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Debunking Private Equity’s Myth

Date09 Mar 2015

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As we have discussed, the investment success of the Yale Endowment led many endowments, foundations and even high-net-worth individuals to consider adopting the strategies utilized in the so-called “Yale Model.” This included a focus on alternative investments and attempts to capture the liquidity premium available in illiquid investments, such as private equity and hedge funds....

Deflation and Stock and Bond Returns

Date09 Mar 2015

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Overview: With expected inflation rates very low, there will be significant attention on the possibility of deflation causing the stock market to fall. This blog examines the relationship between the rate of inflation and stock and bond returns. Generally, the research shows that stock returns are no lower in deflationary environments than in normal inflationary ones....

Wall Street’s Lame Excuses for Active Fund Performance

Date09 Mar 2015

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The securities industry is working itself into a frenzy trying to explain why you should ignore historical data that indicates most actively managed funds underperform their benchmarks. Some of the reasons they provide do not withstand scrutiny. Here’s a small sample of their lame excuses: 1. Last year was an aberration. According to Dan Culloton,...

Rethinking Money, Not as Good or Bad but as a Tool

Date09 Mar 2015

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Almost everything we’re taught about money is focused on spending it and saving it. Parents, teachers and even personal finance books discuss saving money as keeping it, increasing it and controlling it. Saving money involves figuring out ways to get more of it, to build a bigger cushion. We’re taught that’s the ultimate goal. In...

The Effects Of Market Uncertainty

Date09 Mar 2015

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In doing some related research, I came across a Federal Reserve Bank of Atlanta research paper that I thought was worth sharing, especially in light of the tendency in recent years for many investors to stretch for yield. Over the long term, the correlation of Treasury bonds (whether they are short-, intermediate- or long-term) to...

Deflation and Stock and Bond Returns

Date23 Feb 2015

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Why Do Pensions Ignore Evidence?

Date23 Feb 2015

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There are many well-known anomalies in finance. The most notable of these anomalies include the momentum effect, the low-volatility effect (in which high-volatility stocks produce lower returns on average than low-volatility stocks) and the poor performance of IPOs, penny stocks, stocks in bankruptcy and small growth stocks with low profits. But perhaps the biggest anomaly...

Deeper Truths About VC Promises

Date23 Feb 2015

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Behavioral finance is a fascinating field that combines psychology with investing. And one of the insights provided from the research is that some individuals want more from their investments than just returns. Some people make investments for the same reason they buy Rolex watches and oversized Gucci bags, labels proudly displayed. Just like with their...

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