Fund Architects Commentary
GHOSTS OF GREENSPAN
Lest our investing spirits become a little too exuberant, current Fed Chief and aspiring market mystic Janet Yellen took time out last week to cast a chill over the irrational crowd. Indeed, speaking before the International Monetary Fund spooks in Washington, the Chairwoman suggested that, one, the years-long stock rally may have driven equity prices too high, and, two, debt-market investors are taking excessive risks. Eeeek! Continue reading »
Remember the good ol’ days when all we had to worry about were simple scams like Ponzi schemes, pump-and-dump cons, and front-running frauds? It all seems so archaic now. Nowadays, humans – vile or otherwise – have been mostly removed from the marketplace, and in their places are machines with secret programs trading stocks too fast to be seen or recorded on a stock ticker or computer screen. We’re in the era of high frequency trading, and the big boys are spending billions to get a peek at prices a “flash” before everyone else. Continue reading »
THE NIFTY FIVE HUNDRED
History tells us that by the time everyone in the financial markets spots a trend, it’s over. Success becomes a fad and a fad inevitably becomes a failure. So what’s up with the unremitting march into index funds? Word’s going around that indexing has become so popular it’s threatening the efficiency of the markets. Continue reading »
HEDGE FUND, DOFF THY NAME
What’s in a name? That which we call a rose
by any other name would smell as sweet.
According to the abstrusely-named research outfit HFR, Inc., there were more than 8,000 hedge funds in operation at the end of 2014. Allegedly, said funds were responsible for a staggering $2.8 trillion in assets under management, a threefold increase in the cumulative number over the last ten years. Puzzlingly, though, less than 1,200 of these firms use the term “hedge fund” in the “about us” section of their SEC investment adviser registration. And of the other 6,800? “O! be some other name.” Continue reading »
IT’S ABOUT TIME
Ever heard of David Blitzer? We hadn’t either. Probably should have though. He has the altogether cool job of running the S&P Dow Jones Index Committee, the group responsible for picking stocks in the Dow Jones Industrials Average. Last week, the good Dr. Blitzer had the altogether cool job of announcing that, for the first time in its seemingly timeless history, the Dow’s panel of listed companies will be including…a watch maker. Continue reading »
IS THERE A DOCTOR IN THE HOUSE?
In case you missed it, what with “Professor Oil” falling so spectacularly off his lectern, ol’ “Dr. Copper” has been stumbling pretty badly himself. Indeed, spot price on the red metal has fallen nearly 10% since the start of the year, trading somewhere around $5,672 a ton for those keeping score. Continue reading »
“MAGIC ON THE FLOOR” NO MORE
All that noise you’re not hearing is what used to be the organized chaos of the Chicago commodity pits. Seems the parent company of the Chicago Board of Trade is quietly ending the practice of traders establishing prices by yelling at each other.
The CBOT -- the world's oldest futures and options exchange -- was established in 1848
Some say the practice of “open outcry” trading goes back to the ancient world, when the Phoenicians, Greeks, and Romans traded options against ship cargoes. Others point to the 12th century, when European merchants gathered during fairs to loudly negotiate for the future delivery of merchandise. Still others trace the practice back to 1730 Japan, where feudal lords formed the Dojima Rice Market. Continue reading »
YOU WANT FRIES WITH THAT?
McDonald’s CEO Don Thompson “retired” last week. A cynic might infer that his forced departure had something to do with the 21% drop in fourth-quarter earnings for the universe’s largest restaurant chain. Or maybe its truck-stop-class bathrooms. But we’re willing to be a bit more charitable. After all, the good Mr. Thompson, who’d been in charge of flipping burgers and maintaining sanitation at the Golden Arches for less than three years, claimed it was “tough to say goodbye to the McFamily.” Continue reading »
SMOKE ON THE WATER
So, the Swiss National Bank “scrapped the cap” on its franc last week, and within minutes global currency markets were virtually up in smoke. Like firing a flare gun into a rattan ceiling, the SNB’s move ignited things pretty quickly, and by Friday’s close currency brokers around the world were facing hundreds of millions of dollars in foreign-exchange losses. Continue reading »
U.S. equity indices recorded impressive positive results for the fourth quarter 2014 (4Q14) led by smaller capitalization stocks. International equity indices priced in U.S. dollars (USD) were negative for the quarter as many international currencies weakened relative to USD. Long-term bonds maintained surprisingly strong marks as investors continued to favor the relatively attractive yields and safety of U.S. Treasuries. Commodities persisted with another extremely weak quarter of results dragged lower by the energy complex. Continue reading »