Surviving in the Longest Bull Market as a Bear

There is an old saying that “bull markets don’t die of old age, they get murdered by central banks.” This makes a lot of sense, given that central banks control short-term borrowing rates and use that policy tool as a way to influence the economic cycle in an orderly fashion. The Federal Reserve (arguably the…

The Benefits of Preparing for the Unknown

While many investors may define success for their investment portfolio from a return-centric perspective, arguably the more important factor to focus on is risk mitigation. Once you’ve defined a way to quantify the utility function inherent in a risk-centric framework, then return expectations can follow. Otherwise, the strategy is at risk of being abandoned when…

ETFs Aren’t Always the Most Cost-Effective

Over the last few years there has been a lot of media attention on ETFs (exchange traded funds) and how they have precipitated a “fee war” in the asset management industry. Large asset managers like Vanguard and BlackRock have been accused of inciting a “race to the bottom” in investment management fees, squeezing margins for…

Can Access to Financial Markets Be Democratized?

Robinhood Financial and their quest to democratize access to financial markets ran into another speed bump this week, with Robinhood agreeing to pay a $1.25M fine to FINRA as a result of failing to insure the order flow they sold to third parties for execution without considering such factors as “price improvement” and best execution….

Who Should Have a Fiduciary Obligation in Investment Management?

The financial services industry in North America has long had an image problem when it comes to financial advice offered to retail clients. Confusion among investors to the role their advisors play as it pertains to product recommendations has not helped alleviate concerns around mistrust and whether these financial professionals ultimately have the best interests…

Can Concentrated Portfolios Compete with ETFs?

As low-cost indexing strategies – usually in the form of ETFs – have increased in popularity, we’ve frequently opined that one of the major changes for the investment industry will be the shrinking of investment funds that are providing “high-cost” beta. We would define high-cost beta as an investment fund that charges management fees over…

Do Stock Buybacks Dilute Return of Capital to Shareholders?

For anyone that has been following the Democratic nomination race in American politics, you’ve probably noticed that a key issue has been the treatment of stock buybacks. Democratic candidates opposing stock buybacks say that they contribute to rising income inequality in the United States. The candidates have therefore proposed plans ranging from outright bans to…

Should It Be Called “Behavioural” Finance?

Despite all the resources that have gone into studying the field of finance, there is still not one concise theory that can fully explain price action in financial markets. The lack of data and presence of behavioural factors make the “laboratory” a challenging environment to control for specific variables; thus, the field of finance is…

What We Can Learn from Poker About Investment Management

Investing and poker have a lot in common. Both involve a balance of known and unknown information, and both involve updating probabilities when new information is presented. One might suggest investing is slightly trickier than poker given that the “rules” of the game can adapt over time, but at a high level both share a…

In Memory of Bill Fouse, Index Fund Pioneer

It is a common misconception that Jack Bogle and Vanguard Group created the first index mutual fund. While Bogle and Vanguard helped to bring index investing to the masses with the first public index mutual fund, it was actually William Fouse at Wells Fargo in the early 1970s that launched the first index fund marketed…