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  • Takeaways From A Historic Week In The Bond Market: More To Come?
    Mon, Mar. 9 Comment!

    Summary

    • A historic week in the bond market saw several noteworthy deals that have cross-asset allocation implications.
    • A strong payroll print surprised the market, leading to a sell-off in both fixed income and domestic equity markets.
    • A look inside this report and other notable market transactions can help Seeking Alpha readers understand thematic shifts in the capital markets.
  • Takeaways From A Historic Week In The Bond Market: Oil's Well?
    Mon, Mar. 9 XOM 1 Comment

    Summary

    • In a historically busy week in the corporate debt markets, we saw a number of energy deals price across the credit spectrum.
    • A number of companies opportunistically sought to boost near-term liquidity and term out maturity profiles to prepare for potentially prolonged low prices.
    • At least one company was not so lucky as we saw our first corporate bond default of this cycle.
  • Takeaways From A Historic Week In The Bond Market: Buffett's Bonds
    Mon, Mar. 9 BRK.B 2 Comments

    Summary

    • In a historically busy week for the U.S. corporate bond markets, an important headline emerged from a company that chose to skirt that market altogether.
    • Berkshire Hathaway eschewed the dollar denominated corporate bond market for lower nominal interest rates in euros.
    • Diverging financing yields in Europe and the U.S. could see more American companies tap the euro bond market, which could have important capital market implications discussed herein.
  • Takeaways For A Historic Week In The Bond Market: Pharma M&A
    Sun, Mar. 8 ACT 2 Comments

    Summary

    • A historic week in the bond market saw several noteworthy deals that have cross-asset allocation implications.
    • The largest deal was Actavis' $21B financing for its takeover of Allergan.
    • A look inside this deal and other notable market transactions can help Seeking Alpha readers understand thematic shifts in the capital markets.
  • The Dividend Aristocrats And Higher Interest Rates
    Editors' Pick • Thu, Mar. 5 NOBL 64 Comments

    Summary

    • High quality dividend stocks with a long track record of growing dividends through multiple business cycles, have outperformed the broader market over long time intervals.
    • Some investors have expressed concern that higher interest rates could have a disproportionately negative impact on dividend-paying stocks.
    • This article examines the absolute and relative performance of dividend paying stocks during periods of higher interest rates.
  • The Dividend Aristocrats And Maximum Drawdowns
    Editors' Pick • Tue, Feb. 24 NOBL 87 Comments

    Summary

    • The Dividend Aristocrats, companies that have a greater than 25-yr history of paying increasing dividends, have outperformed the broader market over time.
    • Given the large Income Investing community on Seeking Alpha, this strategy has been widely debated and discussed and is popular amongst readers.
    • This article tries to build on that conversation by calculating the maximum drawdown of the Dividend Aristocrat strategy and discussing performance in weak markets.
  • S&P 500 Earnings Multiples At Market Peaks
    Mon, Feb. 23 SPY 12 Comments

    Summary

    • This article examines the P/E ratio when the S&P 500 has hit new all-time highs, as it did on Friday.
    • We are not too far from the average earnings multiple at market peaks, but this average was skewed higher by stratospheric multiples during the tech bubble.
    • I believe that historic context is important to examining current valuation, and I hope that this article is helpful to readers trying to make sense of a new market high.
  • Do These 9 Stocks Represent Your Portfolio?
    Sat, Feb. 21 DIA 17 Comments

    Summary

    • The oft referenced Dow closed at its all-time high on Friday.
    • The Dow, which uses a price weighting methodology, might not be representative of your portfolio.
    • Broadly diversified, capitalization-weighted indices should correlate more with a highly diversified portfolio.
  • Low Volatility Stocks And Maximum Drawdowns
    Sat, Feb. 21 SPLV 16 Comments

    Summary

    • Low volatility equity strategies have been shown to have historically produced higher risk-adjusted returns, a violation of models that expect higher risk to be compensated with higher returns.
    • Low volatility strategies have produced higher returns because they have outperformed in falling markets.
    • This article details the lower maximum drawdowns of a low volatility strategy, showing the worst returns for the strategy over various time intervals versus the broader market.
  • Are Stocks Most Expensive On Record?
    Fri, Feb. 20 SPY 43 Comments

    Summary

    • A dataset from Nobel laureate Kenneth French shows that the median NYSE-listed stock closed 2014 at its highest earnings multiple on record.
    • This broad-based gauge could be portending subpar forward returns for the market.
    • Short-term returns at peak multiples have been strong over short horizons, but the sample size is admittedly small.
  • The Oil Trade Update
    Tue, Feb. 17 XLE 18 Comments

    Summary

    • Like most risky asset classes, oil exhibits short-term momentum. Investors seeking short-term gains from timing a bounce in oil prices should understand this phenomenon, which could be reversing.
    • After seven monthly losses for oil, momentum might finally have turned the corner, giving traders with a shorter-term horizon impetus to add positions.
    • While evolving supply and demand factors impacting oil prices favor a longer-term value investing approach, a simple momentum heuristic could point to potential near-term gains.
    • This is a re-purposed version of an earlier article that cautioned potential investors to take a long-term value approach to falling prices.
  • Oil And The Bifurcation Of High Yield
    Mon, Feb. 16 HYG, JNK 1 Comment

