May 2014: Are Wall Street Wolves Still at Large?
Moviegoers were treated to a harsh view of stock trading earlier this year in the blockbuster movie The Wolf of Wall Street. Leonardo DiCaprio played Jordan Belfort, the 1990’s mastermind of an illegal stock manipulation scheme that defrauded investors and ultimately landed him in prison. The depiction, although based on a true story, seems too wild to be true – Friday afternoon parties to celebrate the week’s “take” with hired strippers, enough drugs to stock a pharmacy and unlimited expense accounts. One compelling scene shows Belfort demonstrating for his salesforce the power of his...
Read MoreMarch 2014: Why do we keep repeating ourselves?
Why Do We Keep Repeating Ourselves? Answer: because on average, a gold fish has a longer attention span. The latest scores on American attention spans are in, and they are not encouraging. Since 2000, the average American attention span1 has fallen from 12 seconds to 8. The average score for a gold fish is 9 seconds. Most educators and psychologists agree that the ability to focus attention on a task is crucial for the achievement of one’s goals. It’s no surprise attention spans have been decreasing over the past decade with the increase in external stimulation. And it’s not just the...
Read MoreDec 2013: Beating the Market?
The media continually offers up stories of investors who “beat the market” and companies that skyrocket. Sensationalism sells. Recently the New York Times ran a story titled “Beating the Market, as a Reachable Goal”1. It profiled the Olstein All Cap Value Fund and its manager, Robert Olstein, who looks for value stocks that are unappreciated but strong by a measure known as “free cash flow yield”. According to the article since he started in September 1995 Mr. Olstein has beaten not only the market as measured by the S&P 500 but the venerable Warren Buffett via his company Berkshire...
Read MoreOctober 2013: Nobel Prize to Efficient Market Pioneer
The Royal Swedish Academy of Sciences announced on October 14, 2013 that Eugene Fama, Professor of Economics at the University of Chicago will share in this year’s Nobel Prize for Economics.* We congratulate Gene Fama on the well earned recognition he has achieved. Fama’s research with long-term collaborator Professor Kenneth French from Dartmouth has been focused on the efficiency of markets and the higher expected return from small company and cheaper [value] stocks. This provided insight and inspiration to David Booth, a former student, who went on to establish Dimensional Funds...
Read MoreSeptember 2013: Where Are The Bargains Now?
As we write this, the US Stock Market appears to be on fire, with the S&P 500 gaining over 20%1 year to date and over 60% in the past 3 years! During much of the four year plus stock market recovery since the lows of March 2009, money continued to flow out of stocks and into bonds despite the recovery taking place. That sentiment has suddenly reversed in 2013 with positive flows into equity mutual funds and ETFs. The “risk on” sentiment has provided price support for the broader equity market and helped to create a receptive market for a host of IPOs, most recently announced –...
Read MoreAugust 2013: The Art of Letting Go
The Art of Letting Go The Chinese philosophy of Taoism has a word for it: “Wu wei.” It literally means “non-doing.” In other words, the busier we are with our long-term investments and the more we tinker, the less likely we are to get good results. That doesn’t mean, by the way, that we should do nothing whatsoever. But it does mean that the culture of “busyness” and chasing returns promoted by much of the financial services industry and media can work against our interests. The fund managers we work with constantly review the holdings and make changes in individual stocks or bonds to...
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