Factoring the Future

By | 2017-11-03T07:33:23+00:00 November 3rd, 2017|Global Market Update|

What is “Factor Investing”? Starshine 3 Satellite. Source: NASA Factor investing is a different way to slice and dice a portfolio. You may have a bond portfolio made up of Government, Corporate, and Foreign Bonds. But the returns they generate come from different factors: their length, their default risk, and the risk of their being called – their duration, credit, and convexity. In the same way, a stock portfolio can be examined from multiple angles: where the companies are located is one axis – [...]

Bad News Bears?

By | 2017-11-02T07:44:19+00:00 November 2nd, 2017|Global Market Update|

Do you want the good news or the bad news? Photo: Anthony Delanoix. Source: Fancycrave Most of us want to get the bad news out of the way, then hear the good news. After all, who wants to leave a meeting depressed and upset? But people delivering the news usually want to start with the good news. We may be anxious about have a conversation, and we want our friends to be happy. Maybe something will interrupt us and we’ll get to the bad [...]

Supersonic Profits?

By | 2017-11-01T07:54:34+00:00 November 1st, 2017|Global Market Update|

Whatever happened to the Concorde? Photo: Steve Fitzgerald. Source: Wikipedia The Concorde was a grand experiment. Supersonic flight had proven practical and useful for military purposes. Why not extend the application for civilian use? Jet aircraft made it practical to cross the continent or an ocean in a single day. Cutting that time down to a few hours could be equally transformative, it was thought. Only it didn’t work out that way. The aircraft were expensive to develop and maintain; only a few dozen [...]

Financially (in)Secure?

By | 2017-10-31T05:16:24+00:00 October 31st, 2017|Global Market Update|

Is securitization good or bad? Photo: Kerstin Riemer. Source: Pixabay Securitization is a five-dollar word that leaves people scratching their heads. It’s been alternately described as the greatest financial innovation since double-entry accounting or as the worst banking product since the centralized call-center. Securitization is actually pretty simple: it takes ordinary bank loans and bundles them up into securities that can be sold to investors. It’s been around for over 150 years. During the California Gold Rush, the railroads boomed. Everyone was moving west. [...]

Back to Average

By | 2017-10-27T07:03:16+00:00 October 27th, 2017|Global Market Update|

Is moderation coming back? Public Domain. Source: Carpictures In the ‘50s and ‘60s, there were all kinds of car models out there: muscle cars, coupes, sedans, and bizarre models with big tail fins and wide front ends. But ever since the ‘80s, designs seem to have converged. When you drive down the highway, you see SUVs, pickups, and generic sedans, all with soft corners and rounded fronts and rears. The desire for higher gas mileage and better crash performance, along with access to wind [...]

It’s Cash Flow

By | 2017-10-26T07:27:52+00:00 October 26th, 2017|Global Market Update|

What drives the stock market? Dow Jones Industrial Average, log scale. Source: Bloomberg In the short run, stock market returns are driven by buyers and sellers. More buyers than sellers drive prices up; more sellers than buyers push prices down. In the long run, though, the market is determined by how much cash companies give to their shareholders. This is the heart of any firm’s valuation. When companies pay dividends or buy back shares, they are distributing cash to their owners. It’s the present [...]

The Difficulty of New Ideas

By | 2017-10-25T07:11:05+00:00 October 25th, 2017|Global Market Update|

Why is it so hard to do something new? Source: Coface.ch Anyone who has tried to introduce a genuinely new idea knows how difficult it is. Counterparties default, it’s hard to obtain funding, and in much of the world, it’s hard to start a new business. People are skeptical of something different. When Alexander Graham Bell’s brought his newfangled telephone to the President of Western Union, he dismissed it as “practically worthless.” In 1995 Newsweek printed an article that predicted internet-based commerce would be [...]

Ahead of the Pack?

By | 2017-10-24T07:17:31+00:00 October 24th, 2017|Global Market Update|

Ahead of the Pack? Do annual returns mean anything? Photo: Jade. Source: Morgufile College endowments have reported their annual returns for fiscal 2017, which ended on June 30th. In contrast to 2016, when schools struggled to break even, returns were quite strong. Grinnell College, in Iowa, had an 18.8% return – driven by a large allocation to public-market equities. Harvard, whose massive $37 billion endowment dwarfs most other schools, lagged the pack at 8.1%. But do annual returns mean anything? Part of the reason [...]

Torsken Kroner Nå!

By | 2017-10-23T08:19:09+00:00 October 23rd, 2017|Global Market Update|

Who says bankers can’t have fun? KLM : Source: NRK News Norway’s central bank is issuing new currency notes, with advanced security features. In the process, they updated the pictures on the front and back. In the past, these notes pictured artists, authors, and scientists. The new notes will feature scenes from the sea: lighthouses, ships, and fish. To promote the new notes, the Central Bank produced a lighthearted video: a take-two version of a popular song from the ‘80s, “The Cod is Coming.” [...]

Steady-State Economics?

By | 2017-10-20T06:02:35+00:00 October 20th, 2017|Global Market Update|

Everyone’s waiting for the economy to get back to normal. But what if normal doesn’t exist? Illustration: Kyle Forinash: Source: Wikipedia Ten years ago, the wheels came off the bus. Housing prices fell, and levered financial institutions began to blow up: first Bear Stearns, then Fannie Mae and AIG, and you know the rest. Since that time, we’ve had the Euro crisis, the immigration crisis, the collapse and recovery of oil prices, retail armageddon, the rise of nationalistic populism, and other disruptions. Our slow-growth, [...]