    Summary

    • Energy has been a rising component of the high yield bond market, necessitating investors have a view on the future performance of oil and gas.
    • Energy bonds trade on average to yield over 3% wide of the rest of the high yield bond market, skewing average yields higher.
    • Stripping out Energy investments, and the high yield market is still trading cheap to its trailing two year average yield despite falling interest rates in the U.S.
    • Distressed investors are preparing to buy energy debt for a potential rebound. Retail investors should understand their exposure and evaluate whether additional bets are warranted.
  • A View From The Top: 3 Looks At Market Multiples
    Mon, Feb. 16 SPY 44 Comments

    Summary

    • The S&P 500 is near an all-time high. This article puts the current level in historical context by examining three different earnings multiples.
    • Trailing 1-yr earnings, estimated forward 1-yr earnings, and a measure of cyclically-adjusted price/earnings are used to frame the current market level.
    • I leave readers with three takeaways on my views of this data.
  • A Global Yield Comparison
    Sun, Feb. 8 7 Comments

    Summary

    • Despite the culmination of quantitative easing in the United States, and with a Federal Reserve poised to lift short term rates, long-term rates have fallen dramatically in recent months.
    • Increased monetary accommodation in other developed markets globally has driven down global sovereign yields, putting downward pressure on U.S rates and increasing the value of the dollar.
    • Understanding the relative positioning of U.S. interest rates is important for even domestic-only investors, and will be a key theme for investors in 2015.
  • Dividend Aristocrats + Equal Weighting Has Beat Market For 14 Of 15 Years
    Fri, Feb. 6 NOBL 43 Comments

    Summary

    • Two factor tilts from the S&P 500 - the Dividend Aristocrats and Equal Weighting - have historically beat the benchmark gauge.
    • Combining these two indices in equal proportions has beat the S&P 500 in all but one year of the twenty-first century.
    • Strong performance in different market environments helps the combination outperform through the business cycle.
  • A Lecture On Yield
    Editors' Pick • Wed, Feb. 4 102 Comments

    Summary

    • This article is a repurposed lecture I gave on the bond market to an undergraduate class last semester.
    • The lecture hit on three major themes that have shaped my career as an institutional fixed income manager.
    • The first topic was about understanding the shape of the yield curve and the information that can be gleaned about the business cycle.
    • The second topic was about understanding the inherent momentum of credit spreads as business cycles run their natural course.
    • The final topic was maybe the most important - framing variability - and understanding that to be successful you need to know why your base case could not be realized.
  • Buffett's Alpha Revisited
    Tue, Jan. 27 BRK.A 44 Comments

    Summary

    • The tremendous track record of Warren Buffett has been shown to be driven by his preference for lower volatility investments and the employment of modest investment leverage.
    • Recent acquisitions by Berkshire Hathaway have continued to build on this investment philosophy.
    • This articles discusses an easy-to-implement strategy to replicate the keys to the Oracle of Omaha's success.
  • A Look Inside The iBillionaire High Dividend Index
    Mon, Jan. 26 CVEO, IBLN, NOBL 11 Comments

    Summary

    • Last week, iBillionaire introduced a High Dividend Index that tracks a slew of billionaires' investments in high dividend paying stocks.
    • Given the focus on yield-driven strategies in this low rate environment, I thought detailing the constituents would be valuable to Seeking Alpha readers.
    • This index has risk tilts toward certain sectors and managers that should be noted if potential investors wished to replicate returns.
  • Ten Themes Shaping Markets In 2015
    Tue, Jan. 6 4 Comments

    Summary

    • Stepping back and writing down your own investment themes can be a valuable tool to framing your market expectations and setting your tactical asset allocation.
    • This process left me with a muted tone on the prospects of risky assets.
    • Market volatility is likely to rise in 2015, expanding the range of potential outcomes.
  • The 'Real' S&P 500 Index High Is Within Sight
    Dec. 24, 2014 SPY 3 Comments

    Summary

    • The S&P 500 Index closed at a new all-time nominal high.
    • Adjusted for inflation, the index is still fractionally below its 2000 "real" high.
    • Understanding a time series of the purchasing power of the market benchmark and the historic relationship between rates and equity multiples could benefit readers.
  • 10% Yields Available In HY CEFs
    Dec. 18, 2014 HYG, JNK 12 Comments

    Summary

    • Select high yield bond closed end funds are trading to yield above 10%.
    • High yield bonds have underperformed other risky asset classes on a relative basis during the recent sell-off, and may offer income investors an interesting entry point.
    • Flows from the asset class have caused closed-end funds to trade at material discounts to their net asset value.
  • Low Volatility Strategies In Bull Markets
    Dec. 16, 2014 SPLV 2 Comments

