Investing & Economics

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.

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Sigma 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.

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Ratio 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.

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86 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.

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What 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.

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