Weekend Reads for Investors: Waiting on the Central Bankers
Second quarter earnings reporting season is wrapping up and companies so far have delivered the goods, or at least met the diminished expectations of investors. Most major stock indices in Europe and the US surged higher in July, but the enthusiasm for stocks may have had more to do with the dovish policies of central bankers than company fundamentals. And recent indications from US Federal Reserve officials that a tapering of their easy money program may come this fall should be cause for concern. Perhaps PIMCO’s Bill Gross’s recent query on Twitter best captured the quandary facing equity investors:
https://twitter.com/PIMCO/status/365112323607760896
Here are some worthwhile reads you may have missed over the past month or so.
Strategic Thinking
- GMO’s James Montier, in “The Purgatory of Low Returns,” reaches patience. (GMO, PDF)
- In his latest memo, Howard Marks weighs in on the role of confidence in an economy. (Oaktree Capital Management, PDF)
- Michael Mauboussin offers a framework for measuring a company’s moat. (Credit Suisse, PDF)
- Wisdom of the crowd? Actually, the crowd can be pretty dumb sometimes. (The Atlantic)
- Richard Bernstein on “Japan — Land of the Rising Stock Market.” (Richard Bernstein Advisors, PDF)
- In “The Minsky Bubble,” John Hussman channels the late Charles Kindleberger, author of Manias, Panics and Crashes. (Hussman Funds)
- Has the low volatility trade become too crowded? (Research Affiliates)
- John Authers on prospective returns, risk, and “the three dirty words of finance.” (Financial Times)
Corporate News
- Eddie Lampert’s operating model at Sears is part hedge fund and part Hunger Games. (Bloomberg Businessweek)
- Attention CFOs, here are three steps to a more productive earnings call. (McKinsey & Company)
- Amid the euphoria, Aswath Damodaran revisits his valuation of Facebook. (Musings on Markets)
- Amazon.com CEO Jeff Bezos buys the Washington Post. (The New Yorker)
- Michael Lewis shares his thoughts on Goldman Sachs and high frequency trading. (Vanity Fair)
Industrial Disease
- The steel industry has become an inferno of unprofitability. (The Economist)
Emerging Markets
- Global CEOs assess ten forces forging China’s future. (McKinsey & Company)
- Nouriel Roubini asks, What if the emerging markets aren’t? (Slate)
- Economist Dambisa Moyo says investors ignore frontier markets “at their own peril.” (CFA Institute Magazine, PDF)
Pensions: Getting What You Paid For
- According to a recent study of public pension funds, higher returns don’t necessarily follow higher fees. (The Maryland Public Policy Institute, PDF)
Hedge Funds under Fire
- According to Holman Jenkins, the SEC’s case against SAC Capital “highlight[s] the enduring absurdity of insider-trading law” (The Wall Street Journal); Jeff Matthews begs to differ, and takes Jenkins to task for his defense of SAC. (Jeff Matthews Is Not Making This Up)
- The reversal of hedge fund fortunes has been has been stunning yet predictable. (Bloomberg Businessweek)
Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.
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