Some of you may remember the quant crash of August 2007. As Andrew Lo wrote in his initial diagnosis, “losses were initiated by the rapid unwinding of one or more sizeable quantitative equity market-neutral portfolios…which then put pressure on a broader set of long-short and long-only portfolios.”
Many folks have now listened to this fascinating interview of the pseudonymous Jesse Livermore by Patrick O’Shaughnessy; which can be found here: http://investorfieldguide.com/livermore/.
For a fundamental, value-oriented investor, we are reasonably active in the management of our portfolio names. This is by design, and on purpose. With a concentrated, best-ideas-only portfolio, it is imperative that we shed any anchoring biases and constantly challenge our theses. This leads to idea and portfolio turnover.
This is going to be an uncharacteristic departure for me. This story is deeply personal, for our family, and for our oldest son in particular. But it is a story he’s letting me tell, because it is a story he wants people to hear.
Is risk “volatility vs. a benchmark” or is risk “the potential permanent loss of capital”?
If you are managing a portfolio of equity investments, whether personally or institutionally, there are many factors that (should) go into its construction.
We’re mulling this morning over what it is that makes stock prices, and stock-picking, work.
I played high school basketball in Indiana. I won a few honors, but was broadly mediocre, and certainly not NCAA D1 material.
Over the past few years, some of the finance literature has started addressing the phenomenon, if not the apparent puzzle, of overnight returns (close-to-open) vs. intraday returns (open-to-close).
We manage a concentrated portfolio of investment ideas. We, essentially, try to be objective about identifying specific instances where Mr. Market may be overreacting or underreacting to particular fundamental phenomenon.
Disruption in the auto industry is a very hot topic. The embers started burning back in 2005 when Tesla dropped a powertrain into a Lotus Elise, then things started heating up in 2012 when Google drove a Prius across Nevada, without a driver; and then they started blazing in 2014 after Uber did a valuation round at $18 billion.
Following on our last post “The First Step to Regaining Credibility” we wanted to quickly highlight that the difference between the fee structure of a large, diversified, purportedly active fund and a smaller, concentrated, active fund.
As equity indices romped higher throughout most of the last ten years, the long-short hedge fund industry increasingly came under attack.
We are not big fans of market timing. Those that profess to have such a skill before the fact often always turn out not to have had much skill in hindsight. Of those that do turn out to appear to have skill, that was actually supposed to happen.
It’s been said that a picture can be worth a thousand words. So can an Excel chart.
The S&P is down nearly 20% since the 20thof September, turning a lovely and respectable 11.2% total return YTD into an excruciating 10.4% loss. In Europe, the pain has been even more severe. In the UK, the FTSE 100 is down 14.8% YTD; meanwhile the French CAC 40 is down 14.7%, and the German DAX 30 is down 21.9%.
The star has fallen for a few companies out there, and for those that had previous share buyback programs, there have been some of the predictable “see I told you so” articles written about them.
Corey Hoffstein’s “Why quants don’t pick stocks” (https://blog.thinknewfound.com/2017/04/quants-dont-pick-stocks/ got us thinking a bit more about risk. Following on our “Island Economies and Risk” piece (https://www.albertbridgecapital.com/drew-views/2018/8/13/island-economies-and-risk) from a few months back, we wanted to expand on the discussion about risk as it relates to stock-picking and portfolio construction.
October unleashed a storm upon financial markets. Here in Europe, we hadn’t had one since Brexit, but had many before then, and will surely have many more. Bad weather is a feature of investing, and as the stewards of long-term capital, we need to balance action and inaction during these bouts of market turmoil.