1. Tuesday, August 12th, 2014
    the ironic triumph

    Charles Ellis has witnessed, chronicled, and helped to shape the modern asset management industry.  He has been a leader of the investment profession for decades and has authored a number of classic works on the business.Gumroad | He was one of five authors cited in Letters to a Young Analyst whose output has been “consistently good in terms of the quality of the material, the quality of the writing, and the importance of the issues addressed.”

    In recent years, Ellis has written a number of notable essays for the Financial Analyst Journal, the latest of which, “The Rise and Fall of Performance Investing,”CFA Institute | The article is free for members of CFA Institute and CFA candidates. is required reading for asset owners, asset managers, consultants, and advisors.

    It is, first of all, a tidy summary of the rise of performance investing over the last half century.  A combination of innovation, demographics, government action, technology development, and ... continues

  2. Thursday, August 7th, 2014

    We all develop a language of our own.  As individuals we have our favorite phrases, which we use again and again, creating a pattern of communication that a linguist could recognize as having unique word-prints which identify us.

    When working with investment organizations, I find myself returning to certain phrases and concepts repeatedly.  Many find their way into my writing (and some originate there), including “analysis plus communication,”the research puzzle | The posting with that title was part of a series on equity research. my simple formula for thinking about the two main components of any investment job.  It is the communication part that messes most people up.

    Being able to communicate — to translate, if you will — is incredibly important.  Here are some widely-disparate examples I have seen of the need for such translations in the investment world:

    ~ Practitioners and academics have so much to teach each other, yet in most cases there is no ... continues

  3. Wednesday, July 23rd, 2014
    you get the market

    The debate between the believers in passive investment management and the believers in active management is destined to go on ad infinitum.  But the simple truth is that they are much more alike than different in terms of results.

    To simplify things, let’s look at the stock market, specifically the U.S. stock market.  For investment professionals, the “market” has long since meant the S&P 500, although there are other measures that capture more of the market than it does.

    The market thus described is weighted by capitalization and serves as the benchmark for huge numbers of active managers who are generally judged and rewarded (or not rewarded) based upon their relative performance versus that benchmark.  The active/passive debate revolves around which of those approaches is likely to produce better returns over time.  There are other issues — including the wisdom of spending gobs of time and money trying to outperform when history appears to not be on ... continues

  4. Saturday, July 12th, 2014
    evolutions and revolutions

    I spent ten days in the Pacific Northwest recently.  The trip included presentations to the CFA societies of Seattle and Portland, as well as some meetings with investment organizations in those cities.  But there were also mountains and coastlines and high deserts and big rivers — and family events, cultural experiences, and an old-fashioned Fourth of July celebration with a big parade and fireworks.

    For me, as for most people, inspiration usually comes when I have been stretched by a new experience, whether I realize it at the time or not.  My trip was a visual and conceptual feast, starting within a few minutes of arriving in Seattle, when I looked at nine LPs arrayed on a wall in an exhibit at EMP Museum:jimiIn order, they were Sgt. Pepper’s Lonely Hearts Club Band (The Beatles), Sound of the Sitar (Ravi Shankar), The Real Folk Blues (Muddy Waters), John Wesley Harding (Bob Dylan), Blues Breakers (John Mayall, with Eric Clapton), The Free Spirits, The Messiah (by ... continues

  5. Wednesday, June 25th, 2014
    cover bands

    These days, many of us are “accidental creatives,” thrust into roles in the information economy in which we are judged by our ability to produce unique ideas.  However, we are often quite unprepared for those roles, lacking the training and processes of traditional creative types and working within organizations which haven’t been structured to foster our development or success.

    Todd Henry’s book, “The Accidental Creative”Accidental Creative | Here is information about the book on the website of Henry’s organization that bears the same name. (recommended to me by Sophia BeraGen Y Planning | This is the site of Bera’s financial planning business, which is focused on Generation Y.), is a how-to for those of us that find that the creative well can run dry at just the wrong time.  It offers suggestions for structuring your work and personal lives to keep coming up with those fresh insights.

    I can safely predict that most investment ... continues