The long-awaited IPO of Saudi Aramco is here and gives investors the first chance to own a piece of the world’s largest oil company. This IPO is historical in that Saudi Aramco becomes the world’s first $2 trillion company. For perspective, very few companies have ever been valued at over $1T, with Apple and Microsoft being the only two publicly traded companies to currently hold that designation. So, should investors race to grab a piece of this gigantic company’s stock? While ... [Continue Reading]
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Understanding how markets function is critical when making investment decisions. This is why Hendrick Bessembinder’s 2018 study of historical stock returns was so important; it revealed to investors that the vast majority of individual stocks underperform. This information is critical. It helps us better understand why active stock-picking managers underperform at such a high frequency, and it gives us a deeper understanding of the importance of portfolio diversification--not just to mitigate ... [Continue Reading]
Research demonstrates that over the past 50 years, every U.S. recession may have been predicted ahead of time by using one simple indicator--the spread between short and long-term government bonds. Usually, long-term bonds offer higher yields than short-term bonds due to the additional risk that an investor assumes when buying bonds with longer maturities. However, every once in a while the dynamic flips, where short-term government bonds offer higher yields than long-term government bonds. This ... [Continue Reading]
There’s a classic line in the 1987 movie “Wall Street,” where Michael Douglas’ character Gordon Gekko states, “lunch is for wimps.” The implication is that in the business of money management, there’s no time to waste, certainly not for something as trivial as lunch. With only so many hours in the workday and a never-ending stream of new information to digest, the idea is that analysts and portfolio managers must spend every waking minute trying to gain an edge. This narrative is powerful, and ... [Continue Reading]
In 2017, the U.S. stock market rose steadily, with the S&P 500 recording a rare feat of 12 straight positive monthly returns. By comparison, 2018 has essentially been a splash of cold water in the faces of investors. After strong returns early in the year, the market has see-sawed back and forth, ending the first quarter with a slight loss. It’s important that we view this recent volatility with perspective and understand just how unusual the market environment was in 2017. Arjun Sigamani, a ... [Continue Reading]