The past two years were challenging for bond investors, but there are reasons to believe that most of the pain from the rout is in the past. The bond market’s valuation, fundamentals, and capacity to handle negative events have all improved. When thinking about bond valuations, real yields, or expected yields in excess of inflation, […]
This most recent Fed Beige Book credits Taylor Swift’s Eras tour with boosting the economy. The Philadelphia Federal Reserve wrote, “May was the strongest month for hotel revenue in Philadelphia since the onset of the pandemic, in large part due to an influx of guests for the Taylor Swift concerts in the city.” The Eras […]
There are a couple of different philosophies about salary construction in sports. One side believes in the star model, having a small number of highly compensated star players mixed with less expensive players. The other option is a balanced roster of more evenly paid players. HarvardSportsAnalysis.org examined payrolls of MLB and NBA teams and compared […]
In late April, the CBOE started a new index, the CBOE 1-Day Volatility Index (VIX1D), that tracks the implied volatility of one-day S&P 500 options. Like the VIX index, which has been tracking the 30-day implied S&P 500 options volatility since 2003, the 1-day VIX provides a picture of the equity market’s perceptions of risk, […]
In most fields, there are fundamentals upon which the discipline relies, for example, the four fundamental forces in physics. In investing and finance, the risk-free rate (i.e., the interest rate on three-month Treasury Bills) is one such fundamental. The risk-free rate represents the rate of return an investor can expect to earn if they take […]
Morningstar publishes an annual “Mind the Gap” study. The study analyzes the difference between investor returns and fund returns. Investors tend to buy and sell funds at the wrong times, often buying when past performance is strong and selling when past performance is weak. For the 10-year trailing period ending 12/31/2021, the average investor underperformed the stated return of mutual funds by 1.7% annually, which was about one-sixth of the total return available.
“AI is a triad of computing power, algorithms, and data.” according to author Ben Buchanan of Georgetown. Among the three, we want to talk about semiconductors, specifically high-end logic chips, where unimaginable growth in computing power is not only bringing AI to life, but also conflict.
Hedging a portfolio against bear markets is a parlay of sorts in that the investor needs to make a minimum of two correct and difficult forecasts to be successful.