Nov
21st
Sat
21st
ND-UCONN
How to Be Risk-Averse | Condor Options
Or, hedging with options for dummies.
Good material as usual from Condor Options.
Nov
12th
Thu
12th
[Flash 9 is required to listen to audio.]
Certo got me hooked on the KEXP Seattle stream during the trip last weekend. I just heard this song from Yeasayer and a few minutes later, I found it on Tumblr Dashboard. The web is blooming with new services for music exploration. They’ve basically taken the place of all the great (former) radio stations. But it’s great to have found a station that still does things right.
Yeasayer, Ambling Alp
Nov
11th
Wed
11th
Many of the bears have wheeled out this chart in the past few weeks, including John Hussman. It’s easy to see why this might be a problem, so I’d really like to hear the counter argument. Where are the bulls on this one? Is everyone really that gloomy?
If this really turns into as big of a problem as some are predicting, I’m sure we’ll see more government props in the residential housing market. With the Fed ending MBS purchases this spring and the potential for Treasury funding issues, you also have to wonder where mortgage rates will go from here.
Perhaps it is time to buy.
Achieving Excess Returns
I love Albert Wenger’s no BS blurbs on investing themes, both from a venture capital and traditional asset management perspective. Even cooler, with one click, I can share his thoughts here. I agree with him.
One of the persistent questions for anyone investing money (whether in the public or private markets) is how to achieve excess returns. I have been thinking about this quite a bit over the last weeks as we have prepared for our annual meeting with the Limited Partners in Union Square Ventures and as I have talked to a close friend who is managing a large trust. I believe that out-performance comes down to two key factors: perception and concentration. By perception I mean the ability to make sense of the heaps of available data. The foundation of perception is a deep understanding of what is going on in one’s target market. Without understanding, there is no way to extract a signal from the data Without a signal, investors are reduced to guessing, which generally results in becoming followers rather than leaders. Only leaders can deliver excess returns. Concentration is the willingness to remain focused and make sufficiently few investments to avoid regression to the mean. A large portfolio is much more likely to perform like the overall market than a small one. Now some might argue that you are just taking more risk. While that is correct, I believe that concentration risk is not efficiently priced so that even on a risk adjusted basis it allows for delivering excess returns. The reason is that mis-aligned incentives push the bulk of investors towards large diversified portfolios (e.g. growing the asset base to collect more management fees). Achieving perception and maintaining concentration are really hard, which explains why sustained excess returns are so rare. I certainly find myself struggling with both!
Nov
10th
Tue
10th
