June 2014: Are the Markets Rigged?
Some of you may have read Michael Lewis’ newest book Flash Boys – we devoured it shortly after it was published in April. Others may have watched as Lewis was interviewed on 60 Minutes and other media outlets as part of the “book launch” and still others may be waiting for the inevitable movie. Very briefly, the book outlines a scheme to rig the markets by companies most have never heard of using technology and “dark pools” to wring small gains out of many of the stock trades that occur in the US each day. “investors are systematically disadvantaged”1 Likely as a result of the media...
Read MoreMay 2014: Are Wall Street Wolves Still at Large?
Moviegoers were treated to a harsh view of stock trading earlier this year in the blockbuster movie The Wolf of Wall Street. Leonardo DiCaprio played Jordan Belfort, the 1990’s mastermind of an illegal stock manipulation scheme that defrauded investors and ultimately landed him in prison. The depiction, although based on a true story, seems too wild to be true – Friday afternoon parties to celebrate the week’s “take” with hired strippers, enough drugs to stock a pharmacy and unlimited expense accounts. One compelling scene shows Belfort demonstrating for his salesforce the power of his...
Read MoreMarch 2014: Why do we keep repeating ourselves?
Why Do We Keep Repeating Ourselves? Answer: because on average, a gold fish has a longer attention span. The latest scores on American attention spans are in, and they are not encouraging. Since 2000, the average American attention span1 has fallen from 12 seconds to 8. The average score for a gold fish is 9 seconds. Most educators and psychologists agree that the ability to focus attention on a task is crucial for the achievement of one’s goals. It’s no surprise attention spans have been decreasing over the past decade with the increase in external stimulation. And it’s not just the...
Read MoreMarket Summary – Q1 2014
It has been five years since the stock markets of the US and most of the world hit bottom and began an astounding recovery. On the heels (fins?) of our recent message highlighting how short our collective attention spans have become (see: Do We Keep Repeating Ourselves? emailed March 17th), we dusted off our quarterly review from five years ago to see what was capturing our attention. Here’s what we wrote on April 12, 2009: … The first two months of the year were the worst January and February on record for the US Stock market, while March was the best month since 2002. The four weeks...
Read MoreMarket Summary – Q4 2013
The unusually strong performance of US stocks in 2013 was a welcome surprise for investors who are following a simple buy-and-hold strategy and a source of exasperation for many professionals caught flatfooted by the steady rise in share prices. The S&P 500 rose more than 32% in 2013, its best year since 1997. The broader Russell 3000 index (which includes both large and small company stocks) did even better, gaining 33.55% in 2013. This chart also reminds us there was a steady chorus of worrying media headlines throughout the year. We entered the final three months of 2013 with the US...
Read MoreDec 2013: Beating the Market?
The media continually offers up stories of investors who “beat the market” and companies that skyrocket. Sensationalism sells. Recently the New York Times ran a story titled “Beating the Market, as a Reachable Goal”1. It profiled the Olstein All Cap Value Fund and its manager, Robert Olstein, who looks for value stocks that are unappreciated but strong by a measure known as “free cash flow yield”. According to the article since he started in September 1995 Mr. Olstein has beaten not only the market as measured by the S&P 500 but the venerable Warren Buffett via his company Berkshire...
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