Get the Beta Right

My latest at Alpha Baskets looks making sure investors own the right betas in their portfolios. Yields are frustratingly low and may stay low for a while. The point made is to avoid enhancing fixed income yield with high yielding equities; hence the word beta in the title. There is equity beta or volatility and there is fixed income beta or volatility. Substituting one for the other, thinking they really are substitutes is a bad idea.

Coincidentally Carl Richards made essentially the same point in this post at the NY Times a couple of days ago (I didn’t know about Carl’s post until late this afternoon after I wrote my piece).

From Alpha Baskets;

This backdrop creates the bullish argument for equities that provide investors 2, 3 or 4% from dividends or 6-7% from MLPs and maybe more from mortgage REITs. This is an important point because pound for pound those vehicles probably yield more than most fixed income proxies but they also take on equity beta or something much closer to equity beta than what investors are typically looking for from the fixed income-ish part of their portfolios.

Please click through to read the rest.



The picture is from last summer at a cross fit exhibition/competition that was held as a fund raiser for the Granite Mountain Hotshots at a gym across the street from their station and where many of them worked out. We are obviously coming up on the one year anniversary of the Yarnell Hill Fire. There are several subdued events planned to commemorate the crew.

In the immediate aftermath I made the obvious comment in many places, including in an interview on Channel 3 in Phoenix, that this would change a lot about how fires are fought and what we think about in terms of fireline safety and that has already started to play out and will continue to evolve.

I’d met a few of the hotshots, they were at the Green Gate Fire here in Walker on May 22nd of last year but the only one I really knew was Superintendent Eric Marsh. For years he was the Chairman of the Prescott Basin Ops Group which plans the big inter-agency training that occurs here every spring. I’ve been the secretary of this group for quite a few years. Eric also taught the Basic (Wildland) Firefighter class known as S-130/190 at the Arizona Wildfire Academy every spring and several of our firefighters had him as their instructor.

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