point

 

 Remember me

Register  |   Lost password?


 

Recent members

 

 

Show:
Finance Clippings wrote a new blog post titled Why stocks are good hedges for inflation.
I was quoted yesterday in the Wall Street Journal on why stocks are good hedges for inflation. Article is here: https://www.wsj.com/articles/which-is-the-better-inflation-hedge-stocks-or-gold-11560132361?mod=searchresults&page=1&pos=8 Quoting from the article: The reason stocks are a decent inflation hedge is because corporate earnings grow faster when inflation is higher, and grow more slowly when inflation is lower, according to Richard Warr, a finance professor at North...
15 days ago
Finance Clippings wrote a new blog post titled Bogle and the genius of indexing.
Jack Bogle passed away this week and the investing world lost one of the most important figures in modern history.   Bogle's contribution to investing is simple but of profound importance.  He showed that an index fund, run entirely passively, could outperform most actively managed funds in the long run.  I've long been a very strong proponent of indexing.  I've posted heavily on the topic here in this blog, but a quick recap of why indexing is so brilliant is...
124 days ago
Finance Clippings wrote a new blog post titled IBM to buy Redhat.
An interesting deal.  IBM has a strong presence in this area, and of course Redhat is a Raleigh based company.   Details of the deal are here: https://www.marketplace.org/2018/10/29/business/ibm-bets-34-billion-cloud-computing-red-hat-purchase. A back of the envelope analysis suggests that there's about $7bn in merger gains.
237 days ago
Finance Clippings wrote a new blog post titled GE cuts dividends
Dividend cuts are quite rare and even rarer for a stallwart stock like GE.  But yesterday, GE cut it's dividend to a penny a share. https://www.cnbc.com/2018/10/30/general-electric-earnings-q3-2018.html There wasn't much of a price reaction, the stock had been on a downward trend, but the dividend cut certainly didn't help. A dividend cut signaled that GE is struggling, but I don't think that was news to anyone.  Even an analyst upgrade didn't help the stock...
237 days ago
Finance Clippings wrote a new blog post titled Do pro-diversity policies lead to greater corporate innovation?
That's the question that we (myself, Roger Mayer of NC State and Jing Zhao at Portland State) recently studied in a paper that's forthcoming in the finance journal: Financial Management. The answer is YES.   We found that firms that promote diversity have more new products, more patents and more influential patents. You can read the paper here: http://onlinelibrary.wiley.com/doi/10.1111/fima.12205/full Here's the summary on the NC State news...
530 days ago
Finance Clippings wrote a new blog post titled Bitcoin is a fraud says JPM boss
https://www.theguardian.com/technology/2017/sep/13/bitcoin-fraud-jp-morgan-cryptocurrency-drug-dealers The problem with Bitcoin, as I see it, is that it is a commodity and not a currency.   It's largely like gold, except that gold has some use outside of being a means of speculation. While I wouldn't be surprised if Bitcoin remains marginalized, what is more important is the role that blockchain technology will play in finance in the future.
650 days ago
Finance Clippings wrote a new blog post titled The stupidest thing you can do with your money.
In a recent episode, the Freakanomics podcast talks about why you should index.  It's a great show - check it out: http://freakonomics.com/podcast/stupidest-money/ Interestingly, Anthony Scaramucci is interviewed as being an advocate of active management (he's the guy who ended up being fired by Trump after 10 days).  Scaramucci's arguments for active management don't really make any sense - they are based on the idea that financial advisors and active management are the same...
693 days ago
Finance Clippings wrote a new blog post titled Why 8.5% is delusional
I am quoted today in an article on Bloomberg.com about the Connecticut pension fund return assumptions.  The article is here:  https://www.bloomberg.com/news/articles/2017-07-20/connecticut-sinks-deeper-in-debt-as-pension-returns-lag-target So why is an 8.5% return assumption delusional? It's pretty simply really.  Assume that your fund is 50% bonds, 50% stocks.  Currently 10-year Treasuries are yielding about 2.3%.  Let's round that up to say 3% to be generous....
705 days ago
Finance Clippings wrote a new blog post titled Will fee cutting hurt the pension fund?
In an article yesterday in the News and Observer (http://www.newsobserver.com/news/business/article161425553.html), David Ranii explores whether fee cutting by the pension fund might hurt future returns. It's a good article, I was interviewed for it, and I recommend that you read it.  I would, however, like to add a small comment/clarification with regard to my comments within the article. While I strongly support attempts by the pension fund to reduce fees, this has to be done in a...
710 days ago
Finance Clippings wrote a new blog post titled Folwell reduces fees by $50m
