January 2018

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2018 Outlook

I’ve been meaning to post an outlook for 2018, but I kept putting it off.  Between the holidays, a sick kid, and my belief that calendar year outlooks are dumb, procrastination has been beating my will to write.  No more!  Here are my predictions for 2018: If you have been investing for 10+ years, your 10 year return number is going to look a ton better at the end of 2018 Donald Trump is going to collaborate with Democrats going into the mid-term elections Bitcoin and crypto-assets will rally hard, then have a huge correction at year-end To be honest, those second two predictions are garbage.  The first one, however, is the stealth story of the year. Ten Year Returns If you’ve been investing for over ten years, your ten year return number is going to burst higher.  Why?  The S&P 500 lost 37% in 2008 and that year is…


ESG

Doing Good While (Hopefully) Doing Well

Each year, BlackRock’s Chairman and CEO, Larry Fink, writes a letter to CEOs of “leading companies” in which BlackRock’s clients are shareholders.  Last year’s letter encouraged long-term thinking in the context of a world that is increasingly focused on short-term volatility.  This year’s letter strikes a similar tone, but goes a step further in mentioning environmental, social, and governance (ESG) matters as factors CEOs should be considering in their long-term strategies.  Socially responsible investing (SRI) is gaining traction among investors.  Is this just kumbaya investing or is it for serious investors, too?  Why would anyone do this?  On the other hand, why would anyone NOT do this? The Basics ESG and SRI are sometimes used interchangeably, but they are different.  SRI is the broad overarching investment thesis of the movement.  ESG filters this mandate through three lenses, environmental, social, and governance.  SRI is open to personal interpretation just like the…


Bron

‘Bron, ‘Bama, and the January Effect

  The NBA may as well cancel the rest of the season.  Why?  Alabama won the college football championship, of course!  This means LeBron James is sure to win a title of his own: This reminds me of the January effect in the markets.  The thinking is that if January is positive, the year as a whole will be positive and if January is a down month, it means negative returns for the year as a whole.  That’s totally ridiculous, of course.  The January effect ‘feels’ right because most months are positive and most years are positive.  Since January is the first month of the year, humans tend to add emphasis to it whether it is deserved or not.  Similarly, Alabama has had a great football program for the last decade and LeBron has been the best player in the NBA for about the same time (don’t @ me).  It…