Drew's Views

Turns out there may actually be something to the old Sell in May and Go Away adage - at least over the last 80+ years.

Most of us in the finance world are well aware of the evolution of “passive” equity investing over the years, and have witnessed its tremendous growth. Some of us have asked questions about it. We’ve asked is it all good? Is it mostly good? Are some aspects perhaps bad? Are some really bad?

Some year-end charts and tables asking some big questions about what comes next.

I’d like to think that prices can get out of whack for some period of time, and in that window, the nimble, unbiased, fundamental stock picker can take advantage of overreactions and underreactions. If they don't, then the M&M propositions truly hold, and I don’t have a meaningful job. However, if this paper is right, and it is only flows that matter, then while the M&M theorems are overturned, I don't have a meaningful job either. If it is all about flows, then I shouldn't play the game.

This had a lot to do with bad banking, but most to do with an overzealous client. Meanwhile, it had very little to do with holdings disclosure. Sure, our kneejerk reaction is (always) for more regulation, because we want to believe that some regulatory response will immediately solve all our future problems. But we should question this intuition.

He implies that a biased sample of self-selected winners suggest that it is a mistake to ever sell any shares in any companies that you think are “winners” either historically or prospectively. That sure would be nice, wouldn't it?

I know, these are weird and trying times. It all makes you wonder what the point of stock-picking is. What is the purpose of kicking the tires, looking under the hood, and doing our jobs?

In 1861, at the outset of the Civil War in the United States, Union Pacific issued 20 shares in its IPO.

COVID-19 and related counteractive policies have had an extremely negative impact on domestic and global economies. Whether or not you believe that the policies weren’t strong enough, or if they were overzealous, we are where we are.

Last week, Barry Ritholtz had a fun interview with Eugene Fama.

When it comes to predicting the economy, we believe that speculating when things will turn is an exercise in futility and a horrible waste of time; one which meanwhile distracts us all from the task at hand.

Last week, Finance Twitter erupted over a Bloomberg article about Michael Burry [i] and how he likened passive investment in equity markets to the bubble in the synthetic CDO market back in 2007, which he famously – thanks to Michael Lewis and Christian Bale – identified.

Ben Graham is famously attributed for stating that the market was a voting machine in the short term, but a weighing machine in the long term.

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).

It’s been said that a picture can be worth a thousand words.

As we’ve discussed, efficient market academia suggests that Mr. Market actually only cares about systematic risk.

The presupposition that quarterly earnings and guidance somehow breeds short-termism and suboptimal business strategy,

In this economy there are two companies, a resort hotel, and an umbrella manufacturer.

But Can a Stock-Picker Really Generate Alpha, and is it Luck or Skill When it Happens?

At our firm, one of our main goals is, very simply, to generate excess returns from equity investing without taking commensurate risks.

Elon Musk made a lot of news last week, refusing to answer “boneheaded” questions from “boring” sell-side analysts.

There is a great deal of discussion these days regarding the impact of passive investing

After discovering the next great investment idea, why is it so easy to start with a half-sized position, watch it a bit, and then go full-sized later?

I have immense respect for Bob Shiller.

Several years ago, we did an analysis of companies starting with a specific starting growth rate, and assumed that they would do a straight-line ten-year fade to a growth rate equalling inflation.

The trend from active to passive (or systematic) investing is now well-entrenched.