employees. The move – which will give about 15 percent of the company’s workforce a bad case of the Mondays–represents the largest layoff in Microsoft’s history. Continue reading »
TOUR de FRAUD
So, last week, BNP Paribas SA — the mother ship of France’s banking industry — was tagged with an $8.9 billion fine for willfully evading U.S. sanctions against rogue nations. In the most abrupt “tomber en disgrace” since Lance Armstrong hit the ditch, the nearly 200-year old behemoth fessed up to criminal charges that it had falsified business records and engaged in elaborate schemes to conceal illegal transactions from regulators. Continue reading »
IF YOU MARKIT, THEY WILL COME
Ten years or so ago, a former TD Securities credit-trading executive – one interestingly named Lance Uggla – started a little outfit called Markit. Launched on the outskirts of London, in a barn no less, the good Mr. Uggla’s calling was to tap into the burgeoning credit-default-swaps market, which at the time was growing faster than Iowa corn.
People will come Lance.
Fortuitously enough, Markit eventually created the so-called "ABX" index, which famously became a way for banks to wager on the subprime-mortgage market ahead of and during the financial crisis. Since then, the company has figured out how to make money by charging its 3,000 or so clients fees for services and occasionally for licensing. Continue reading »
ALTS, ON THE ROCKS
So here we are at the investment bar…stocks are chasing all-time highs, bond yields are on ice, volatility’s spiking, and global geopolitical risks are bubbling over the rim. No surprise that today’s asset mixologist is creating more enticing cocktails by combining interesting alternative strategies with more traditional assets. And he better -- a simple concoction of stocks, bonds, and cash seems downright old fashioned in this modern setting. But adding a splash of financial alternatives by itself ain’t gonna’ win this flair contest…what we need is a shot of booze in our allocation mix. Continue reading »