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As you’ve probably noticed by now, I try to mix up the content on the blog. When I need a good laugh, one of my favorite past times is checking out financial news site and magazine headlines. By the law of large numbers, some of the headlines will be really funny. I’ll be doing this segment from time to time on the blog and generally mixing it up between fake and real headlines. In this inaugural offering of FBRH, though, all the headlines are fictional.
Congress Establi....
As I mentioned last week, my article “The Death of Diversification Has Been Greatly Exaggerated,” co-written with Antti Ilmanen, has been published in the Journal of Portfolio Management. A number of people (ok, in full disclosure, just my mom and my wife) have asked me to summarize some of the key points. Though the article is a bit technical, the basic takeaways are pretty straightfor....
Ben Bernanke and the Federal Reserve have taken flak in some circles for not committing to additional monetary policy easing (for example, another round of quantitative easing) in light of continued weakness in the U.S. economy. Underlying these critiques is a belief that keeping interest rates as low as possible will strengthen economic growth and reduce unemployment. Let’s not forget though that 1) many of the economy’s problems are unli....
I finally got around to reading the Dodd-Frank financial reform bill, and there are some major surprises in there. I think it’s fair to say that some of these are “hits,” while others are “misses.” Here are my top four (I wanted to go with five, but I ran out of creative energy):
- If you’re married and either you or your spouse works for one of the companies ....
Last week’s post pointed out the fact that owning corporate bonds (particularly lower-tier investment-grade and high-yield corporate bonds) muddies the interpretation of your asset allocation. The idea is that corporate bonds tend to behave like a combination of high-quality bonds and stocks. However, in reality it’s even more complex than that. At some points, corporate bonds are more like stocks than at other points. The graph below illustrates the point I’m making. It sho....
This week’s blog is a bit challenging but rewarding (in my opinion) if you can get the concept and apply it to your portfolio. In this low yield environment, I’m frequently asked about corporate bonds as a replacement for higher-quality fixed income. There are a few reasons why I typically advise against this:
It considerably muddies the concept of asset allocation.
Most....
Carry Premium: Returns
The carry premium is the tendency for yield-seeking strategies to generate positive excess returns. The three most well-known versions of the carry strategy involve high-quality fixed income, corporate bonds and currencies:
- In high-quality fixed income, a naïve example of the carry strategy would seek out the highest yielding point on the Treasury yield curve and own the corre....
Multifactor World recently had the good fortune of sitting down with Kenny Powers for a question-and-answer session to discuss one of his many areas of expertise: investing. For those of you who aren’t familiar with Kenny, I wouldn’t recommend watching the show Eastbound and Down unless you aren’t easily offended. To get the full effect of this interview, all y....
The past few years of financial uncertainty have been a boon to the catchphrase industry. Two that have gotten a fair amount of attention are the “new normal” and “financial repression.” The new normal — the idea that we are in for a period of sluggish long-term growth — is old news. Financial repression is the new kid on the block and has gotten inordinate attention by....
Momentum Premium: Returns
Momentum is the tendency for good past performance to continue. In stocks, the premium was first documented in Narasimhan Jegadeesh and Sheridan Titman’s 1993 Journal of Finance paper titled “Returns to Buying Winners and Selling Losers.” In the U.S., the momentum premium has averaged 9.7 percent per year o.... 1
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Jared Kizer is the director of investment strategy for B...(more) |
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