The Paper Trail: Quality Time
This month's research roundup features:
- Quality in Small-Caps
- Value vs. Growth Regimes
- Sports Teams as Real Assets
- Inverted Yield Curves and Future Bond Returns
- Political Influence and Stock Returns
- Benchmark Bias in Institutional Portfolios
- The Outlook for Credit Markets
- Global Data Centers
- And much more!
The Paper Trail: Darkest Before the Dawn
It's ironic that today, on Halloween of all days, markets feel (somewhat) less spooky than they were a month ago.
Following a dismal Q3, the Dow Jones Industrial Average is on pace to register (pending how things close today) it's best October of all time and its best month of performance since January of 1976.
It's been a year of Tricks for investors thus far in 2022. Let's hope this is a sign of some Treats coming our way.
The Paper Trail: Diversify Your Diversifiers
"Wake me up when September ends." - Green Day
Good riddance Q3.
The Summer rally proved to be short-lived, with equity markets giving back their gains (and then some). Interest rates and bond prices continue to defy any sort of precedent. In short, this historically challenging year for investors has continued to test the patience and discipline of many.
Here's hoping we get some relief to close out the remaining three months of the year!
Now on to the latest installment of The Paper Trail...
This month's research roundup covers:
- Mitigating line-item risk with diversifying strategies
- Neutralizing sector exposures in equity portfolios
- Single-family rental investments
- The opportunity in publicly traded REITs
- Replicating VC returns in public markets
- Bitcoin's developer community
- And much more!
The Paper Trail: Back to the Futures
Now that everyone's kids are back in school, it's time for investors to go back to school as well. With that in mind, here is some quality Labor Day Weekend reading with this month's installment of The Paper Trail, featuring:
- Fed Funds Futures and Bond Returns
- Shorting Bonds with Trend Following
- The Importance of Fundamentals
- Emerging Markets and the Ukraine Crisis
- Quantifying Direct Indexing's Tradeoffs
- The Relationship (or Lack Thereof) Between Value and Interest Rates
- And Much, Much More!!
The Paper Trail: Predictably Bad Investments
Doth my eyes deceive me? Could it be?
Stocks AND bonds up in the same month?
Did we take a time machine back to 2021??? 😂
All kidding aside, let's hope that "as goes July, so goes the rest of the year"!
Please enjoy this month's installment of The Paper Trail, featuring:
- Predictably bad investments in VC-backed startups
- Long-term private equity returns
- Crypto regulation
- The "overnight effect" anomaly in equity markets
- Liquidity holes in financial markets
- The impacts of supply and demand on inflation
- And much, much more!
The Paper Trail: Breaking Beta
We're "halfway there" through 2022 and, like Bon Jovi, many investors feel like they are living on a prayer.
It's been the worst first half of the year in my lifetime for the classic 60/40 portfolio, down nearly 20 percent year-to-date.
In the rare occurrences when 60/40 portfolios are in drawdowns of this magnitude, it typically means that stocks are down significantly more and bonds are somewhat hanging in there. Not the case this year, with the Bloomberg U.S. Aggregate Bond Index down double digits this year as well.
You'd be forgiven for thinking that "market beta" - by which I mean traditional stock and bond market exposure - is broken in light of the current backdrop. But I would argue they are merely bent, not broken. That said, investors have more options than ever before to break free from relying on traditional beta alone and can instead augment them with an ensemble of valuable, diversifying strategies. But I digress...
The Paper Trail: An Expensive Free Lunch
As I publish this, I was supposed to be on a plane to Ft. Lauderdale for the Wealth Management EDGE/Inside ETFs conference. Unfortunately, Covid had other plans and I am now stuck at home. Seems like we're all destined to get our turn sooner or later...
Regardless, I wasn't about to allow a little Covid to interrupt my streak of (now) 23 consecutive monthly Paper Trail posts! So, without further ado...
The Paper Trail: Private Party
2021 was a banner year for private equity: new records in deal value and exits, the second-best fund-raising year ever, and a continuation of the strong returns that have outpaced other asset classes.
But can the party in private markets continue in 2022 and beyond? It's definitely a question worth examining with private markets likely to play a more substantial role in the portfolios of high-net-worth investors in the years to come.
In addition to private equity, this month's installment of The Paper Trail digs into:
- Litigation Finance
- Value in Japanese Equities
- The Upward Migration of ESG Ratings
- Information in Municipal Bond Yields
- The Momentum Factor's Woes
- And much, much more!
The Paper Trail: Rate Expectations
There's no sugar coating it - it's been a brutal start to the year for bonds. The Bloomberg U.S. Aggregate Bond Index is down nearly 7 percent year-to-date.
The conventional wisdom of building a balanced portfolio is being challenged before our very eyes. If there was ever an environment to demonstrate the value of diversifying your diversifiers, this is it.
The Paper Trail: Don't Say The "S" Word
This week was a reminder of how humbling markets can be. I don't think anyone went to bed Wednesday night after seeing the alerts on their phones about Russia's invasion and Dow futures being down ~800 points and thought stocks would finish in positive territory by Thursday's close. Nor did they think it would be followed by a strong rally on Friday going into the weekend. Investing is hard.
An investment strategy predicated on predictions and activity is almost certain to fall short over time to one based on preparation and temperament. And that is what The Paper Trail is all about - sharing valuable third-party insights with investors to help them prepare and improve their odds of long-term investment success.
The Paper Trail: Trending, Fast and Slow
There's an old Wall Street adage that says “as goes January, so goes the year.”
Like most market aphorisms, it sounds clever in theory but the results are mixed at best in practice. But if it does happen to ring true this year, we are in for one wild ride. All the more reason to seek ways to diversify and build durable portfolios!
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