March, 2016

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About Those Trading Quotes.

The Irrelevant Investor

If you want to lose weight, eat less and move more. If you want to make money in the stock market, cut your losses short and let your winners run. But neither losing weight nor making money is as simple as aphorisms make it seem. Not even Jesse Livermore, who is probably the most widely quoted trader of all time, was able to follow his own advice. This is from the excellent Jesse Livermore- Boy Plunger (emphasis mine): "It seems incredible that knowing the game as well as I did, and with an exp

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The Advisory | March 2016 Insights on Markets and Investments

Brown Advisory

The Advisory | March 2016 Insights on Markets and Investments. achen. Tue, 03/01/2016 - 11:37. So far in 2016, investors have encountered some of the worst market turbulence in many years. The key to weathering the volatility is staying true to a long-term investment plan. In this issue: Through the Storm. Stock market volatility has spiked in response to immediate market concerns about energy prices, weakening economic growth in China and changes to monetary policy, as well as momentous capital

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Before You Trash Smart Beta…

The Irrelevant Investor

It's probably no surprise that the S&P 500 high quality index has outperformed the S&P 500. But what is surprising , to me anyway is that the S&P 500 low quality index has also outperformed the S&P 500 (as well as the high quality index!). How is this possible? It has everything to do with the structure of the index; interesting things happen once you break the link between size and weighting.

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Eating Your Own Cooking

The Irrelevant Investor

Wouldn't you love to know how people actually invest. It's one thing to follow somebody on Twitter or to read their blog, but at the end of the day we have no way of knowing if that person actually practices what they preach. I want to lay my cards on the table, and share how I invest my money. First, I keep 6 months worth of living expenses in cash, you never know when the rainy days will come and I think this is a good rule of thumb.

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8 Ways to Torture Your CFO

The office of the CFO is rapidly evolving, with more and more demands being placed upon the finance and accounting team each year. Join us in this webinar, where we share 8 things to NOT do when it comes to helping the CFO office advance in supporting the business. Learning Objectives: This course objective is to understand how best to support an organization's finance leadership.

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There’s A Large Spread Between Large And Small

The Irrelevant Investor

The S&P 500 always gets the majority of the attention and understandably so, as these 500 504 stocks comprise ~80% of the total U.S. market cap. But something interesting recently happened in the Russell 2000, which represents just ~8% of the total U.S. market cap. The Russell 2000 has made no progress over the past thirty months. But in this thirty month period, it has experienced a 26.4% decline on a closing basis, certainly qualifying as a bear market.

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The Problem With Average

The Irrelevant Investor

“Statistician, a person who lays with his head in a oven and his feet in a deep freeze stating, On the average, I feel comfortable"- Bruce Grossman Peter Bernstein describes the average and standard deviation of returns perfectly, he said: "The greater the variance or the standard deviation around the average, the less the average return will signify about what the outcome is likely to be.

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Fool You

The Irrelevant Investor

"The main purpose of the stock market is to make fools of as meny men as possible." -Bernard Baruch The other day I pointed out the unusual weakness out of small cap stocks. I also added the caveat that it was likely not indicative of anything, which is about as close to a prediction as I'll make in writing. [link] For the second time in four days, small caps are showing unusual movement relative to large caps, except today it is in the exact opposite direction.

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An Object In Motion

The Irrelevant Investor

Emerging Markets have been a serial disappointment. Over the past five years they've been a money loser and were a huge opportunity cost relative to U.S. stocks. But alas, there is at least a glimmer of hope that things might be changing. Emerging Markets (EEM) have spent the last 184 days below the 200-day moving average. In that 184 day period, EEM experienced a decline of 29%.

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Paralysis By Analysis

The Irrelevant Investor

While many people have recently said it has never been a better time to be an investor, one can also make the case that it has never been as confusing. Between index funds and mutual funds, hedge funds and fund of hedge funds, ETFs and ETNs, financial advisors and robo advisors, there is an overwhelming amount of options out there for investors. Brian Portnoy's hits the nail on the head in his excellent book, The Investor's Paradox.

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Surviving The Short Term

The Irrelevant Investor

Thinking and behaving for the long term is one of the most difficult challenges an investor is faced with. Although simply buying and holding has produced fabulous returns, this type of investing requires you to commit to several sizable drawdowns, likely to be over fifty percent in some cases, over the course of your investing career. For many, this is too steep a price to pay.

