David Larrabee, CFA

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David Larrabee, CFA, is director of Member and Corporate Products at CFA Institute and serves as the subject matter expert in portfolio management and equity investments. Previously, he spent two decades in the asset management industry as a portfolio manager and analyst. He holds a BA in economics from Colgate University and an MBA in finance from Fordham University. Topical Expertise: Equity Investments · Portfolio Management

Weekend Reads for Investors: Merger Mania, Peak Profits, and Value Investing

Weekend Reads for Investors: Merger Mania, Peak Profits, and Value Investing

The burgeoning market for mergers is reflective of a lack of organic growth opportunities, cheap capital, and flush corporate coffers. Additionally, elevated stock prices provide buyers with a strong currency and sellers with a reason to cash in, which helps explain why M&A activity has tended to peak around market tops, most recently in 2007, and before that in 2000. So while the pace of deals may be a sign that CEOs and their boards are more confident about their prospects for growth, investors should be aware that their timing of late has been less than prescient. For those investors tempted to pick the next takeover target, the safer bet may be on the Wall Street bankers who are doing the matchmaking and financing. They always get paid. Read more

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Weekend Reads for Investors: “The Most Crowded Trade”

Weekend Reads for Investors: The Most Crowded Trade

The economic backdrop figures prominently in the chatter among investment strategists of late as they debate the sustainability of the “decoupling” of the US economy from sluggishness in the rest of the world. Bank of America Merrill Lynch strategists have called the decoupling trade — long US stocks and the dollar — “the most crowded trade in the world.” As US stocks hover near all-time highs, those with a contrarian bent may be receptive to the latest missive from Joe Calhoun. In “Is It Time to Zig?” he suggests investors might want to look outside of the United States for opportunities. Read more

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13F Watch: In Defense of Active Share

13F Watch: In Defense of Active Share

The poor performance of active management has been well chronicled of late but the active fund management industry is not going down without a fight. Apologists have been quick to point to artificially low interest rates as one factor dragging down the collective returns of stock pickers. Index huggers — those managers with low tracking error funds and almost no hope of outperforming their benchmark after fees — are also to blame. In response, active managers are pointing to their “active share” — a measure of how much a portfolio’s holdings differ from those of its benchmark — and research that suggests funds with the highest active share do indeed beat their benchmarks. A review of just-filed quarterly 13F reports reveals that some of the most prominent fund managers truly embrace their role as active portfolio managers. Read more

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Poll: Is the Oil Price Plunge a Cyclical or Structural Change?

Global oil prices have plunged by approximately 50% over the past seven months, their sharpest price drop since the 2008 global financial crisis. The sudden fall can be attributed to a confluence of factors — most notably, weaker demand because of sluggish economies around the world, a surge in supply because of the shale energy boom in the United States, and a relatively stable geopolitical backdrop (insofar as there have been no meaningful supply disruptions). Read more

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Weekend Reads for Investors: Greece, Currencies, and Earnings

Weekend Reads for Investors: Greece, Currencies, and Earnings

It’s been an eventful week for most investors, if not a profitable one. In Greece, the leftist Syriza party, which pledged to end austerity, won national elections, and Greek stocks responded by falling 15% over the next three days. Greece’s bailout program expires at the end of February, and their anti-austerity stance and ongoing need for cash sets the stage for a showdown with the so-called “Troika” of the European Union, the European Central Bank (ECB), and the International Monetary Fund (IMF). Expect plenty of political posturing in the coming weeks. Read more

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Weekend Reads for Investors: Market Forecasts, the Wall of Worry, and Oil

Weekend Reads

Fund managers are generally an optimistic lot, especially in the midst of a bull market, but even more so at the start of each new year. The turning of the calendar has become a popular occasion for introspection, an appraisal of what might have gone wrong—a lot for active managers in 2014—and, unfortunately, predictions. The ubiquitous “Top Ten” lists, while generally entertaining, are as much marketing pitches as they are serious reading. Below are some other stories that caught my eye in recent weeks. Read more

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