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Open Forum: What is “Market Timing”?

I wanted to continue the discussion about “passive” vs “active” investing here with an important question for readers:

What is market timing?

Interest_Rates

High-Yield Bonds: Call Waiting

High-yield bonds’ attractive income has made them popular in today’s low-rate environment. But market complacency has caused callable-bond investors to ignore a lurking risk: duration extension in a rising-rate scenario.

machine

The Importance of Understanding Your General Portfolio Framework

I’ve been on a bit of a kick in recent days talking about portfolio construction and some of the underpinnings that drive certain approaches.  It’s important to understand the underlying framework that drives a certain portfolio construction process because it is this framework that will ultimately increase or decrease the…

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A World of Widowmakers?

The WidowMaker trade became famous in Japan over the last 20 years as bond traders continually bet again Japanese Government Bonds in the face of falling yields.  It’s a story that’s not unfamiliar in the USA where we’ve heard countless stories about how government bond yields are sure to rise…

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Why Economic and Market Forecasting Matters to Everyone

There has been some chatter in the economics universe in recent days about the usefulness of economic forecasting (see here and here for instance).  The concept of “forecasting” is highly controversial in both economics and finance.  Some say we shouldn’t do it.  Some say it’s just impossible.  Some say it’s possible….

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commodities

Thoughts on Commodities as an Asset Class

I really liked this piece by Ben Carlson on commodities and how they might fit into your portfolio (I like Ben’s piece primarily because he agrees with my views so you’ve been warned in advance! ).   He goes over the historical performance of commodities and concludes that commodities are…

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Fail_WP

Everyone’s a Financial Expert During a Raging Bull Market

The bull market appears to be going to some people’s heads.

Macro10

Trouble on the Margin?

Have corprorate profits peaked?

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US loan growth rate the highest since the recession

US credit growth continues to accelerate, reaching the highest year-over-year pace since the Great Recession.

paradise

Trouble in Paradise

It’s a problem that is now — finally — discussed and sometimes dealt with. Increasingly, investors of various type are questioning high-cost, high-risk strategies (often purveyed by hedge funds) because they have performed so poorly.

happy

GDP Isn’t Designed to Measure Happiness

There’s been a movement in recent years to try to calculate what matters most to a country so we can provide an index of overall happiness.  Being able to put a number on such a thing could theoretically help provide policy that improves overall living standards.  That would be a…

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strategy2

We Are All Active Investors – Part 2

The active vs passive investing discussion – an import debate that is often misunderstood.

Fail_WP

Technology and Liquidity Don’t Necessarily Make us Better Investors

The study, undertaken by the Vanguard Group and published two years ago, showed that 36% of ETF users were in there every single day. For mutual-fund-only investors, it was 16%.

junk

The Worrisome Trend in Junk Bond Issuance

There is little doubt that the Fed’s QE programs have resulted in a “chase for yield” which has led to this environment. Those who claim the Fed doesn’t contribute to market instabilities clearly don’t interact in markets very often….

psychology_think_thinking

Proof Negative

We should be spending much more of our time focused upon a search for disconfirming evidence for what we think…