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How to Streamline Payment Applications & Lien Waivers Through Innovative Construction Technology

Speaker: Dylan Secrest, Founder of Alamo Innovation and Construction Digital Transformation Consultant

Construction payment workflows are notoriously complex when you consider juggling multiple stakeholders, compliance requirements, and evolving project scopes. Delays in approvals or misaligned data between budgets, lien waivers, and pay applications can grind progress to a halt. The good news? It doesn't have to be this way! Join expert Dylan Secrest to discover how leading contractors are turning payment chaos into clarity using digital workflows, integrated systems, and automation strategies.

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Are We Due For A Recession?

The Irrelevant Investor

That depends on what you mean by "due." Are we due in the sense that it has been a while since the last recession? Sure. Since 1926, recessions have happened on average every 59 months. We're currently 80 months removed from the last recession. Are we due in the sense that stocks have gone too far? Sure. The S&P 500 has risen on average 111% in between recessions; currently stocks are up 142% since June 2009.

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The Fool’s Gold

The Irrelevant Investor

"Patterns are the fool's gold of financial markets" Benoit Mandelbrot In 1976, a group of economists discovered that stocks tended to do well in January, small cap stocks in particular. Small cap stocks returned 26% in January of 1975 and an 18% in January of 1976, enough to get anybody's attention. This came to be known as the January effect, and like many other fundamental-less anomalies, shrunk upon its discovery.

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Admissions of Uncertainty

The Irrelevant Investor

"It is wise to take admissions of uncertainty seriously"- Daniel Kahneman Apple is the biggest and one of the most carefully watched stocks in the world. It's 50-day average volume is 49,069,563 shares, or roughly $4.8 billion a day. The buyer and the seller of every one of those shares believes they are receiving a good enough price which compels them to pull the trigger.

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Calling It Versus Nailing It, Redux

The Irrelevant Investor

The only thing gold miners and biotech stocks have in common is their extreme performance over the past few years. While miners lost 76% of their value between 2011 and 2015, biotechs gained 241%. Below you'll see the 31-week rate of change of gold miners versus biotechs, which has spent most of the last few years deeply in the red. However, this ratio has jumped through the stratosphere, rocketing 144% in just the last 31 weeks.

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Your Accounting Expertise Will Only Get You So Far: What Really Matters

Speaker: Victor C. Barnes, CPA, MBA

In the climb from contributor to leader, the rules quietly change. If you’re aiming for the summit, the air gets thinner—and what got you here won’t be enough to get you to the top (a concept first popularized by Marshall Goldsmith in his book What Got You Here Won’t Get You There ). What made you successful early in your finance career—technical accuracy, sharp analysis, flawless execution—won’t be what carries you to the next level.

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A View From The Bottom

The Irrelevant Investor

We've seen some explosive moves since the S&P 500 bottomed on January 20th. 241 S&P 500 stocks are up double digits, 29 stocks are up more than 20%, and 8 stocks are up more than 50%. Below is a further dissection of recent S&P 500 performance from the bottom. Here are the returns of the S&P 500 broken down by market cap, from largest to smallest.

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Teddy Roosevelt Versus Jay Gould

The Irrelevant Investor

I want to share an amazing piece of history that I found in the New York Times archive from 1882. It pertains to Teddy Roosevelt, who in addition to being the youngest President of the United States, was also the youngest New York assemblyman. In one of Roosevelt's first acts as an assemblyman, he would take on the corrupt Jay Gould, as well as a judge and Gould's conspirator, Judge Westbrook.

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Good Luck, Bad Luck

The Irrelevant Investor

"There's a quick and easy way to test whether an activity involves skill; ask whether you can lose on purpose. In games of skill, it's clear that you can lose intentionally but when playing roulette or the lottery you can't lose on purpose." - Michael Mauboussin I don't believe that stock picking is entirely a game of luck, but the fact that there is a large amount of luck involved is indisputable.