Some good news from the Treasurer's office.  Apparently our new Treasurer has reduced fees by $50 million so far.  He reports that he's on track to hit $200 million by the end of his first term. http://www.newsobserver.com/news/business/article155868344.html This is great news.   I am sure we will be digging into the numbers when the annual report comes out, but for now, this is a great start.
741 days ago
Finance Clippings wrote a new blog post titled Dow hits 20,000
What does this mean? Ummm. Not much.  https://www.bloomberg.com/news/articles/2017-01-25/-time-to-get-out-as-dow-milestone-a-call-for-caution-pros-say Some will say that you need to get out once a milestone is met.   Trouble is - when do you get back in?   Oh - that's right - before the market goes back up. Of course, 20,000 is no 36,000.  We're still waiting for that one.
881 days ago
Finance Clippings wrote a new blog post titled What's the best way to protect against inflation?
I was recently interviewed by Mark Hulbert for this article in Barrons: http://www.barrons.com/articles/whats-the-best-way-to-protect-against-inflation-1482943455
903 days ago
Finance Clippings wrote a new blog post titled Nevada only pays $13 Million to run its $35 Billion pension fund!
A recent article in the Wall Street Journal is getting some attention - as it reports that Nevada only pays $13 million to run its $35 billion Pension Fund.  To put this in perspective; North Carolina pays 12 times as much, even after you take account of the size differences in the plan. So how does Nevada keep costs so low?   The answer is simple: the plan is indexed. Not only are the costs super low, the performance is pretty good.   Ron Elmer runs the numbers and finds that...
973 days ago
Finance Clippings wrote a new blog post titled You can't consistently beat the market. Just ask Harvard.
Harvard University has been lamenting a substantial loss in the value of their endowment.  Apparently about $2 Billion.   See:http://www.chronicle.com/article/What-a-2-Billion-Loss-Really/237965 Harvard has chased all sorts of exotic strategies, including private equity and hedge funds and yet - to quote the above article: "...if Harvard had passively invested in a standard mix of 60 percent stocks and 40 percent bonds, it would have gotten a higher rate of return — 8.9 percent over...
995 days ago
Finance Clippings wrote a new blog post titled Money Monster - a review
I just watched "Money Monster".   It's a thriller staring George Clooney and Julia Roberts that's basically a mashup of Jim Cramer meets the flash crash meets (fill in your evil corporation here). The movie is OK, if you don't know much about finance.   However, if you do happen to know a little bit about how markets actually work, you'll be cringing all the way through. The basic plot:  Clooney is a TV star (a la Cramer) who runs a stock picking show.  Roberts is his...
1016 days ago
Finance Clippings wrote a new blog post titled NC SPIN talks about Pension Fund Fees.
On a recent episode of NC SPIN, the topic was pension fund fees.   I was quoted at the start of the segment.  The video is here:  The bit about the pension fund starts at 17:37. While the discussion was pretty good and I am glad to see that the fees are getting more and more attention, there were a few comments that I think need addressing. 1. John Hood talks about the idea that if everyone indexed, markets wouldn't be efficiently priced anymore.   While in theory,...
1016 days ago
Finance Clippings wrote a new blog post titled Pension Fund Fees keep on growing.
Last Friday, Cullen Browder reported on the level of fees now being paid by the NC Pension Fund.   In the process, he interviewed yours truly.   The video is here: http://www.wral.com/fees-grow-faster-than-nest-egg-in-nc-employees-pension-fund/15963461/ A big thank you goes to Ron Elmer who blogged about the fees on his investorcookbooks blog. Ron compared the fund today vs. what it would have looked like had the asset allocation in 2000 been maintained using Vanguard index funds....
1028 days ago
Finance Clippings wrote a new blog post titled Indexing Pension Funds
This is a bit of a repost - but is relevant as we talk about fees. Back in February I wrote a white paper that was a back of the envelope analysis of the fees paid buy the pension fund, including some hidden fees such as trading costs.   You can read the paper here.    It was referenced in this article on Forbes that talks about indexing pension funds.
1029 days ago
Finance Clippings wrote a new blog post titled Are markets efficient?
A must watch discussion between Richard Thaler and Gene Fama - both from the University of Chicago. http://review.chicagobooth.edu/economics/2016/video/are-markets-efficient#
1029 days ago
Finance Clippings wrote a new blog post titled Pension Funds using options.
Two states, Hawaii and South Carolina are using Cash Secured Puts to boost the yield of their pension funds. http://www.wsj.com/articles/pensions-play-with-puts-for-protection-1471777202 So what exactly is a cash secured put?   A put is a bet that the underlying stock will fall in price. Buying a put results in a payoff when the stock price falls below the strike.    Conversely, selling a put results in a loss when the stock price is below the strike.    The...
1034 days ago