AAM News & Independent Research

Republished from: The Economist

Practice makes imperfect

Even experienced fund managers don’t beat the market
Aug 9th 2014 | Finance and ...

Republished from: BloombergView

By Noah Smith
In an earlier article for Bloomberg View, I described a danger facing investors: the put-option illusion. This is when investors, who tend to extrapolate too much from recent trends, are fooled into thinking that a string of good returns means an ...

Republished from: Hudson.org
Christopher DeMuth

The federal government’s total debt is approaching $18 trillion. Its operating deficit was more than $1 trillion in each of the years 2009–12 and $680 billion in 2013. These numbers are too immense and unfamiliar to be useful. (A trillion is not yet even a standard measure—it means a thousand times a ...

Stock Pickers Have Tough Time in 2014
...

Republished from: “Forbes”

How To Beat The Rigged, ‘Flash Boys’ Stock Market

This is not a post-April Fool’s day joke, but it riffs on the furor caused by Michael Lewis’s new book Flash Boys: A Wall Street Revolt.

“How do you beat Wall Street at trading?”

“Don’t trade.”

That’s my advice in a nutshell because it avoids the mostly true, but old news of Lewis’s book. You can’t beat robotic high-frequency trading programs unless you have what the big boys have: High-speed fiber ...

Republished from: “Forbes”
Michael Lewis Is Entirely Wrong About High Frequency Trading Hitting The Little Guy

It appears that Michael Lewis has a new book out today, on in which he talks about high frequency trading on the stock market. And he makes the claim that this practice in some way takes money from the little guy to give to the capitalist profiteers running those HFT systems. No, I’m sorry but this will not do. The effect on the ...

Republished from: “Financial Times”

Warren Buffett issued some startlingly simple financial advice in the latest Berkshire Hathaway annual report, along with an extraordinary vote of confidence for Vanguard.

Writing about the instructions laid out in his will, Mr Buffett said his advice for the cash left to his wife was that 10 per cent should go to short-term government bonds and 90 per cent into a very low-cost S&P 500 index fund.

“I suggest Vanguard’s [S&P 500 index fund],” wrote ...

Republished from: “The Economist:”

Time to sweep away an artificial distinction

Feb 8th 2014 | From the print edition
IMAGINE that the stockmarket was divided into two. The big investment banks—Goldman Sachs, Morgan Stanley and Bank of America Merrill Lynch—would create lists of the shares that they liked. These approved shares would be classed as IB, for investment-bank-approved, and would trade on a higher valuation (ie, lower yield) than equities they did not like, which would be lumped ...

Republished from: “Chicago Tribune:”  (I’m not trying to promote McDonald’s here, but it’s such a great story: Boy flees Vietnam, grows up in Chicago, works at McDonald’s as a teen, returns to Vietnam to open the country’s first McDonald’s restaurant. – J.L.)

McDonald’s is opening its first restaurant in Vietnam today with a partner with strong ties to the Chicago area: Henry Nguyen, a private equity investor with a medical degree and MBA from Northwestern University.

Nguyen, who ...

Republished from Dr. Ed Yardeni’s blog: “Dr. Ed’s Blog”

The current emerging markets crisis didn’t just start last week. It’s been going on for a while, and should come as no surprise to investors. Argentina’s peso has plunged 18.9% y/y. South Africa’s rand is down 5.7%. Turkey’s currency has been a turkey since 2008. The following have been running trade deficits for the past year or longer (with the latest 12-month deficits in parentheses): India ($155 ...