In another era, before we all had our noses to screens or could afford a trip to some far off land when we had a little time off, a holiday often meant a visit to the city park with your extended family and friends.  Kids being kids, they’d want to get away as soon as they could, and would make their way to the swing set or some out-of-the-way place, depending upon their age.  The old men like me, confident that others would organize the meal for later, might head off to pitch horseshoes.

As with most any game, among the players of horseshoes there are various levels of interest, involvement, obsession, and expertise.  That’s true for those navigating the markets as well.

There are those who play to go along with the crowd, without a particular plan or much if any preparation.  To use the horseshoe analogy, they may laughingly throw the horseshoes around when others do, but if you are in the vicinity you’d best keep your eyes open, since a horseshoe could come ... continues

In A Streetcar Named Desire, Tennessee Williams’ classic play, Blanche DuBois has been forced to leave her once-stately Mississippi home, now lost to foreclosure.  She makes her way to her sister’s modest dwelling in New Orleans, the last stretch by way of a streetcar with that fateful name, still gripped by her delusions of grandeur and not prepared at all for what is to come.

As the story unfolds, the layers of desire and events of the past are laid bare, and the façades come tumbling down.  The arc of the tragedy encompasses generations, with years of unwinding having been played out in slow motion before the few months of cathartic action in the play.

It is a dramatic use of poetic license to say that it seems like the business of investments is on a similar journey, but the similarities are there.  Decades of good times fostered beliefs that in a harsh light don’t seem as beautiful as they once did:  efficient markets, modern portfolio theory, buy-and-hold ... continues

Are you better off being a specialist or generalist?  Will your performance improve if you try to get good at one way of investing, and relying on it through thick and thin, or if you draw from a variety of strategies to create something of your own?  There have been a number of interesting postings in the finance blogosphere over the last several months that argue for the latter.  Here’s a guide to a few of them:

While some investors assiduously avoid forecasting, it is a critical piece in many investment strategies, and a posting from The Capital Spectator looked at the worth of “combination forecasts.”The Capital Spectator | James Picerno has been blogging about investments since 2003. No matter how good an indicator is and how reliable it appears to be in aiding forecasting, “that any one predictor fails at times is unsurprising.”  The bottom line:  “In effect, investors should diversify the sources of their forecasts.”

When it comes ... continues

How do you organize your thinking about investments?  At a basic level, most people consider their holdings in a fashion like this:

So, what are your categories?  How long have you had them?

Maybe they are asset classes or sectors or industries or themes or tax-impact buckets or some combination thereof.  Maybe you have an advanced system whereby the exposures of packaged products like funds are disaggregated into the proper line items.  Maybe the economic impact of the optionality of various instruments is factored in and maybe you have even moved on to the next generation of risk classifications before everyone else.  Or maybe your construct is as simple as could be imagined.

In any case, at the root of your approach is a series of conceptual categories that you use to think about the world.  Where did they come from?

This is not idle musing.  It is helpful to know how they originated and even more important to figure out whether they are still valid.  Our tendency is to ... continues

The buyers and sellers of institutional investment management services often go through elaborate rituals as part of a selection process:  RFPs (request for proposals), consultant evaluations, and rounds of dog-and-pony shows at which portfolio managers, marketers, and client servicers vie with their competitors to win the right to manage a pool of assets.  From beginning to end, it can take quite some time and the outcome can depend on the smallest of things anywhere along the way.

I hadn’t thought of it as being somewhat like a court trial, until I had the opportunity yesterday to hear a lawyer discuss a high-profile lawsuit and the related proceedings.  There are many differences too, since you are dealing with points of law and defined procedures in one situation and mere convention in the other, but the final judgment in either case may turn on a few critical factors.

One is due diligence.  Before arriving at court, the parties do intensive investigations, and the ... continues