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Explainer: Minsky Moment
We’ve come across a large and increasing amount of articles recently referring to something called a Minksy moment. As the term makes its gradual journey from academia, to the blogosphere, to the financial press, to your door, we thought it would be useful to explain exactly what a Minsky moment is.
Keep ReadingA Simple Example of the Difference between Technical and Quantitative Analsyis
Recently, one of my colleagues posted to our internal message boards an article suggesting that investors should be concerned about the fact that the S&P 500 has spent a record amount of days above its 200 day moving average. The article suggested that when stocks spend too much time above the moving average it can be dangerous because:
Keep ReadingFactors: An Essential Part of Any Nutritious Portfolio
We recently posted a piece on factor investing (here) so we were thrilled to have an opportunity to see Dr. Andrew Ang and Don Raymond discuss factor investing at a seminar in Toronto last week. Dr. Ang is Ann F. Kaplan Professor of Business and Chair of the Finance and Economics Division at Columbia Business School, while Dr. Raymond is Adjunct Professor of Finance and past Chair of the International Centre for Pension Management at University of Toronto’s Rotman School of Business.
Keep ReadingSigma Sensationalism Syndrome
The article explores the substantially large outflow of money form high-yield bond funds in the first week of August. For clarity, in our practice we don’t pay attention to indicators like these since we’ve yet to see compelling evidence that they provide any reliable insights into future expected returns. Nonetheless, we always enjoy taking a look at interesting numbers, especially when they’re used to characterize incredible events.
Keep ReadingRatio of Value to Fear
In investment management we often use information gleaned from ratios to try and establish (within the limits of probability) where we are in a given market cycle. Most of the time these ratios are financial in nature, comparing price to some other metric that, over long periods of time, should normalize around an average value.
Keep Reading86 Years of Lies
Recently, Equius Partners published an interesting piece, which was picked up by The Big Picture. I’ve posted it in it’s entirety below, but for the moment, we have a few issues that I need to get off our chest.
Keep ReadingWhat the Heck is a “Stock Picker’s Market?”
Just a quick thought today: We often come across articles talking about how this is/isn’t a “stock picker’s market.”
Some articles begin with the idea that a stock picker’s market is one in which the internal correlation amongst the S&P 500 stocks is low. This low correlation creates the opportunity for astute investors to choose stocks with a chance to materially outperform the index.
Keep ReadingLogical Fallacy Series: Strawman
We recently decided, on the basis of coming across these things all the time, to write a series of blog posts about logical fallacies. Our hope is to give you the tools to recognize flawed arguments more quickly, before they lead to poor decisions.
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