Monthly Archive for: ‘August, 2009’
>A Tax Test May Be Coming Soon
Ken Solow | August 27, 2009
> In my book, Buy and Hold is Dead (AGAIN), the Case for Active Management in Dangerous Markets, I devote an entire chapter to portfolio tax planning. The tax chapter is called, The Tax Tail and the Portfolio Dog. The title refers to an old saying about taxes that basically means that investors shouldn’t let tax considerations outweigh value considerations [...]
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Looking for the Right Word
Ken Solow | August 24, 2009
I have no problem with describing Modern Portfolio Theory as science. After all, Markowitz’s work did win a Nobel Prize for Economics, and for that matter, so did Bill Sharpe’s work on the Capital Asset Pricing Model. I believe that investor’s want to pay for science… and all that it implies. Science implies certainty, exactness, facts versus opinion, expertise, proof, [...]
Read More →>Recovery to Be Stronger Than Expected?
Carl Noble | August 21, 2009
>Lately it seems that there’s general agreement that some sort of economic recovery is underway, thanks to the massive doses of financial stimulus that have been unleashed to halt the recession. Now, the debate has shifted to whether or not we will experience a typical post-recession recovery pattern, or whether we will enter a “new normal” of permanently lower levels [...]
Read More →>China’s Wild Ride
Sean Dillon | August 20, 2009
> In case you missed it, the Shanghai SE Composite (a capitalization-weighted index that tracks the daily performance of all A and B shares listed on the Shanghai Stock Exchange) entered a bear market in two weeks! From 8/4/09 to 8/19/09, the index fell almost 21% which is the classic measure of a bear market. It has certainly been one [...]
Read More →>The Surprising Mathematics of Defending Market Declines
Ken Solow | August 18, 2009
>The mathematics of portfolio declines and recoveries are somewhat counterintuitive. You would think that if your portfolio declines by 50% that you would need the portfolio to rally by 50% to get back to even. But that’s not true at all. The following simple chart shows the relationship between portfolio declines and portfolio recoveries: When you consider how a 50% [...]
Read More →>Is it Time to Change the Benchmark?
Ken Solow | August 14, 2009
> One of the unfair facts of life for investment managers is that our clients insist on two different unofficial benchmarks for performance comparisons. In bear markets, when stock market values are plummeting, clients insist on comparing portfolio returns to cash. However, in bull markets, when stock prices are roaring ahead of other asset classes, clients want to change their [...]
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