Here are a few things we know about the financial markets: Beating the market or obtaining “alpha” (excess return) is extremely difficult as evidenced by the annual SPIVA Scorecards. Alpha [ … ]
Category: How Things Work
How to Avoid the Problem of Short-Termism
If I had to pinpoint the biggest problem for most asset allocators I would probably say short-termism. Short-termism is the tendency to judge financial markets in periods that are so short [ … ]
Why Equity Outperforms Credit
In my new paper on asset allocation I go into quite a bit of detail about why certain asset classes generate the returns they do. Understanding this is useful when [ … ]
Understanding Modern Portfolio Construction
My newest research paper, Understanding Modern Portfolio Construction, is available on SSRN. This paper is the culmination of years of work and I consider it to be the most important piece of research I’ve published.
Why Stock Market Declines are Good
James Bullard, the St Louis Fed President, gave an interview today discussing how the stock correction has been good because it has helped to prevent a bubble. He’s inferring that [ … ]
Why Would Anyone Buy a Negative Interest Bearing Bond?
Good question here from the Q&A section about negative yielding bonds: Hi Cullen. The Economist had a good article explaining why people buy negative yielding bonds. https://www.economist.com/blogs/economist-explains/2016/02/economist-explains-6 Do you agree [ … ]
Central Banks Didn’t Eat Your Lunch
One of the consistent trends you’ll find in my econ and finance work is that I don’t think much about Central Banks. In other words, I think mainstream macro puts [ … ]
Why Do Corporations Pay Dividends?
There is increasing chatter in recent years about share repurchases, dividends, corporate investment and the ideal way for firms to use capital. But one question that economists can’t really agree [ … ]
Why are Treasury Bonds the Ultimate Safe Haven?
The last 10 years have exposed a very important reality for any global asset allocator – US Treasury Bonds are the ultimate safe haven investment. For decades we have heard [ … ]