Fund Architects Commentary
BITS AND PIECES
Did you know that bitcoin was launched in a paper published October 31, 2008 by some form of higher intelligence calling itself Satoshi Nakamoto? We didn’t either. The still mysterious pseudonym’s detailed workings of the new currency, including the brilliant mathematical code that would operate it, were published the following January.
The first money business to deploy the new technology of record-keeping was the Medici bank in Renaissance Italy Continue reading »
BOARD TO TEARS
Remember Yahoo! Inc.? If not, here’s a clue: The struggling company with the exclamation point in its corporate name was an Internet search engine pioneer. It’s true…you can look it up on Google.
In 1994, "Jerry and David's Guide to the World Wide Web" was renamed "Yahoo!" Continue reading »
They say that patriotism is the last refuge to which a scoundrel clings.
If you missed it, Moody’s just agreed to a $130 million settlement with a California pension fund. The agreement resolved one of the industry’s last remaining legal migraines attached to the Financial Crisis of 2008. You’ll probably remember that eight years ago Moody’s and its ilk were loyally awarding sweet evaluations to huge piles of the smelly residential mortgage debt that eventually stuck to the bottom of Wall Street’s figurative shoe. Continue reading »
ILLUSIVE PUBLIC OFFERINGS
Since nothing says “risk-on” like the IPO market, it’s no surprise that current “risk-off” conditions are crushing the market’s newest companies. This hostile environment will doubtlessly have far-reaching effects on Wall Street, which has been hugely profiting from the public offering boom, and Silicon Valley, which has propagated many of the new ventures.
The 10 largest U.S.-listed IPOs of 2015 are down about 25% from their offering price. Continue reading »
Exponentially rising volatility in stocks, bonds, currencies, and commodities has left market pundits around the world scrambling to figure out what’s going on. As analysts search for reasons for the global volatility, what seems plausible one day is quickly disqualified the next when the market veers in a different direction. Scientists have a name for a state of disorder such as this:
Chaos -- When the present determines the future, but the approximate present does not approximately determine the future. Continue reading »
“CANNOT PREDICT NOW”
Believe it or not, fortune telling is a class B misdemeanor in the state of New York. Occasionally, that’s a problem for Madame Ruth and her gold-capped tooth. But predicting the future is hardly a legal issue for Wall Street analysts, especially those of the oil kind. To wit: “We assume that with less of a supply overhang in H2-2015, prices can recover further,” said the energy soothsayers at Credit Suisse in late 2014. “We see an average price of $79 a barrel in that period.” Magic 8-Ball says “Are you kidding?” Continue reading »
RISE OF THE MACHINES
There was a war…
We’ve been hearing that there’s a storm coming. It’s here. Oil prices are tanking. Global equities are evaporating. U.S. economic data seem to be moving backwards in time. The Dow and the S&P 500 look like they’re a couple cans short of a six-pack, surrendering 8% since 2016 arrived, while the faint-hearted NASDAQ has given up more than 10%. What’s wrong with this picture? Continue reading »
U.S. equity indices prices exhibited volatile trading in fourth quarter 2015 (4Q15) as measured by S&P indexes but managed to post positive results largely because of strong returns in October. International stocks and emerging market equities gauged by MSCI EAFE and MSCI Emerging Markets also finished positively for the quarter even though the latter index was up only slightly. Domestic and international bond returns as calculated by Barclays U.S. Aggregate Bond and Barclays Global Aggregate Bond ex U.S. were lower for the quarter as credit spreads widened and the U.S. Fed increased the target of the Fed Funds rate. Commodities continued to struggle mightily partly because of slowing Chinese demand and absent inflation. Intra-day volatility increased as the quarter wore on and left indices mixed as the year drew to a close. Continue reading »
A DERIVATIVE BY ANY OTHER NAME…
It’s no secret that taxpayers have borne the bulk of mortgage credit risk since Fannie Mae and Freddie Mac flamed out seven years ago. Well, guess what…the two government-controlled housing giants have come up with a “plan” to get us all off the hook if/when the next mortgage crisis arrives. What a SYNTHETIC notion! Continue reading »
THIRD AVENUE FREEZE-OUT
Tear drops on the city, Bad Scooter searching for his groove.
Everybody’s heard by now that Marty Whitman’s Third Avenue Management pulled the plug on its six-year-old, $789 million Focused Credit Fund. And by pulling the plug we mean suspending shareholders’ right to ask for their money back from a ’40-Act fund. Song goes the manager will jam up shareholders’ money for several months as it tries to liquidate its assets. Continue reading »