Income Investing Takes Homework, Too
Equity-income investing can be highly rewarding, but it is not without its potential pitfalls. The rules of careful stock-picking still apply.
read morePutting Recent Active Manager Performance in Context
History suggests that reports of active management’s death are premature. In fact, conditions appear ripe for a comeback, as my colleague Scott Wallace ably explained in a recent article for Institutional Investor.com’s Global Market Thought Leadership blog, attached below.
read moreThe Perils of Past Performance, Part 2
Last month, I wrote that even great investors are very likely to underperform in one of the next three-years periods. Here’s some historical evidence that even champs can sometimes look like chumps.
read moreThe Perils of Past Performance, Part 1
In November, legendary equity investor Bill Miller stood down as portfolio manager of the Legg Mason Capital Management Value Trust, after underperforming in four of the past five years. Does this mean Miller had lost his touch?
read moreHow to Diversify When Markets Are Highly Correlated
With economic and political developments driving big gyrations in equity markets, at first blush it seems that all stocks are moving together and diversification benefits have diminished. But as my colleague Andrew Chin explained in a recent article, spreading exposures across the spectrum of equity risk and return factors is now more important than ever.
read moreDo Investors Really Think Earnings Are Going off a Cliff?
Investor concerns about the future of global and US economic growth and corporate profitability are understandable. But corporate profitability has never been as low as the equity risk premium (ERP) now suggests. Thus, we believe the long-term upside potential in equities is extraordinary, as my colleague Joseph G. Paul explains in the article below.
read moreIs Active Management Dead?
Active equity managers have had an extraordinarily difficult time delivering premiums over the last year, especially managers with a bottom up approach focused on corporate fundamentals. (Active strategies driven by macroeconomic concerns have done better recently.) Here’s why we think active strategies driven by corporate fundamentals are down, but not out—as ably explained by my [...]
read moreBeware of Crowded Trades
Trying to avoid a repeat of the last market disaster sows the seeds for the next one. The collapse of large growth companies after the tech bubble burst in 2000 led to strong leadership by small-cap value stocks for many years. And the market plunge in 2008 has led to investors’ crowding into a number [...]
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