The oldest and strongest emotion of mankind is fear, and the oldest and strongest kind of fear is fear of the un-known. –H.P. Lovecraft Volatility and risk aversion returned to the financial mar-kets last year. Concern over energy, industrial commodities and emerging markets began to spread to other as-sets. Large cap companies with growth opportunities… » read more
Market Commentary
4th Quarter 2015 Market Commentary
Second Quarter 2015 Market Commentary
The S&P 500 returned 1.2% for the first half of the year. Energy languished while Healthcare, particularly Biotech, continued to be the best performing sector. The Utilities Sector, 2014’s best performer, is so far the laggard of 2015, returning -10.7%. Growth outperformed Value and Low Quality outperformed High Quality. This outperformance of growth and lower… » read more
Second Quarter 2014 Market Commentary
The equity rally resumed during the second quarter with the US Market returning over 7% for the year. Value, lower quality and higher dividend stocks continued to outperform. Growth and momentum strategies continued to underperform. Utilities and Energy, driven by renewed instability in the Middle East, were the best performing sectors. Europe and Japan lagged… » read more
Fourth Quarter 2013 Market Commentary
A Great Year, but What Now? The 32.4% return of the S&P 500 in 2013 was its best showing since 1997 and its fifth best year since 1970. Beginning the year at a P/E ratio of 14.2, the S&P 500 traded at a multiple of 17.4 at year end. This increase in valuation, rather than… » read more
First Quarter 2013 Market Commentary
Equity markets continued to rally with the S&P 500 surpassing its October 2007 peak shortly after the end of the quarter. While large cap high quality stocks performed well, the poor performance of the Technology sector negatively impacted many managers with high quality disciplines. Dividend paying stocks and MLPs, laggards in 2012, staged an impressive… » read more
Sundown of a Theory
David Stockman, President Reagan’s former budget director, wrote an impassioned editorial in the New York Times this past Sunday essentially predicting financial death for the United States. While the points about the sluggish recovery from the financial crisis of 2008 are essentially correct, Mr. Stockman glosses over the risks faced in 2008 of a much… » read more
Tax Update
The American Taxpayer Relief Act of 2012 was a politically attractive compromise for both parties that addressed the income tax most on voters’ minds but delayed for two months the more difficult issue of the budget cuts outlined in the Budget Control Act of 2011. Thus the act provided clarity to the revenue half of… » read more
Post 2012 Election
The 2012 election re-elected President Obama and did not significantly alter the composition of Congress. Republicans still control the House while the Democrats retain control of the Senate. This leaves the same actors to negotiate a way to get the budget deficit under control while averting the recession that would result from a full implementation… » read more
Third Quarter 2012 Market Commentary
A Look at the Markets Stocks rallied during the quarter after signs emerged of stabilization in both the Euro crisis and the US economy. US stocks continued to outperform the rest of the world with the S&P 500 up 16.4%. The MSCI EAFE Index, measuring the rest of the developed world, returned 10.4%. Emerging Markets,… » read more
Average Hedge Fund Manager Returns
In January this year Simon Lack published a book entitled The Hedge Fund Mirage: The Illusion of Big Money and Why it’s Too Good to be True. The book makes the not unreasonable claim that the popularity of hedge funds, which began in the early 2000s after the crash of the technology bubble, resulted in… » read more