What Harvard Can Teach Us About Portfolio Management

My latest at Alpha Baskets is titled What Harvard Can Teach Us About Portfolio Management. The endowment was featured in Barron’s and the results lately have not been so great. The comments drew a lot of comments with the theme being that an SPY/AGG combo would have been better. In hindsight, for certain periods that is true and for others it isn’t. An excerpt; Like many similar pools of capital, the fund allocates a large portion of its assets to illiquid investments like private equity and hedge funds but is doing less of this type of investing after a particularly bad experience in the financial crisis. Please click through to read the entire post. The picture is not quite Cambridge (although it is in the background across the...

A Decline In January Draws Attention to Portfolio Protection

My latest for Alpha Baskets looks at funds that sell short one way or another. Whether the current decline will turn out to be something meaningful or something we very quickly forget it is true that investors do start to revisit the idea of portfolio protection. An important reminder is that the idea should probably be protecting an equity portfolio with a couple of diversifiers and maybe some sort of exit strategy as opposed to owning a portfolio full of diversifiers that is protected with a couple of equity holdings. January was a bumpy month for domestic equities as the S&P 500 declined by 3.5%. Perhaps the decline was influenced by the even larger decline in emerging markets, an earnings season that was viewed by some as disappointing or for no reason at all (markets don’t always have a reason for what they do). Please click through to read the rest. The picture is from Bryce...

Bear Markets: Different Ingredients, Same Market Behaviors

My latest for Alpha Baskets looks at the extent to which markets are relatively more complex this year than last year and a reminder that bear markets may start for different reasons but create the same or very similar market behaviors. While it is logical that markets are complex, the reality is that the level of complexity changes over time. The level of complexity started to increase last year when now former Fed Chairman Ben Bernanke first introduced the idea of what has come to be called tapering. Please click through to read the rest. The picture is from Newport,...