Book Bits |7 January 2017

High Returns from Low Risk: A Remarkable Stock Market Paradox
By Pim van Vliet and Jan de Koning
Summary via publisher (Wiley)
For generations investors have believed that risk and return are inseparable. But is this really true? In High Returns from Low Risk, Pim van Vliet, founder and fund manager of multi-billion Conservative Equity funds at Robeco and expert in the field of low-risk investing, combines the latest research with stock market data going back to 1929 to prove that investing in low-risk stocks gives surprisingly high returns, significantly better than those generated by high-risk stocks. Together with investment specialist Jan de Koning, he presents this counterintuitive story as a modern upbeat stock market equivalent of ‘the tortoise and the hare’. This book helps you to construct your own low-risk portfolio, select the right ETF or to find an active low-risk fund in order to profit from this paradox. And it explains why investing in low-risk stocks works and will continue to work, even once more people become aware of the paradox.
Continue reading

Do Long-Short Equity Mutual Funds Pass The Smell Test?

Around the turn of the century, the first wave of mutual funds trying to replicate hedge fund strategies started rolling off the financial industry’s assembly line. With more than a decade of results in hand, we can begin to assess how this experiment in publicly traded funds has fared. As you might expect, the results are mixed. But that tends to be true for active management generally. Let’s dig a bit deeper and focus on so-called alternative investing categories for mutual funds, as defined by Morningstar, starting with long-short equity strategies. In follow-up pieces, I’ll look at other alternative categories.
Continue reading

A New Year Brings New Recession Forecasts

The economic outlook is always uncertain, but one thing that doesn’t change is the constant stream of recession forecasts. Predicting a slump, in fact, has been a staple ever since the last downturn ended. Did the experience of being consistently wrong over the last seven years temper the obsession to see macro trouble at every turn? Apparently not. The business of assuming that a recession is lurking around the next corner for 2017 is in high gear.
Continue reading

Major Asset Classes | December 2016 | Performance Review

Global markets ended 2016 on a (mostly) positive note. Except for inflation-indexed Treasuries and foreign developed-market government bonds, all the major asset classes posted gains in December. For the year overall, everything was up, except for cash (3-month T-bills). The positive skew for 2016 marks a bullish change from 2015’s year-end summary, when red ink weighed on most markets.
Continue reading

Price-Momentum Implied Forecasts: REITs/Real Estate

This week’s year-end momentum profile of the major asset classes concludes today with a review of REITs/real estate, which follows updates on stocks, bonds, and commodities. The analytical lens is a two-part focus: 50- and 200-day moving averages, augmented with trailing one-year return (252 trading days). The goal: develop intuition about the near-term outlook for various slices of the global markets, based on a set of proxy ETFs. Since the agenda is analyzing price trends (as of Dec. 29), we’ll strip out distributions and look at price-only data, using charting resources via StockCharts.com.
Continue reading