Posts Categorized: Finance

Should You Use Active Managers?

How much of what you do in your life is the result of what others expect of you? I’ve been trying to remove small talk from my life and replace it with what Larry David calls “medium talk.” If you want to try medium talk, I’d steer clear of the above question. I’ve tried it,…

Knights, Warlord Entrepreneurs, and Innovation

I am invigorated by the amount of innovation that is flowing today, no matter how crazy the associated business valuations may be; there is nothing more exciting than dealing in ideas that may change things for the better—from the individual to the global scale. To keep the momentum and motivation going, we can learn a…

O’Doul’s Part 2

I posted the other day about fundamental indexation being the O’Doul’s of value investing, because it is just the first step away from a market cap weighted index and towards a more differentiated value portfolio. I received lots of emails about the post, so figured I would spend more than 20 minutes on the time series…

Robo-Advisors, Financial Advice, and Millennials

I had a great time today with Jason Zweig and Beth Hamilton-Keen talking all things millennials, robo-advisors, and investor behavior. We talk alot about the importance of using automation and technology to our advantage, so its fun that the set is completely virtual. Check out the video below:    

The O’Doul’s of Value Investing

Note: Please also read part two which corrects for a few outliers in the below results Traditional index funds are gaining record market share. The weight of each stock in these index funds is determined by its market capitalization. But bigger is not better. Enter fundamental index. These improved indexes weight stocks by variables “smarter” than…

The Active Manager’s Toolkit

There are only so many aspects of the investing process that we can control. Categorizing these elements will serve as an outline for our research. Let’s outline the active management process and try to leave no aspect uncovered. Your comments here—on elements that I’ve missed—would be much appreciated! This outline will be for a portfolio…

The Rise of the Robots And What To Do About It

Companies need fewer and fewer employees to generate each dollar of profit. This trend is likely to continue. The best thing you can do is focus on areas which are less likely to be automated away: entrepreneurship, art, creation, ideas, and innovation. Let’s explore what is happening and what you can do about it. Martin…

The Rich Are Getting Richer

Profit margins have been steadily rising for huge companies, but margins have been stagnant or falling for smaller companies. Clearly, the large are getting richer. But viewed a slightly different way we see an even more exaggerated trend: the rich are getting richer. Forget market cap for a moment. Instead of sorting stocks on their size…

Tiny Margins for Tiny Companies

The U.S. market’s profit margin remains very high, but smaller stocks are suffering. While margins for the largest companies have remained well above their long-term averages, margins for the 40% of stocks in the market with smaller market caps have current margins well below their long-term average. This divergence highlights a broader key point: small caps provide…

Is Being Different Better? Dispersion and Active Management

Beating the market very obviously requires performance that is different than the market, which in turn requires portfolio holdings that are themselves different from the market. “Active Share”–or the percent of your portfolio which does not overlap with your relevant market benchmark (say, the S&P 500 or the Russell 2000)–has become a buzz word in…