When equity brokers pitch their share repurchase capabilities to corporations, they never fail to mention their ability to outperform VWAP. When asked how they outperform so consistently, the answers tend to be non-answers: “we have proprietary algorithms” “our traders are top notch” “we can see the flow”. They forget to mention that in many cases …
Many times we use the terms return and yield interchangeably, and that may be because both concepts describe investment performance. But they are not the same. The difference is this simple: return is backward-looking, yield is forward-looking. Return Return is a measure of earnings and gains/losses achieved on an investment over a time period in …
Most corporate investors use benchmarks to express their desired asset allocation, to guide their asset managers’ portfolio construction process and, on an ex-post basis, to measure their performance. Well known indices such as the S&P 500 or the Barclays U.S. Aggregate are generally used as benchmarks. In BS (balance sheet) fixed income investing, the most …
Bad advice to avoid “It is consistently taught in business schools across the world that the more information we absorb, the better investment decisions we will make.” It makes sense, right? But it’s wrong. The above quote is a paraphrase of Adam Robinson when asked the question: “what is bad advice to avoid?” Enter Paul …
Blast from the Past | Financial Crisis headlines as of October 7, 2008 Just some notes I took while things were unfolding. Many names live only in people’s memories now… September 2008 (S&P 500: -9.2%) September 7: FNMA and FHLMC are put under the conservatorship of the FHFA September 14: Bankruptcy of Lehman Brothers September 14: …
I’m going to give you a rule of thumb for estimating portfolio yield after rebalancing (a.k.a., liquidating) your bond investment portfolio. If you don’t already explicitly know this rule of thumb, I am pretty certain that you have developed the intuition for it. However, here is the value add: teach this rule to your boss, …
This book is a collection of ideas and reflections on the intersection of economics, culture, and technology. It also provides a framework to process and understand businesses, be them existing and established, or inception-stage ventures. One of the main concepts is that of horizontal versus vertical progress. Horizontal progress is making marginal improvements to existing …