Category

What We Are Reading

WWReading-Cards-Global-Equity1

Bob Rodriguez – We are Witnessing the Development of a “Perfect Storm”

By | What We Are Reading | No Comments

In this article:

Robert L. Rodriguez, former managing partner at FPA, a Los Angeles-based asset manager who retired after more than 33 years of service, shares his take on:

  • Reversion to the mean
  • Factors driving the flow of mutual fund assets to passive strategies
  • Under-performance of active managers and the potential bubble
  • Destabilizing influences of ETFs and index funds that are brewing the perfect storm
  • Concerns about “smart-beta” products for investors who want a value-oriented portfolio
  • How he is investing his personal assets

Rodriguez’ insights are what every investor should read.

Read More

WWReading-Cards-Global-Equity1

The Reasonable Formation of Unreasonable Things

By | What We Are Reading | No Comments

In this article:

It is the most devastating trick investors play on themselves. Realizing that the rise and fall of bubbles does not negate the effectiveness of diversified long-term investing is one of the most powerful understandings an investor can have. And one of the hardest things an investor can do is maintain conviction on a long-term strategy when there’s a changing of the guard between one game and the next.

But a lot of the emotions — excitement, greed, fear, and frustration — stem from not knowing what bubbles are or why they’re happening which is what Minsky’s financial instability hypothesis explores.

Read More

WWReading-Cards-Global-Equity1

Auto Loan Warning by Fitch

By | What We Are Reading | No Comments

In this article:

With slightly higher yields, subprime auto-loan backed securities were grabbed by institutional investors that manage other people’s money.

Now, almost all indicators of auto lending are flashing red. Negative equity has hit an all-time record. Why is negative equity such a growing phenomenon? Because of the toxic trifecta in the auto industry, now happening. Read on to delve deeper into the insanity of the United States’ auto lending segment.

Read More

WWReading-Cards-Global-Equity1

Why care about China’s Shadow Banking Crisis?

By | What We Are Reading | No Comments

In this article:

Credit growth is a well-known factor behind bubbles and China’s credit growth in the recent past should be a definite concern. Shadow banking channels (which make traditional reporting obscure) is a further negative. History shows, in many cases, how it ends in the scenario of tightening or loss of confidence among participants walking a tightrope of duration mismatch.

Read on for more insight on shadow banking risks in China.

Read More

WWReading-Cards-Global-Equity1

Bad News Investor – Buying “Bad” Stocks

By | What We Are Reading | No Comments

In this article:

Bad news investor is a person who invests primarily in stocks of companies that are in news due to bad reasons. But does it make sense? Theoretically it does. You need to be sure as to why your reason for investing in so-called bad stocks is sounder than the reasons of those who are selling.

Cyclical businesses are known to witness regular flows of good and bad news depending on the cycle of their businesses and effects of bad news can be temporary. So what should you do if you hear some bad news about the company whose stock you always wanted to buy? Learn how bad news can actually be good for you here and how to choose what stocks to buy.

Read the original article here

Bad News Investor – Investing on Bad News

 

WWReading-Cards-Global-Equity1

Volatility is not the same as Risk

By | What We Are Reading | No Comments

In this article:

Why do people equate volatility with risk? Volatility is NOT the same as risk. Risk is defined as the chance of losing some or all of your investment. The path that the price of the stock takes between when you buy it and when you sell it shouldn’t matter, at least from a financial point of view. In fact, in many cases higher volatility equals LESS risk

The psychological impact of the price changes can convince you to make non-optimal choices with your money. Read this article to find out how volatility and risk are related in an investment scenario and learn how you can minimize investment risk.

Read More

Macro

The Rising LIBOR Pains

By | What We Are Reading | No Comments

In this article:

Since mid-2015, 3 month USD LIBOR has soared from a low of approximately 22.5 basis points to its current level of 115 basis points.

It is now more than 5 times higher than two years ago. Banks have vacated their previous role of market makers. The demand for corporate debt and in particular junk debt has been enormous, and corporations have obviously sated it by producing more debt than ever before. Such a scenario implies a latent risk, one that keeps growing and is ready to bust.

Rising interest rates and a slowdown in credit growth imply that this precondition is very likely to prevail when the next batch of problems shows up.

Learn the impacts of rising LIBOR in this in-depth analysis of LIBOR.

Read More

WWReading-Cards-Global-Equity1

Are Global Housing Prices Fairly Valued?

By | What We Are Reading | No Comments

In this article:

The National Association of Realtors estimates that Chinese investors bought 29,000 American homes for a total of $27bn in the year to March 2016. Foreign buyers focus on a handful of cities: San Francisco, Seattle, New York and Miami. Foreign money has helped propel skyrocketing prices in other places, too. London’s mayor has ordered a study on foreign ownership in the capital after property prices rose by 54% in four years. Central bankers fret about the dangers fickle capital flows pose to financial stability.

Are houses fairly valued across the globe? Learn more about how these changes have impacted House Prices around the world in this interactive chart.

Read More

Macro

The Time Arbitrage Investment Strategy

By | What We Are Reading | No Comments

In this article:

This article talks about the edge that an investor can have by focusing on the long term when the entire market is obsessed with short term data/events. The underlying value of a business is determined by stream of cash flows that it is going to earn over long time. We at Multi-Act believe that any event that does not structurally impair long term earnings power of a business would provide an opportunity if the market is worried about its short term impact. Read how many have found success through this investment activity.

Read More

Macro

The Consequences of Command and Control Economics

By | What We Are Reading | No Comments

In this article:

Everyone knows that the law of supply and demand is designed to bring equilibrium in the economy. If it is true for commodities, the same rule should apply to interest rates as well. But like Soviet Russia where the price of sugar has very little to do with supply and demand because it runs on a command-and-control economy, central bankers have been setting the price for the most important commodity in the world: money. How will all this end? Does anyone know?

Read More