Yes, but they are supposed to be if you want reasonable returns for the risk, which is one more reason the Fed Model is wrong. Compared to the past however not that cheap. Jim Hamilton takes a look: We’re currently at a P/E around 14, a bit below the historical long-run average P/E of...
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We should start out with some humor: A robber in a ski mask blamed the bank for what he was about to do, The Associated Press reported Feb. 22. “You took my house, now I’m going to take your money!” the assailant hollered. Talk about a reverse mortgage! The FBI plans to review the...
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The recent downturn from the high in October has led to a great deal of chatter about the markets being cheap. That the recent turmoil has presented us with wonderful buying opportunities based on valuation. Readers here know that I disagree, and vehemently. Which doesn’t mean there isn’t money to be made as speculators....
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One of my favorite people to read is Rob Arnott, who never ceases to examine every truism, shibboleth and academic orthodoxy in the field of finance. What are alpha and beta? Why and when is it important to distinguish between them. All About Alpha reviewed some of his points a little over a year...
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Index investing is often described as “passive” or “beta” investing. However, one thing that is often looked past is exactly how active the construction process of indexes is in practice. Steve Galbraith used to say when I, and he, was with Morgan Stanley (before he went to manage money with Maverick Capital) that buying...
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With the rise of inverse indexes (they go up when an index goes down, and vice versa) which we have used to profitably hedge our own portfolios, Standard and Poor’s has created an inverse index to benchmark them. Coming down the pike will be benchmarks to replicate leverage as well. This is very welcome....
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