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Misconduct

The Irrelevant Investor

A new paper was recently published titled The Market for Financial Adviser Misconduc t by Mark Egan, Gregor Matvos, and Amit Seru. It takes a deep dive into financial adviser shenanigans and quantifies everything from repeat offenders, to misconduct across firms, to the consequences of misconduct. This is a must read for anybody in the industry. Below I've clipped some of the data I found to be most interesting.

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How To Overcome Change Fatigue In Finance With Neuroscience-Backed Strategies

Speaker: Kim Beynon, CPA, CGMA, PMP

The most overlooked, yet most critical, element of transformation is preparing people for change. Automation and AI aren't just technical upgrades, they’re cultural shifts which can challenge identities. That’s why change management isn’t a side project—it’s the foundation. In finance, where precision and process rule, navigating change can feel especially disruptive.

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Risk On

The Irrelevant Investor

Well that was a fun day. Let's get right into some of the data. 100% of large cap financials were positive, which has now happened twice over the last six days. XLF is up 11.6% from the lows made on February 11th. The transports, which were a major laggard all of 2015, are up 17.3% off their January 20th lows. All but two transports were positive today.

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Through The Storm

Brown Advisory

Through The Storm. achen. Tue, 03/01/2016 - 15:11. Stock market volatility has spiked in response to immediate market concerns about energy prices, weakening economic growth in China and changes to monetary policy, as well as momentous capital-market shifts during the past 20 years. In times like these, investors earn their stripes by staying focused on their long-term goals.

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A Lift Amid Headwinds: The Appeal of Mortgage Bonds

Brown Advisory

A Lift Amid Headwinds: The Appeal of Mortgage Bonds. achen. Tue, 03/01/2016 - 15:28. With the Federal Reserve tightening for the first time since 2006, investors may generate competitive returns from the comparatively stable market for mortgage-backed securities. "Know your borrower!”—a lesson from the subprime mortgage meltdown last decade—is now the key to achieving outperformance through investing in the even-keeled market for government-backed mortgage bonds.

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‘The Ultimate Mobile Device’: Redefining the Automobile

Brown Advisory

‘The Ultimate Mobile Device’: Redefining the Automobile. achen. Tue, 03/01/2016 - 15:52. For more than a century, automakers have provided a way to find adventure and new possibilities just beyond the horizon. Now the industry is also trying to satisfy consumers’ Web-focused wanderlust. Global automakers—latecomers to the digital highway—are now trying to hog its fast lane.

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2025 Industry Index: How Top Advisors Are Scaling Smarter (and Faster) This Year

Where are top advisors focusing in 2025? AcquireUp’s 2025 Industry Index reveals it all. Based on insights from 200+ financial professionals nationwide, discover why 74% say seminars and referrals deliver the best ROI, how automation is helping advisors scale faster, and why only 8% are tapping into niche marketing (a major growth opportunity!). Whether you're refining your client acquisition strategy or scaling your practice, this report gives you the real-world data, benchmarks, and action ste

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Present at the Creation: Early-Stage Venture Capital

Brown Advisory

Present at the Creation: Early-Stage Venture Capital. achen. Tue, 03/01/2016 - 16:02. While headlines often focus on Uber, Airbnb and other private companies valued at more than $1 billion, we are looking beyond the so-called unicorns to find opportunities for bigger returns in early-stage venture capital. In 2011, a Tel Aviv-based startup called Cyvera began developing cybersecurity software deploying the coding equivalents of barriers and traps to thwart hackers staging potentially devastating

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Global Leaders Investment Letter - Q1 2016

Brown Advisory

Global Leaders Investment Letter - Q1 2016. ajackson. Thu, 03/31/2016 - 09:50. Global Leaders Strategy Investment Letter - Q1 2016. In their inaugural letter, the Global Leaders team shine some light on why they have a strong focus on customers and why high and sustainable ROIC is an important factor in their bottom-up analysis. . . Download the Letter. . .

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Back in Fashion: The Jackie Onassis Trust

Brown Advisory

Back in Fashion: The Jackie Onassis Trust. achen. Tue, 03/01/2016 - 16:14. Jacqueline Kennedy Onassis structured her will with an approach toward charity and her heirs that, given the outlook for interest rates, is back in style. Through her will, former first lady Jacqueline Kennedy Onassis left behind a sizeable inheritance for her children while incorporating an innovative estate planning tool aimed at meeting her philanthropic goals.