Category Archives: Uncategorized

The growing popularity of passive investing provokes a series of tough questions: What necessary functions does active management perform in a financial system? What is the optimal amount of active management to have in such a system, to ensure that … Continue reading →

The prior piece received a much stronger reaction than I expected.  The topic is complicated, with ideas that are difficult to adequately convey in words, so I’m going to use this piece as a follow-up.  I’m going to look at the … Continue reading →

U.S. equity index funds have grown dramatically in recent decades, from a negligible $500MM in assets in the early 1980s to a staggering $4T today.  The consensus view in the investment community is that this growth is unsustainable. Indexing, after all, is … Continue reading →

The downturn in the energy sector and persistent economic weakness abroad has caused the investment community to become increasingly focused on the possibility of a U.S. recession.  In this piece, I’m going to examine a historically powerful indicator that would … Continue reading →

Suppose that you had the magical ability to foresee turns in the business cycle before they happened.  As an investor, what would you do with that ability?  Presumably, you would use it to time the stock market.  You would sell equities … Continue reading →

“My metric for everything I look at is the 200-day moving average of closing prices.  I’ve seen too many things go to zero, stocks and commodities.  The whole trick in investing is: ‘How do I keep from losing everything?’  If … Continue reading →

If you had invested $100,000 in Altria Group ($MO) on March 31st, 1980, and reinvested the dividends, the position today would be worth $93.6MM–a 21.0% annualized return. If you had invested the same amount in Berkshire Hathaway ($BRK-A), the position … Continue reading →

The recent piece on the dangers of backtesting has attracted an unusual amount of attention for a piece on this blog.  I’d like to thank everyone who read and shared the piece, and also those who offered up commentary on … Continue reading →

Consider the following market timing strategy, which we’ll call “daily momentum”: (1) If the market’s total return for the day, measured from yesterday’s close to today’s close, is positive, then buy the market at today’s close and hold for one day. … Continue reading →

In this piece, I’m going to examine the question: why do markets trend in the way that they do? Part of the answer, in my view, can be found in the process of operant conditioning, a process that we explored … Continue reading →