Weekend Reads: Fear, Chaos, and All-Time Highs

Third is inadequate ability to diversify.  This is largely a function of the two problems listed before, and benchmarking and indexing, which has been correlating the markets more and more.  I’m not talking about short-term correlations — diversification applies of the time horizon of the assets, which is long.

The Biggest Problems for Investors Today – (Aleph Blog)

 

The VIX was conceived after the Black Monday crash in 1987, when the market fell 23% in a single day. The measure used stock-market bets, known as options, to gauge expectations for the speed and severity of market moves, or what traders call volatility.

The Snowballing Power of the VIX, Wall Street’s Fear Index – (Wall Street Journal)

 

Net inflows into managed futures strategies in the quarter ended March 31 were $4.9 billion; total assets under management in the category, including investment gains/losses, rose 2.2% from $125.8 billion as of Dec. 31, showed data from eVestment LLC, Marietta, Ga.

Managed Futures Setting Stage for Dramatic Growth – (Pensions & Investments)

 

So why aren’t investors more fearful? It’s hard to know for sure — interpreting market behavior is usually a sucker’s game. But it’s possible to lay out a few, not mutually exclusive, theories:

Why Is Trump Causing Chaos In Washington But Not In The Stock Market? – (FiveThirtyEight)

 

It’s a mistake for investors to dismiss the entire hedge fund industry because it has underperformed the stock market in recent years. There’ll come a time when the market won’t be so kind to those invested in low-cost, passively-managed index funds. And when that time comes, what appears to be exorbitant fees charged by fund managers will seem totally justified.

Why high-cost money managers aren’t worried about the passive investing boom – (Yahoo Finance)

 

A NerdWallet study of medical crowdfunding said GoFundMe had indicated that $930 million of the $2 billion raised in the period the study analyzed was from medical campaigns.

American Health Care Tragedies Are Taking Over Crowdfunding – (Bloomberg)

 

As the robot war on Wall Street stock pickers heats up, there’s a new line of attack from the algorithmic set: IBM’s Watson supercomputer has been hired to help run an ETF and pick stocks than can achieve better performance than the broad U.S. stock market index.

IBM’s Watson supercomputer is getting into Wall Street stock-picking – (CNBC)

 

I’ve often joked that this show should be called “this is who you are up against,” because I am so often having conversations with brilliant people across the investment landscape who are effectively my competition and yours.

Quant vs Traditional Investors, and How Alphas Become Betas, with Leigh Drogen [Invest Like the Best, EP.41] – (Investor Field Guide)

 

It’s possible that the frat boys and lacrosse bros will find a way to get into the quant hustle and replicate how they used to act back when merger arb, long/short equity or event-driven were a big deal. But it hasn’t happened yet.

I’d Like to Solve the Puzzle Pat – (The Reformed Broker)

 

The European Commission published plans on Tuesday that would force UK-based clearing houses, such as the London Stock Exchange’s LCH, to stick to EU regulations and accept requirements set by the European Central Bank if they want to handle large volumes of euro-denominated trading.

Brexit Issues – (Financial Times)

 

The required wages ranged from $126,454 for Hawaii down to $91,140 in Connecticut. The least costly states after Indiana were Arkansas, Ohio, Missouri, and Kentucky, all in the low to mid-$60,000s.

How Much Do You Need to Make to Send a Kid to College? – (Bloomberg)

 

American growers are taking advantage of technologies that weren’t around two decades ago to squeeze more profit from crops, especially after record harvests left global surpluses and plunging agricultural income.

Sophisticated Farmers Cut Out Trading Giants in Profit Hunt – (Bloomberg)

 

The trains stopped to pick up milk from what later became Edison Park, in an area then occupied by dairy farms, Suerth said.

 TBT: Edison Park’s First Train Station Was Built More Than 160 Years Ago – (DNA Chicago)

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