    Summary

    • In a recent series of articles, I showed readers five strategies that have outperformed the market over trailing twenty year time periods.
    • Funds that track low-volatility indices were shown to produce higher risk-adjusted returns. This article addresses the performance of low volatility strategies in bull markets where they are expected to lag.
    • High beta stocks outperform early in economic recoveries, but the bounce is difficult to time. I propose a momentum strategy that switches between high beta and low volatility stocks.
  • Junk Bonds Or Stocks?
    Dec. 15, 2014 JNK, SPY 5 Comments

    Summary

    • A recent correction in high yield bond prices might provide an interesting opportunity for investors.
    • The pressure in the energy sector has disproportionately impacted the high yield bond market, an asset class that has traditionally exhibited less variability of returns than stocks.
    • With the high yield bond market yielding north of 7% for the first time in several years, a tactical rotation to high yield bonds may be interesting to some investors.
  • 5 Simple Ways To Beat The Market: Part 5 Of 5
    Dec. 12, 2014 RSP 32 Comments

    Summary

    • Investors should understand simple, low cost, and easy-to-implement strategies that have been shown to outperform the market over long time intervals.
    • The final strategy of five I have described in a series of articles is the benefits of equal weighting as opposed to the traditional capitalization weighting of indices.
    • Equal weighting benefits from the size factor and a contrarian "buy low, sell high" approach to index rebalancing. These attributes have driven alpha over long-time intervals.
  • 5 Simple Ways To Beat The Market: Part 4 Of 5
    Dec. 11, 2014 NOBL 21 Comments

    Summary

    • Investors should understand simple, low cost, and easy-to-implement strategies that have been shown to outperform the market over long time intervals.
    • The fourth strategy of five I have described in a series of articles is the long-term benefits of consistent dividend growth investing as demonstrated by the Dividend Aristocrats.
    • Investing in companies with long track records of continuously increasing dividends to shareholders has been shown to outperform on both and absolute and risk-adjusted basis over time.
  • 5 Simple Ways To Beat The Market: Part 3 Of 5
    Dec. 10, 2014 SPLV 20 Comments

    Summary

    • Investors should understand simple and easy-to-implement strategies that have been shown to outperform the market over long time intervals.
    • The third of five strategies I will describe in a series of articles is the "low volatility factor" that has seen these stocks outperform over time.
    • The Low Volatility Anomaly runs counter to how many investors see the world, but is supported by academic research and could be a successful holding for long-term investors.
  • 5 Simple Ways To Beat The Market: Part 2 Of 5
    Dec. 9, 2014 RPV 11 Comments

    Summary

    • Investors should understand simple and easy to implement strategies that have been shown to outperform the market over long time intervals.
    • The second of five strategies I will describe in a series of articles is the "value factor" that has seen high book-to-market stocks outperform over time.
    • Investors reduced their equity exposure after the drawdown in 2008 and missed tremendous returns in value stocks.
    • A rules-based index approach to value investing may help investors overcome these biases and capture the alpha inherent in value investing.
  • 5 Simple Ways To Beat The Market: Part 1 Of 5
    Dec. 8, 2014 IJR 15 Comments

    Summary

    • Stock ownership by U.S. households is low and falling even as the barriers to entering the market have been reduced.
    • Investors should understand simple and easy to implement strategies that have been shown to outperform the market over long time intervals.
    • The first of five strategies I will describe in a series of articles is the "size factor" that has seen small caps outperform large caps over time.
  • Rating Agencies Disagree On Amazon Too
    Editors' Pick • Dec. 4, 2014 AMZN 37 Comments

    Summary

    • Amazon issued $6B of bonds on Tuesday, the largest bond deal in the company’s history.
    • The divergent opinions of market participants on the company’s stock are well documented. The gap between rating agencies' view of the debt is wider than for any investment grade credit.
    • Understanding why these opinions are so disparate can help investors determine if there is value in the company’s stock or bonds.
  • Takeaways From 2014's Biggest Bond Deal
    Dec. 3, 2014 MDT 7 Comments

    Summary

    • Lost beneath the wave of stories about the swoon in oil prices and the lackluster holiday retail sales results, the biggest corporate bond deal of 2014 happened Monday.
    • Medtronic issued $17B of new bonds to finance its takeover of Covidien.
    • This article details five main topics investors should take away from this notable issuance.
  • The Oil Trade
    Editors' Pick • Dec. 2, 2014 XLE, USO 20 Comments

    Summary

    • Like most risky asset classes, oil exhibits short-term momentum. Investors seeking short-term gains from timing a bounce in oil prices should understand this phenomenon.
    • Over longer time intervals, energy stocks are highly correlated with the underlying commodities, and the -34% year-to-date decline in oil may provide patient investors the opportunity to buy low.
    • Given the evolving supply and demand factors impacting oil prices, investors should take a long-term view towards building exposure to stocks in this sector.
  • High Yield/Treasury Momentum - December 2013
    Dec. 2, 2013 JNK 9 Comments